NY-style retail coming to Miami

Attention New York shoppers: You’ll feel right at home at the new retail centers opening in Miami’s urban core. Replacing the traditional model of the stand-alone shopping mall, Miami developers are beginning to see the advantage of large-scale mixed-use development, combining high-rise condominium towers, street-level retail, restaurant and entertainment complexes, all connected by pedestrian walkways.

Strolling the new pedestrian-friendly, mixed-use projects in Downtown Miami will feel a lot like walking down the streets of Manhattan. It’ll take some getting used to, but developers figure it’ll be a welcome change.

“This is a car-driven market down here,” says Tim Weller, vice president of development for MDM Development Group, builder of Metropolitan Miami, one of the larger projects under construction Downtown. “People are used to driving everywhere. But really, they’ve had no choice.

“We have a lot of beautiful condos that have become isolated,” continues Weller. “You have to get into your car and fight a lot of traffic for the smallest purchase. People are really looking forward to not using their car and getting into a pedestrian environment. They want to have all their lifestyle needs met within a compact area.”

Shaq-ing up

Metropolitan Miami is a $1 billion, nine-acre development under construction on Biscayne Boulevard in Downtown Miami, with 1,143 condominiums in two high-rise towers, a five-star Marriott Collection hotel, 47-story office tower and a four-story atrium “lifestyle center,” with a multiplex cinema, restaurants and shops, all strewn among shaded walkways and plazas.

Aside from the customer base that will be built into the residential component of the project, Weller says, “there is a critical mass of enough people living and working in the central business district — with 5 million square feet of office space within six blocks — to ensure the 24-hour traffic this type of urban environment really needs.”

While the retail space will not be ready until 2009, 50 percent is already leased. Merchants were attracted by the potential customer base in the thousands of condominium residences set to come online in the next two years and, most particularly, the anchor tenant at Metropolitan, a Whole Foods Market.

The project has gotten press lately because of an investment by Shaquille O’Neal, whose development firm, the O’Neal Group, will open a 24-hour Shaq Ultra Sport Fitness Center at Metropolitan. The basketball star also bought a lavish penthouse in the Met 3 condominium tower, which claims it will be “the tallest residential building south of Manhattan,” once completed. High-profile Manny’s Steakhouse has also signed on to the project.

Commercial success

While the slide in the residential market in Southern Florida has been grabbing all the headlines over the past year, the retail market has never been better. “The retail market is very tight,” reports Paco Diaz, vice president of the Miami office of CB Richard Ellis.

“We’re running at 95 percent occupancy,” he says. “There’s a scarcity of available land, and land prices, lease rates and sale prices are all on the upswing. We’re under-retailed in Miami compared to Broward and Palm Beach County.”

Miami has 12 square feet of retail per capita. Broward and Palm Beach each have 19 square feet per capita, which is just below the national average of 20 square feet.

“The retail portion of the giant new mixed-use projects, like Metropolitan and Midtown Miami,” says Diaz, “should do very well,” even as their residential components wait out market doldrums. “The slowing of the residential market has not affected the retail market whatsoever,” he adds. “One has nothing to do with the other.”

“South Florida is under-retailed,” agrees Michael Ullian, director of commercial development for the Midtown Miami Group, co-developer of Midtown Miami along with Developers Diversified, “so companies like Kohl’s, Costco and every major big box would like to be in this urban area.”

Big stores Downtown

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The mammoth Midtown Miami, a 56-acre mixed-use project on North Miami Avenue, will bring the first big boxes to Downtown. “The Shops at Midtown Miami,” occupying 633,000 square feet, will be anchored by a 141,000-square-foot Target and include (in order of size) Circuit City, Ross Dress For Less, Linens ‘n Things, Marshalls, Loehmann’s, West Elm and PetSmart.

“Getting Target involved was the key,” reports Ullian, “Once they were involved, the other retail followed.”

Ullian claims that when Midtown began to test the waters, they got a huge response from retailers of every stripe. “We’re three deep in every category of merchandise.” He says they’re getting calls from overseas store brands that see Miami as an ideal test market.

“We have a lot of international retailers,” he says, “from Germany, France, Spain, England, Southeast Asia and South America that would love to establish a presence in the U.S. but are afraid of rents that go up to $1,000 a square foot in New York City.” While the average rent along major retail corridors in Manhattan runs $225 a square foot, according to recent market reports, rents at Midtown Miami average about $50 a square foot.

The European retailers, especially, give the Shops an exotic appeal. For example, says Ullian, “We will have a German eyewear company, instead of taking a Pearl Vision. It’s something different, more high-style.”

The big-box stores at The Shops will be the only such stores serving Downtown Miami, Miami Beach, the Brickell area and other points of Miami, with just over 2 million people living within a 15-mile radius. “There was no super-regional shopping before Midtown Miami between Aventura and Dadeland,” says Ullian. “That’s a 24-mile stretch.”

Still, it required $170 million in government subsidies to get off the ground. The City of Miami and Miami-Dade County granted the money to the project to build two parking garages, streets and sewers. It’s one of the largest incentive packages to a private developer in city history.

The problem is the parking. Unlike the field of asphalt that provides parking for the suburban shopping center, says Ullian, “you have to build structured parking garages, at an enormous cost.” The city requires four spaces for every 1,000 square feet of retail. The Midtown Miami development will have about 6,000 parking spaces.

In addition to The Shops owned by Developers Diversified, the Midtown Group plans to build approximately 3,000 condominiums, 140,000 square feet of commercial space, and 150,000 square feet of office space on the Midtown Miami site within the next few years.

Some of the stores in the first phase of the project, the Northern Block, opened this fall, including Target, Linen’s ‘n Things and Circuit City, but most of the retail has yet to be installed. “There’s almost 3,500 people working on the site right now,” says Ullian. “We’re building it a building at a time.”

Heights in Little Havana

Just west of Downtown proper, a new mixed-use development called Altos Plaza is introducing the pedestrian-friendly model to Little Havana and taking it to a new level of sophistication (and price point) for the neighborhood, leasing at $40 and more a square foot.

“On the site for Altos Plaza,” says Gonzalo Negrete, project manager for B Developments, developer of the project, “there used to be a gun shop and a bar where you had prostitution.”

In its place the neighborhood will have an amenity-rich 17-story luxury condominium, 50,000 square feet of office space and 50,000 square feet of retail, including a new supermarket concept specially tailored to the urban Latin market called Publix Sabor.

This is B Development’s second mixed-use, pedestrian-oriented development within an eight-block radius. The first, Altos de Miami, is nearing completion. What’s more, says principle Miguel Barbagallo, “We’re looking for another three sites to do the same. It’s an urban development solution.”

The company is also widening sidewalks, installing benches and crosswalks, and providing curbside parallel parking to serve as a buffer from street traffic. “We want to keep the main avenue as continuous as possible so as not to break the rhythm of the people walking,” says Negrete.

Once Publix committed to Altos Plaza, he says, “The retail filled up by itself. We didn’t have to go out and shop it very hard.” The developer signed a bank and is in talks with Starbucks and other big names. “These are the things that create a neighborhood.”