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| © Dylan Jackson/Miami Herald/TNS A vacant storefront on Lincoln Road. According to a Miami Beach city staff report, there are 23 vacant storefronts on Lincoln Road alone. |
By Dylan Jackson, Miami Herald, Tribune News Service
MIAMI BEACH, Fla.
Ricky Arriola remembers 1990s Miami Beach in shades of pulsing neon and "Miami Vice" pastels. Tourists shared sidewalks with European models and fashion titans. Night life was so hot that Mickey Rourke, Prince and Rolling Stones guitarist Ron Wood opened their own clubs.But not anymore. The models and fashion industry are gone, ousted by rising rents and stricter permitting. Many clubs have fled across the bridge. Only the best-known brands like Nike and Apple can afford shops on Lincoln Road. Ocean Drive has become a rowdy, tourists-only playground with limited appeal for locals.
"We rested on our laurels for too long," said Arriola, now a Miami Beach commissioner, as he passed vacant storefronts wedged between a pawn shop and massage parlor on Normandy Drive. "Look at this. Any space that is occupied seems to be pawn shop or tattoo parlor. What respectable store wants to set up between businesses like that?"
The shuttered North Beach shop is just one of many retail vacancies in Miami Beach - 117, to be exact, says a recent city survey requested by Arriola. That amounts to 4.5 percent of the city's inventory. According to data compiled by retail leasing firm Marcus & Millichap, the only commercial district in the county with more empty storefronts is Coconut Grove, which is set for a face lift. After the Beach, the area with the next highest rate is Northeast Miami-Dade.
But the problem runs deeper than empty shops. Vacancies are symptomatic of more endemic problems, says Drew Kristol, vice president at Marcus & Millichap.
For one, commercial space in the Beach is still as expensive as ever, but demand isn't strong enough to justify the high prices.
"At one point, I was purchasing property on South Collins for up to $1,800 a square foot for big-box clients," said Kristol. "Now I get $700 because the retailers can't bring in enough people to make those numbers work."
Or, as Arriola and some others see it, Miami Beach has lost its mojo. Tourists still come for the beaches, but all-too-often, they dine and party elsewhere. Miami Beach hotel occupancy rates have lagged behind its mainland Miami-Dade counterparts every year since 2012, according to numbers from data analysis firm STR.
The star power that led one-time Heat star LeBron to tell a 2010 national TV audience that he was 'taking his talents to South Beach' (even though he would play and live on the mainland) has dimmed as mainland neighborhoods like Wynwood, Brickell and the Design District have developed their own magic.
Thick traffic and partial closure of the MacArthur Causeway aren't helping. Neither is the specter of sea-level rise.
"I see it in technicolor," said Nancy Liebman, a long-time preservationist and former Miami Beach commissioner. "I weep for my city."
Projects are already underway to spruce up some of South Beach's key retail areas. In April, the Miami Beach Commission designated the stretch of Washington Avenue form 5th to 17th streets as a Business Improvement District, providing tax incentives for private money to revitalize the area.
On Lincoln Road, refurbishment is set for 2019. While small businesses continue to close in the wake of increasing rents, the newly renovated Miami Beach Convention Center could boost pedestrian traffic.
For his part, Arriola is set to finally capitalize on the long-discussed but untapped promise of North Beach. For years the area had been left out of the Beach's success. Now, many are looking to the neighborhood as a key to the Beach's future. Developers are promising improvements such as a North Beach version of Ocean Drive and a Midtown-esque plaza.
But the concrete is far from set. Preservationists and developers are battling over the details that will define the neighborhood's character.
"We hope North Beach doesn't just become a condo canyon. We have enough of those around here," said preservationist Daniel Ciraldo.
Identity crisis
In the midst of a real-estate boom that began in 2010 and peaked in 2016, developers paid a premium for spaces that are no longer justified by the current Miami Beach retail environment, say experts. The average asking rent for commercial space in the Beach is $89.50 per square foot - almost triple the overall Miami-Dade metro average, according to Marcus & Millichap.
