No surprise! Boucher, Major Food Group on track to win Nikki Beach Club bid
City manager Alina Hudak and evaluation committee recommend city commissioners approve new lease with politically connected joint venture
Boucher Brothers is still the city of Miami Beach’s top pick to take over the site Nikki Beach Club.
Miami Beach City Manager Alina Hudak is recommending that Boucher Brothers and its partner, Major Food Group, be awarded a 10-year lease commencing in 2026 to operate the city-owned restaurant and entertainment venue at 1 Ocean Drive, according to a memo released on Wednesday. The joint venture is offering to pay the city about $41 million over the life of the proposed lease.
Boucher Brothers, a Miami Beach-based company that already has a city contract to provide beach concessions, and Major Food Group, the New York-based hospitality company that owns Carbone and other high-end restaurants, won a recent competitive bidding process. Their bid was ranked first by an evaluation committee primarily made up of high-ranking city staffers, the memo states.
The joint venture beat out proposals submitted by The Group, RH (formerly known as Restoration Hardware) and Tao Group Hospitality. In June, Miami Beach put out a request for proposals for a new lease after the city commission rescinded a previous vote awarding Boucher Brothers a controversial no-bid, non-binding term sheet to become 1 Ocean Drive’s new tenant when the current lease expires with Nikki Beach operators Jack and Lucia Penrod in three years.
A source who worked with one of the other proposers told The Real Deal that the city rushed its decision to recommend Boucher Brothers and Major Food Group. “There are bidders who feel this process was flawed from its inception,” said the source, who asked for anonymity. “And the public hasn’t been given enough time to review it.”
RH’s proposal offered the city a starting base rent of $7 million that would increase by a minimum of 3 percent annually for a 30-year term. The Corte Madera, California-based firm also proposed investing $150 million to $170 million to redevelop Nikki Beach Club with a pair of low-rise buildings that would cover 16 percent of the 180,000-square-foot site, two landscaped beach promenades, a 94,000-square-foot public park on top of an underground parking structure and a 17,000-square-foot public sculpture garden on an elevated podium.
Another bidder, The Group, a New York-based hospitality company that is opening Le Jardin Boucherie in Miami Beach, offered $3 million in annual rent, increasing by 10 percent every five years for a 30-year lease. The Group proposed investing $36 million to tear down the Nikki Beach Club building and replace it with a three-story restaurant and cultural theater, a beach concession area and a “lagoon” for wellness programming.
The Penrods, a married couple that has operated Nikki Beach Club for more than three decades, have a pending lawsuit in Miami-Dade Circuit Court that alleges city officials denied them due process in seeking a no-bid deal with Boucher Brothers. They also recently filed a court petition alleging city officials improperly disqualified them from competing for the new lease. They were disqualified when their bid was submitted 15 minutes after the deadline.
The city’s RFP allowed bidders to submit proposals for either a 10-year lease or a 30-year lease, and Boucher Brothers and Major Food Group put in bids for both terms. Hudak is recommending city commissioners go with the 10-year option in the event Miami Beach elected officials decide to redevelop the two-story building and its surface parking lot in the future, the memo states.
The 10-year option also allows the city to avoid seeking approval by Miami Beach voters in a citywide referendum under the city charter. The lease would still need to be approved by residents living in voting precincts with a mile of 1 Ocean Drive, the memo states.
The joint venture is offering the city annual payments equaling 10 percent of the proposed new beach club’s gross operating revenue, or $4 million per year. The payments would increase by 3 percent each year with Miami Beach receiving about $41 million during the 10-year lease term, the memo states.
Boucher Brothers and Major Food Group are proposing a $26 million renovation of the existing building that would include a pool, a wellness center and spa, a “kids corner” and a beach concession area, according to bid documents. The joint venture also plans to add a Sadelle’s, an all-day dining restaurant by Major Food Group.
Last month, the Penrods’ lawsuit was dismissed, but the couple immediately filed an amended complaint. During the discovery process, lawyers for the couple obtained emails from city officials showing that Mayor Dan Gelber, commissioner Ricky Arriola and city staffers on several occasions requested favors, such as securing dinner reservations and beach chairs from principals of Boucher Brothers and Major Food Group.