Miami retail tenants think small in search of space
While big-box retailers like hhgregg have received much of the attention in Florida’s improving real estate market in recent years, it’s the small spaces that are driving local retail in areas like Miami, brokers say. The trend of small leases has been particularly strong in the restaurant sector in areas like Midtown and Sunset Harbour where eateries believe they can get a more bang for their buck in a smaller space — that is, under 10,000 square feet.
“I love to have a small space, because the expenses are controllable,” said Graziano Sbroggio, the part owner of the recently opened restaurant Salumeria 104 in Midtown, which has just 1,600 square feet of space. “I’d rather be in a small space where the rent is cheaper because the space is smaller, and you’re able to do a different amount of volume.”
More and more high-end eateries — and retailers in general — are going the small route for precisely this reason, according to Frank Begrowicz, an associate in retail brokerage services at Cushman and Wakefield.
“This doesn’t just speak to restaurants, but to retailers — that is, ‘how small can I make my footprint and be commercially efficient and profitable, knowing the current economic challenges that exist?'” he said. “I think for the restaurateurs, that’s become even more essential because of how hard they have been hit in recent years.”
Part of the reason for tenants’ new size preferences has been an influx of foreign restaurateurs, accustomed to smaller spaces in their home countries, replicating their formulas in Miami and Miami Beach.
“They may have to two to five [retail] units in Italy, and want to break into this market,” Begrowicz said. “What we’ve seen from a requirement standpoint is very efficient — 1,500 square feet, with a little bit of outdoor seating.”
He also pointed to Chef Jeff McInnis’ Yardbird restaurant, which opened in a former storefront near Lincoln Road last year.
“I think Yardbird is the big success story of the last year, in terms of getting into a very efficient space, in an off street, but being in close enough proximity to Lincoln Road that they feel they can be a draw,” he said.
Increasingly, retail tenants are looking for these spaces, believing the under 10,000-square-foot range to be their sweet spot, Guzman said.
“It’s small-shop leasing, spaces under 10,000 square feet or so, where we’re seeing a lot of activity,” said Carlos Guzman, a retail specialist at Coral Gables-based Continental Real Estate Companies. “For these tenants, it’s their prototypical size. It’s been a very active market.”
Salumeria 104 is the latest small space for Sbroggio, who has opened similar-sized restaurants across the Miami area, including Spris, Segafredo, both of which have multiple locations in the area.
“I believe when you have a small space, even if you have a manager there, he’s able to control the table, to recognize most of the customers,” he said. “It’s a home feeling when you go to dine.”