Battle of the retail titans

Miami Worldcenter secured anchor tenants Macy’s and Bloomingdale’s in December
Miami Worldcenter secured anchor tenants Macy’s and Bloomingdale’s in December

One has been in the planning stages for a decade. The other is being built by an internationally known developer with massive projects under its belt. Both secured experienced teams to bring in top retail tenants. And so, as Brickell City Centre and Miami Worldcenter, the biggest development projects in Miami, move closer to adding a combined 1.3 million square feet of new retail shops, restaurants and entertainment venues to the city’s urban core, the battle for high-end tenants is intense.

In August, Brickell City Centre unveiled Saks Fifth Avenue as the lead retailer for its 565,000 square feet of shopping and entertainment space. The news came eight months after Miami Worldcenter’s developers announced that their retail partners, the Forbes Co. and Taubman Centers, secured Macy’s and Bloomingdale’s as anchor tenants for its 765,000-square-foot shopping mall.

“Potential retail tenants I speak to are interested in both projects, as well as the Design District,” said Tony Arellano, executive vice president of commercial real estate firm Metro 1 Properties. “Are they competing against each other for tenants? Absolutely.”

Brickell City Centre developer Swire Properties partnered with Bal Harbour Shops owner Whitman Family Development in an attempt to lure luxury retailers to the $1.1 billion project rising on nine acres west of Brickell Avenue. Saks, scheduled to open in fall 2016, will occupy three floors totaling 107,000 square feet. Cinemex, a dine-in movie theater chain based in Mexico, also recently inked a lease. Swire Properties President Stephen Owens said in a statement to The Real Deal that the two high-end tenants symbolize the direction planned for City Centre.

“Our plan is to incorporate a tenant mix that will successfully appeal to both Miami’s international visitors and local residents,” Owens said. Construction is slated to finish at the end of next year, and the rest of the mall will open in stages, the company said.

Across the Miami River in Downtown, Miami Worldcenter partner Art Falcone has a contract to sell the 765,000 square feet of retail to Forbes and Taubman. The two firms have partnered to create more than 40 malls in the U.S., including the Dolphin Mall in western Miami-Dade County, the Mall at Millenia in Orlando, the Gardens Mall in Palm Beach Gardens and the Waterside Shops in Naples.

When the deal was announced in December, Forbes and Taubman revealed Miami Worldcenter’s mall would include a 120,000-square-foot Bloomingdale’s and a 195,000-square-foot Macy’s as anchor stores.

“We believe there is plenty of demand for retail in Downtown,” said Miami Worldcenter spokesperson Aaron Gordon. “Of course, having Macy’s and Bloomingdale’s as our anchors is a big asset.”

Gordon would not comment on the retail leasing strategies for Worldcenter. But industry insiders say the competition is significant.

Zachary Winkler, a CBRE senior associate who specializes in retail leasing, said having established retail developers with strong track records gives both City Centre and Worldcenter credibility with global retailers. “That element of risk goes out the door,” Winkler said. “Retailers feel confident when they have companies like Whitman, Forbes or Taubman as their landlords.”

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Commercial broker Matt Cheezem, a Cresa South Florida senior vice president, believes City Centre has a slight edge over Worldcenter for two reasons: location and experience. Cheezem noted the project is being built by Swire, which has a legacy in the Brickell area with the past development of island community Brickell Key. City Centre is also located in a densely populated area with an established urban atmosphere.

“You have existing retail and pedestrian traffic surrounding it that forms a good base,” Cheezem said.

Worldcenter’s principals, on the other hand, have spent close to a decade trying to get their project off the ground in a long-blighted neighborhood called Park West. Forbes and Taubman have to convince tenants that Worldcenter will be a neighborhood catalyst, according to Cheezem.

“There is some risk involved in that,” Cheezem said. “When speaking to tenants, they will want to highlight that they got Macy’s and Bloomingdale’s to commit.”

If Cheezem was marketing Worldcenter, he would also promote the project’s proximity to the All Aboard Florida train station to be constructed downtown. The high-speed rail service is expected to launch before the end of 2016. “I think Worldcenter will have more success getting conventional retail stores for the masses,” he said.

Both projects already trail the Design District when it comes to landing high-profile retail tenants.

“The Design District should be included in any discussion about retail in the urban core,” Arellano said.

In 2010, local developer Craig Robins embarked on an ambitious transformation of the area north of downtown by partnering with L Real Estate, whose investors include the world’s top luxury products company, LVMH. Since then, Valentino, Fendi, Tom Ford, Dolce & Gabbana, Louis Vuitton, Hermès, Berluti and Emilio Pucci are just some of the iconic fashion brands opening stores in the district.

If City Centre and Worldcenter find ways to differentiate themselves from each other and the Design District, they should both end up with substantial tenant rosters, according to Arellano.

“I don’t necessarily think any of the three will be the clear-cut winner,” he said. “I think they will all coexist happily together.”