A Lincoln Road property owner’s dispute with a former tenant almost cost him a much more lucrative lease deal with shoe retailer Steve Madden, The Real Deal has learned.
Santa Monica resident James Argyropoulos, who owns a two-floor building at 433 Lincoln Road through a company also called 433 Lincoln Road, finalized a deal in May to lease 2,100 square feet of retail space to Steve Madden for nearly $50,000 a month – roughly double what the landlord had been charging jewelry and watch store Mini Mall Gallery, according to court documents obtained by TRD.
However, Mini Mall Gallery owner Roni Mualem refused to move out, insisting he and Argyropoulos had agreed on a lease extension until 2020 and that he would continue paying $23,206 in monthly rent, which is significantly below-market rate, Argyropoulos’ attorney William Clayton told TRD. In June, 433 Lincoln Road filed an eviction lawsuit against Mini Mall Gallery.
“The tenant claimed he could stay on for another five years according to a lease option that was never properly executed,” said Clayton, a shareholder with the law firm Greenberg Traurig. “We challenged it and won.”
On Sept. 10, Miami-Dade County Court Judge Donald Cannava granted final judgment for 433 Lincoln Road LLC after Mini Mall Gallery failed to place one month’s rent deposit into a court registry per a July court order. Clayton said Mini Mall moved out on Sept. 20. Mualem could not be reached for comment and the phone number for Mini Mall has been disconnected. His attorney Vivian Jaime did not respond to an interview request sent via email.
The delays caused by the eviction proceedings prompted Steve Madden to sue 433 Lincoln Road in Miami-Dade Circuit Court. Steve Madden wanted to terminate its lease agreement based on alleged misrepresentations by the property owner. Steve Madden’s complaint, which was transferred to Miami federal court in August, states the retailer was looking for a new spot because the company needs to relocate from its current location at 817 Lincoln Road, where it has a month-to-month lease.
Steve Madden signed a 10-year lease agreement with 433 Lincoln Road on May 6. The shoe company accused Argyropoulos of failing to disclose that Mualem was refusing to vacate the space because of the five-year extension he allegedly negotiated with 433 Lincoln Road.
“It is now clear that defendant misrepresented and omitted material facts regarding the term of tenant’s lease in order to induce Madden into signing the lease and the addendum in the hope that it could force tenant out of the premises so that it could secure a higher lease price,” the complaint states.
In recent years, the Lincoln Road Mall has become one of the hottest retail sectors in the Miami real estate market, with rents reaching $300 a square foot. Earlier this month, real estate investors and developers Jonathan Fryd and Michael Comras sold an entire block that stretches from 1001 Lincoln Road to 1035 Lincoln Road to Spanish billionaire Amancio Ortega for $370 million. Fryd and Comras bought the properties for a combined $12 million in 1999 and 2000. Over the summer, New York investor David Edelstein plunked down $6,500 per square foot for two buildings at 918 and 920 Lincoln Road.
Clayton told TRD that 433 Lincoln Road and Steve Madden have settled and that the shoe retailer agreed to a new lease commencement date of Oct. 1, which was confirmed by a spokesperson for the company’s law firm, Becker & Poliakoff.
“Our client is thrilled with the expediency in which it was resolved,” Clayton said. “The expediency was important because Steve Madden is deeply interested in building and occupying the space before late fall 2015.”