Priced out in Miami-Dade
Rent increases leave some retailers with little option
When retailer Pink Palm began talks with its landlord about renewing its lease at South Beach’s Lincoln Road Mall, owners Perry Martino and Russ Root were told to expect a 300% rent increase. A new owner planned to increase rents to $300 per square foot. The owners of the accessories and gifts store decided to move a few blocks away, to Washington Avenue, and rebrand as Perfect Gifts.
Facing similar rent increases, retailer Post Jeans and restaurants Ice Box and El Rancho Grande moved north to Miami Beach’s Sunset Harbour area. Jewelry store Teno, which had already moved to a side street of the pedestrian mall after a significant rent increase, closed its doors this summer. The landlord declined to renew the store’s lease because a large national retailer plans to take over most of the building.
Similar stories are playing out along Lincoln Road: Small local stores are facing huge rent increases because international chains are willing to pay higher rates for a spot on the famous pedestrian mall.
The transformation is actually a return to the mall’s roots. During the 1940s and 1950s, tenants included Saks Fifth Avenue and Bonwit Teller department stores. But in the late 1990s, few national retailers were interested in the mall with its eclectic mix of retailers.
Apple kicked off the changes in 2006, when it opened a retail outlet. Rent increases gained momentum when Sunglass Hut paid top dollar for a corner space a couple of years ago, Martino says.
Demand for Lincoln Road space is driven by both local and tourist traffic. Tourists to Miami-Dade list Lincoln Road among their favorite destinations in the county, says Rolando Aedo, senior vice president at the Greater Miami Chamber of Commerce. “And we are seeing shopping as a percentage of their overall experience and their overall expenditures increasing,” he adds. Total tourist spending in Miami-Dade stores grew from $5.05 million in 2008 to $7.01 million last year — faster than any other spending category.