A new era for the evolving Lincoln Road
If New York has Fifth Avenue, Miami Beach has Lincoln Road. South Florida’s premier outdoors shopping has a great diversity of shops, cafes, restaurants, and bars. The place is busy day and night, a great destination to enjoy the atmosphere of the city and watch the movement of people at any time of the day. The only problem? It is increasingly difficult to keep small stores open due to the high commercial rent of the region.
That’s why The Shoe Shop decided to close its store in August. “There are too many corporate stores on Lincoln Road,” said Jessica Elmaleh, a part owner of the store in an interview to the Miami Herald commenting about her decision to close the business. “There’s a price war, and we’re not Amazon. We can’t compete. People even try to negotiate shoes that are priced for clearance. Lincoln Road is just like Aventura Mall now. They don’t make small businesses want to stay.”
The increase in rent is mostly due to national and international investors buying properties on the spot, hoping to capitalize big bucks, which means high rent prices. What for small businesses like The Shoe Shop means two things: close or relocate.
“We’re paying 50 percent more in rent than we paid ten years ago, but sales aren’t the way they were ten years ago,” commented Books & Books’ owner Mitchell Kaplan. “Our rent is 25 percent of our sales now. There’s no way we can make that work. My landlord has expressed that he’s willing to negotiate with us and we’re going to try to find a potential solution. It’s becoming untenable for small businesses like mine to stay on Lincoln Road, which has become a sort of Dadeland without a roof.”
Which does not mean the decay of the iconic destination; quite the contrary, more and more new tenants are replacing the old stores with their newly designed one, custom made by renowned architects. The case of Apple’s store, Nike or even Gap most recently. Other big names don’t seem to care about high rent.
“Lincoln Road is a unique street, and the makeup of the stores there is changing based on what does well,” said Zach Winkler, senior vice president and South Florida retail lead for the investment management company Jones Lang LaSalle. “Big box stores such as Forever 21 and Zara are doing really well. Miami Beach is always progressing and morphing into what could be the most useful allocation. It’s not that these small businesses are being pushed out: It’s more that they’re being relocated.”
The changes that Lincoln Road is undergoing are seen as inevitable to accommodate the public that frequents hotels and luxury condominiums annually, making the city a cluster for high net worth individuals.
“Who’s going to be able to afford to shop at these higher-end retailers? The people who are staying at the higher-end hotels and condos on Miami Beach,” said Adam Lustig, a partner at the real estate group of the law firm Bilzin Sumberg. “Lincoln Road is evolving from a cute mom-and-pop street that was very walkable into a hub for global fashion brands. The street has always been charming, and locals have always enjoyed it. But the influx of high-net individuals is luring large national and international tenants who can pay these huge rents.”
Miami Beach is one of the world’s most expensive cities ranked by price per square foot for residential properties, according to a study by EWM Realty International. The city’s value of $ 850 is higher than Rome, Frankfurt, and Beijing. Even though New York keeps the title as the highest in the country at $ 2,089.
Lincoln Road is the 5th most expensive shopping street in the United States with the lease at $300 per square foot, according to Business Insider. There is a current vacancy rate of 14%, said Stephen Bittel, chairman, and founder of the real estate firm Terranova Corp., one of the largest owners of Lincoln Road property. But that doesn’t worry the investors and developers that snapped a piece of Lincoln Road; they can wait until the right tenant comes along.
The vacancy could even increase until the completion of an extensive $62 million renovation of the common area’s street, which is scheduled to begin in the second half of 2019, according to Bittel.
“Retail streets are always evolving,” commented Bittel, who started developing on Lincoln Road in 2010, when rents were still at $65 per square foot. “There’s no question Lincoln Road suffered a downturn [after the recession], and in that downturn, tenants closed stores. But we have recovered, and we’re back. We’ve had more people looking in the last six months than we’ve had in the last two years. I remain quite bullish on Lincoln Road.”