When businesses don't bring enough to pay the high rents, storefronts are left vacant even in the most prized areas such as Lincoln Road.
"Developers got ahead of themselves," said real estate lawyer and former Miami Beach mayor Neisen Kasdin. The Beach is a much more mature market than was previously thought, he said. There just isn't as much room for investment as was expected - with the exception of North Beach.
"Miami Beach is almost fully built out. Coupled with the beach's regulations, there's no room to grow, he said."
Long-time Miami Beach business owner Buzzy Sklar blames out-of-town real estate investment trusts that came in during 2010 to 2016 speculation rush for many of the Beach's woes. Sklar owned Hank and Harry's Deli near Lincoln Road, which opened in early 2016 and closed in August. He said investors are intentionally leaving the storefronts vacant, hoping to consolidate space for a big box client or resell at an even higher price. According to Business Insider, Lincoln Road is the fifth most expensive shopping street in the U.S., with rents at $300 a square foot.
Practices like these drove out small, distinctive retailers that attracted the high-end international clientele and locals, Sklar said.
"Our client base used to be Europeans and South Americans on longer vacations with a more disposable income. We don't see those people anymore," he said. "The locals also don't come to Lincoln Road anymore; I think it lost its personality and is like any other mall now."
Mitch Novick, part owner of the Sherbrooke Hotel, said he's seen the same thing in the over 40 years he's lived on the Beach. From his vantage point, certain parts of Miami - especially Ocean Drive - have become a "party-till-you-drop" nightmare. He says he hasn't seen this much crime in the Beach since the 80s - despite the millions the city has put into police resources. He blames lax sound ordinances and 5 a.m. closing times.
"The city needs to address this carnival-like circus that attracts spring breakers, which drives out the affluent, international clients," he said.
While Miami Beach Mayor Dan Gelber agrees with Novick when it comes to Ocean Drive - he's sponsored an ordinance up for a vote next week that would reduce the number of businesses that get a noise exemption. But with Lincoln Road, Gelber sees a transformation that's a natural result of the city's growth.
"It's an incredibly popular area, so it gets stores that can pay high rents and that's just natural," he said. " Depending upon your perspective, that could be a good or a bad thing. That's just the nature of the market and we can't just stop the market for existing."
Looming on the horizon is sea rise, which worries investors, developers and politicians. The city has spent hundreds of millions of dollars on water pumps and consultants to mitigate the condition.
"Sea level rise is an existential threat of proportions we don't even know," said Claro Development owner Sandor Scher, who has been involved in numerous projects on the Beach including The Raleigh Hotel and the SoHo Beach House.
But the primary driver behind Miami Beach's fall from glory is one that affects all cities.
As a city matures and grows, other neighborhoods begin to take off. real estate experts point to New York as an obvious example. In the 1980s, the lower Manhattan commercial district dubbed SoHo - South of Houston - became the city's hot neighborhood. By the 1990s, the action moved east into the Meatpacking District. Now gentrification is sweeping through Brooklyn neighborhood by neighborhood.
So it goes in Miami. Districts that rarely saw visitors after dark 15 years ago have sapped Miami Beach's entertainment monopoly. Today, Wynwood, the Design District and Brickell are jammed with restaurants and specialty shops.
Liebman has seen it all. When she first moved to Miami Beach in 1959, iconic stars such as Frank Sinatra frequented the Fontainebleau and Eden Roc hotels, then the peak of luxury. The city's popularity waned in the 1960s and 1970s. But its fortune began to turn in the eighties, on the back of a campaign by Liebman and others to save the Beach's Art Deco architecture from destruction.
"The outside developers that saw the value in Art Deco architecture saved the Beach from itself last time," said Liebman, who served on the Miami Beach commission in the 90s and early 2000s. "We are getting closer and closer to having to be saved again."
Miami Beach became the trendy place to be for models, celebrities and tourists. The people brought the restaurants and housing. The housing brought the retail.
