Upscale revamp of Collins Avenue sparks national interest
By Marilyn Bowden
Changing demographics and the resurgence of Collins Avenue as an upscale retail destination are fueling national interest in South Beach, local experts say.
Rabina Properties' 500 Collins Avenue, a 50,000-square-foot, two-story retail complex with 225 parking spaces, is 97% leased as it begins its first full holiday season, said Senior Vice President Lynn Lawrence.
"We view the location as the entrance to the Collins Avenue shopping area, coming off the causeway," she said.
Tenants include upscale national retailers such as Zara, Sabrina Monte Carlo, and MNG by Mango, which selected 500 Collins for its Florida flagship location, and Equinox Fitness Center.
Ms. Lawrence said Rabina, which purchased the site — then a supermarket with surface parking — in1998 as part of a portfolio, "saw the retail value of the site, given what was already happening on Collins in terms of the strong sales per square foot."
Since that time, she said, a growing base of permanent residents in the area due to infill development has made it still more attractive to retailers.
Drew Kristol, a member of Marcus & Millichap's National Retail Group who works out of the firm's Miami office, represented the seller, 437 Jefferson St. Corp., in the $5 million sale of a 9,350-square-foot shopping strip at Fifth and Jefferson. The building has 140-foot frontage and some parking in the back.
"We had offers from California and from New York City," he said. The buyer was Schottenstein Realty Co., which was represented by Marcus & Millichap's Mark Strauss.
"Schottenstein owns a lot of retail property nationally," Mr. Kristol said. "They bought with the intention of redeveloping. Their intention is to bring in stronger destination tenants."
The center currently has two vacancies, he said, one of 1,650 square feet and a 3,700-square-foot restaurant space that was formerly the home of Bongzai restaurant. Existing tenants are Big Al's Bagels, South Beach Pets and Sign-a-Rama.
"The seller originally bought the property in the early 1990s to store cotton for his futon business," Mr. Kristol said. "The building is special because it was used as an American garage for Rolls Royces. Al Capone used to keep some of his cars there" — an historic footnote providing the theme for Big Al's Bagels.
He said the new owners hope to capitalize on traffic created by Berkowitz Development's retail project at Fifth and Alton.
Fifth & Alton, a 180,000-square-foot vertical retail mall 5½ years in development, is now under construction, principal Jeff Berkowitz said.
Tenants announced so far include a 45,000-square-foot Publix, Best Buy and Staples.
"We're in negotiation with two additional anchor leases," he said. "We hope to open the stores in late summer or fall of 2009."
The project will incorporate 1,080 parking spaces owned in part and operated by the City of Miami Beach, Mr. Berkowitz said.
"This is a unique project," he said, "in that after the stores are closed we expect significant use by valet parking services. They are losing opportunities every time any type of building goes up here, and they are finding it difficult to find a place to store cars. We are hopeful we can help them consolidate that."
Mr. Berkowitz said the city is considering a circulator transportation system that would shuttle people from the area to South Beach clubs at night.
"This is a great project for the Beach," said Greg Masin, senior director of the retail leasing team at Cushman & Wakefield. "Now people will not have to leave the island to shop. It will be very successful."
Mr. Masin said the general trend of retail in South Beach is positive.
"There's a lot of capital chasing properties in South Beach," he said, "and still room for growth in the rents. Lincoln Road is still the heartbeat of the retail component of Beach."
According to Cushman & Wakefield's fourth-quarter retail leasing report, Lincoln Road is now among the top 10 most expensive retail streets in the country, with rents topping $100 per square foot triple net across the board, representing a rise of 20%-30% over the past 18 months.