While the recession forced some retailers out of business, fueling vacancies and depressing rental rates, Miami Beach’s Lincoln Road is seemingly stronger than ever.
In a sign of confidence for the pedestrian mall, fashion retailer Forever 21 is planning to open its largest outpost there this fall.
The Los Angeles-based retail chain is to open a two-story, 39,000-square-foot store at 701 Lincoln Road, according to retail broker and investor Michael Comras, who is buying the building for $17.5 million and signed Forever 21 as the tenant.
The new Forever 21 store will be more than twice the size of the largest stores on Lincoln Road, he said.
Comras would not disclose how much Forever 21 is paying per square foot.
Forever 21, known for its chic yet affordable clothing for young adults, is a staple of some of North America’s prominent retail thoroughfares such as New York’s Fifth Avenue, Chicago’s Michigan Avenue and Montreal’s Catherine West.
“It is going to add another level of diversity and provides for another anchor for Lincoln Road,” said Comars, president of the Comras Cos. in Miami Beach. “It will attract more people and increase the volume of sales coming out of the Road.”
While other retail destinations posted declines in rental rates, Lincoln Road rents have been relatively stable at between $125 to $150 a square foot, depending on the size of the space, said retail broker and investor Lyle Stern, a principal with Koniver Stern Group in Miami Beach.
“Now they are going back up because of the desire of more tenants to be on the road,” he said.
Effective retail rents throughout Miami-Dade will decline 3.2 percent this year, to $19.11 per square foot, according to Marcus & Millichap’s third quarter report. That’s the lowest rate in five years.
Forever 21 executive vice president Larry Meyer did not return a call and e-mail seeking comment.
Symphony Driven Boom
The debut of Forever 21 will come at a time when the eight-block open-air mall — filled with a mix of restaurants, locally owned boutiques and national retailers — is experiencing a mini-boom driven in part by the construction of the New World Symphony campus designed by renowned architect Frank Gehry. The new complex is set to open in February.
The new performing arts complex will be complemented by a new city park that will feature a 7,000-square-foot projection wall that will feature video presentations of New World concerts.
“If it wasn’t for the New World Symphony and the development of the park, the demand [for retail space] would not be as strong as it has been … at least on this side of Lincoln Road,” said Gary Rosenberg, whose family owns a two-story building at 455 Lincoln Road.
“Rental rates are certainly not going down. We have shopping centers in Dade and Broward counties and none of them perform like Lincoln Road does.”
A recently redeveloped office-retail building at the western end of the mall, which runs between Washington Avenue and Alton Road, also played a role in making Lincoln Road a more diverse place to shop.
The new retail space at 1111 Lincoln Road attracted several national high-end brands to its 40,000-square-foot space, including Y-3, a designer clothing store; MAC, which features makeup; Coltori, which sells Italian designer cloths; and Artsee Eyewear.
The city of Miami Beach last year paved the area in front of 1111 Lincoln Road with black-and-white Portuguese stones and closed that portion of the street to auto traffic.
“It brought in a new crop of retailers that were not here before,” said Rosenberg, of the upgrades to 1111 Lincoln.
Rosenberg is a principal with Plaza Development Realty.
Clamor for space
There is high demand for space on Lincoln Road, which has few vacancies, said Esslinger Wooten Maxwell broker Jeffrey Cohen, who brokered the sale of the Forever 21 building.
“I have retailers from Europe calling wanting to buy real estate if they have to … whatever it takes … to get on Lincoln Road,” he said. “But it is extremely difficult. If you are not a national tenant, there is little hope that you can get on it.”
More space will open up when the Lincoln Theatre, now home to the New World Symphony, is redeveloped into a three-story retail building.
Most of the 35,000-square-foot building is expected to be leased to a retailer with global operations, according Clifford Stein, a principal building owner SRA/Lincoln Theater MM.
Stein, also president of Miami-based Savitar Realty Advisors, would not disclose the prospective tenant because the lease hasn’t be finalized. He hopes the space at 541 Lincoln will be occupied by mid-2012.
Spillover into Alley
The arrival of big national tenants comes at a cost. Small, locally owned stores are being forced to relocate.
“You do lose mom-and-pop shops, but we need to have a certain amount of national tenants to bring the crowds, as well as [to broaden] the exposure of Lincoln Road,” Rosenberg said.
In a way, Lincoln Road is returning to its roots. In the 1930s, it was home to Saks Fifth Avenue, Harry Winston Jewelers and the department store Bonwit-Teller.
“It was the Fifth Avenue of the South,” Comras said.
The road lost its luster in the 1950s. In the 1960s, the city hired famed Miami Beach architect Morris Lapidus, designer of the Fontainebleau Hotel, to give Lincoln Road a facelift. He closed the road to auto traffic and created the pedestrian mall. But the street’s come-back was short-lived. By the 1980s, the area’s demographics changed and business on Lincoln Road began to wither. With the redevelopment of South Beach, local businesses and shoppers began to return to the street in the late 1990s.
Lincoln Road’s influence is spreading. Comras said Lincoln Lane, north of Lincoln Road, is likely to become an alternative retail spot.
Lincoln Lane now is mostly a dark alley, but some businesses are changing that. CB2, an offshoot of the home furnishing chain Crate & Barrel recently opened. Also, nearly 7,000 square feet of new retail space was built on Lincoln Lane as part of the garage component of the New World headquarters.
“It is an opportunity to capitalize on an area that is right next to the most thriving area in South Florida,” Comras said, noting that rental rates on Lincoln Lane range between $45 to $50 per square foot, compared with as much as $150 per square foot on Lincoln road.
“It offers an opportunity to tenants that are not national tenants,” Cohen said. “The landlords [on Lincoln Road] would much prefer to have a bankable national tenant than even a retailer that may have two or three stores. [Lincoln Lane] will give an opportunity for those retailers to get into play and take advantage of the buying public that comes to Lincoln Road.”
Paola Iuspa-Abbott can be reached at (305) 347-6657.
About Forever 21:
Founded by Do Won (Don) and Jin Sook Chang in 1984, Forever 21 started humbly on the bustling street of Figueroa in Los Angeles as Fashion 21. Having immigrated to the United States just three years before hand from South Korea, the Changs quickly realized a need for affordable clothing that was fresh, modern and trendy.
The first store was only 900 square feet. 20 years later, Forever 21 stores have grown to just under 400 stores (some of which now boast an impressive 24,000 square feet), mostly within malls in the United States, Canada, Dubai and Singapore. Revenue for 2006 was a whopping $1.05 billion and with more than 12,000 employees, Forever 21 continues to grow at a rate of 30 new stores every year.