Commercial developer Michael Comras bought his first Miami Beach building in the eighties - and old gas station at the corner of Collins Avenue and 7th Street - "A block down from the property there were all these beautiful people hanging outside News Cafe," the Miami Beach native said. "I knew when places got hot like that, GAP would open up a store. So I called them up and that's what they did. And that opened the door for even more retail."
But in the 2000s, things became to change.
"What's cool is what other people aren't doing," said Wynwood pioneer Todd Glaser. "It always goes back and forth. Cities are always cyclical."
Today, "all the hip restaurants and bars are back in the city," said Glaser. "Even if people are staying on the Beach, they're dining and going out in Wynwood or Midtown."
But as rents are rise in the city core, Glaser sees an opportunity for the Beach. He's eying 15-and-a-half acres in South Beach for a mixed-use plaza that he's calling a "secondary Lincoln Road."
An Ocean Drive BID is in the works, says Arriola, who has working with Ocean Drive business on a 10-point improvement plan for Ocean Drive. The initiative recommends additional police officers and emergency responders, a ban on chain restaurants and a limit on music volume.
But Arriola and others looking to North Beach as the new frontier. Higher density regulations has opened up the area to a level of development the quieter cousin to South Beach has never seen. And with most of the beach built out, experts like Kasdin say the neighborhood's development is key to boosting city coffers.
Thirty years of property value growth and development have allowed the city's tax base to expand from $4 billion to over $36 billion in 2017. If development slows and taxes flatten, the city budget will suffer.
"Miami Beach is now going to face a fiscal issue that it didn't have to face," he said.
North Beach
In 2017, the city set the table for development in North Beach with a master plan that includes both historical designation and increased density that allows mixed-use development. The area stretching from 72nd Street and Dickens Avenue to 69th Street and Collins has been designated as a Midtown-like Town Center, with co-working spaces and micro apartments.
"If we can create a place where people can work, live and shop, people won't need a car," said Arriola. "Look at the success of Sunset Harbour."
But nine months later, preservationists and developers remain at odds over the height of North Beach's future skyline. Standards regarding land use, setbacks and height requirements are still in limbo. Preservationists are asking for a maximum height of 12 stories. Developers want more.
The Miami Beach Commission is considering a limit of 200 feet, or 22 stories. Arriola and Gelber are in favor of the height increase. The final vote is on Nov. 14.
"It's hard for someone on the street to tell if a building is 200 feet or 240 feet, but they certainly can tell if they have to walk on a narrow sidewalk," Arriola said.
To preservationist Ciraldo, the differences between the two heights are more than a detail. He worries that North Beach will fill up with luxury high-rises if these heights are allowed.
"We don't need any more luxury housing," he said.
And as the proposal ping-pongs between committees, construction remains stalled.
Developer Robert Finvarb bought a block on the north side of Town Center - a motley collection of low-rent offices and laundromats. He plans to turn it into a mixed-use street with residential rental spaces, juice bars, coffee shops and possibly offices.
But he and other developers can't draw up plans until the commission sets standards. Height is crucial to his bottom line. "We can't move forward until we come to a set of regulations that would make our numbers work," he said.
Scher bought buildings along Ocean Terrace between 74th and 75th streets for a mixed-use development with retail, two hotels and residences as a North Beach alternative to Ocean Drive. His proposal has passed the commission and the historic preservation committee, but it's stalled until Scher finds a hotelier for the historic Broadmoor and Ocean Surf Hotel. Together the hotels encompass only 60 rooms, a tough sell.
"I know five projects that could fundamentally change the quality of life for residents in Miami Beach, but they are still being held up," said Scher. "I understand the need to preserve Miami Beach.But as material costs and interest rates increase, these projects become less and less feasible."
But in spite of the differences of opinion, many are still optimistic about the city's future. They point to the work of the various BIDS and to the compromises made on North Beach.
Most importantly, they say Miami Beach is matchless; there will never be a city like it.
"Miami also still has the big blue thing: the ocean," said Comras. "Wynwood and Midtown will never have that."
