Miami Beach’s Lincoln Road could be in for a rough time as coronavirus hits the retail industry particularly hard.
Steve Madden vacated its lease at 663 Lincoln Road, according to the data provider Trepp. The shoe retailer notified the property owner, Thor Equities, that it would not be renewing its 2,269-square-foot lease on April 30.
The space accounted for 45 percent of the total square footage of the retail building, and is currently being marketed, “but there is no activity due to the economic uncertainty,” according to Trepp.
Thor Equities was also 30 days delinquent on its $7.3 million commercial mortgage-backed securities (CMBS) loan backing the building as of March, according to Trepp. The company is working with its borrower on relief for the loan, according to Trepp.
New York-based Thor Equities listed the Lincoln Road property for sale in March for $17.5 million or $3,500 per square foot, about 30 percent below the peak of about $5,000 per square foot on the pedestrian-only retail street in 2015. The listing brokers are Devlin Marinoff and Tony Arellano of Dwntwn Realty Advisors.
Arellano said he is in talks with a few institutional buyers, and the listing price remains the same. He said Steve Madden made the decision to vacate the property prior to the coronavirus pandemic. “It is the perfect size for a small fashion brand,” Arellano said.
Thor Equities did not immediately return a request for comment.
Thor Equities paid $15 million for the 5,000-square-foot building in 2012, property records show. It was built in 1935. Pizza Rustica is also a tenant with 1,700 square feet at 667 Lincoln Road.
Thor, led by founder and CEO Joseph Sitt, owns real estate in the U.S., Canada, Europe, Russia, India and Latin America, according to its website. In Miami, it owns properties in the Miami Design District and in Wynwood. In Miami Beach, it also owns the ground-floor retail space at 605 Lincoln Road.
Thor has sold off some of its retail portfolio in New York in recent years. The firm sold a commercial condo at 51 Greene Street in April 2019, for about $14.6 million; and a trio of retail condos at 212 Fifth Avenue, which it sold to an international investor for more than $25 million.
CMBS loans are often deemed riskier than a conventional bank loan since the loans can be more difficult to rework and restructure when the borrower lands in trouble.
In April, South Florida’s retail market had an outstanding CMBS loan balance of $6.3 billion, according to data provided by Trepp. It was the third highest CMBS exposure of any metropolitan statistical area after New York City and Los Angeles.