Rivani’s Miami Beach office expansion, lease extension heads to voters

The fate of Robert Rivani‘s proposed $50 million rooftop expansion and 106-year lease extension for the Miami Beach office building that will house Playboy’s headquarters is in the hands of Miami Beach voters.

Miami Beach commissioners approved the measure for The Rivani office building at 1691 Michigan Avenue on second reading in a 6-1 vote, sending it to a Nov. 3 special election referendum. Commissioner David Suarez was the sole opponent.

Rivani, who leads his Miami-based namesake firm, plans to tear down the garage’s sixth level and remove 250 parking spaces to make way for a total of 47,000 square feet including office space, three rooftop padel courts and a members club restaurant.

The ground lease, approved in 1999, runs through 2052 with two 20-year renewal options and an annual base rent payment of about $600,000. The proposed amendment would grant Rivani two additional 20-year renewal options, extending the lease through 2132 if approved by Miami Beach voters. Rivani purchased the building and ground lease for $62.5 million in 2024 and previously told The Real Deal he invested roughly $40 million renovating the property.

In exchange for the lease extension, the investor is offering the city an annual rent increase of at least $500,000 and $1.5 million in public benefits — a $200,000 increase Rivani committed to during the Wednesday meeting from the original $1.3 million.

The city’s annual base rent increase would start in 2033, while its share of the property’s gross revenue would rise from 2.5 percent to 3 percent. The percentage rent generated $279,700 for the city last year, according to the memo

The $1.5 million would include $600,000 for Lincoln Road improvements and public art, $200,000 for infrastructure and $150,000 to support Miami Beach’s human trafficking tip line and sister cities initiative.

Rivani must obtain a master building permit by July 1, 2031, and begin construction by Jan. 1, 2034, or the lease extension becomes void. He also could face financial penalties for missing construction milestones. For example, if he fails to obtain a temporary certificate of occupancy by the deadline set in the agreement, the annual rent increase would rise to $575,000.

Commissioner Alex Fernandez questioned the proposed 20 percent cap on future rent resets, arguing it could prevent future taxpayers from receiving true market value for the city-owned land.

Suarez’s biggest point of contention was with the projected revenue the deal would provide the city.

“I don’t think $18 million through 2051 is a good deal considering what we’re giving away, but is there a way to have some skin in the game as a city where, when you do good, we do good?” he said, arguing the city should negotiate additional compensation, including a transfer fee if the building is sold.

Rivani argued the city would be better served by guaranteed near-term revenue and investment than by speculating on future market conditions. He said “nobody here has a crystal ball” to predict commercial real estate values 60 years from now, and he maintained that the city already shares in the project’s success through percentage rent.

He pushed back on suggestions for a transfer fee, saying he’d “never really heard of” a city collecting a fee from a future private sale of a leasehold interest. But city officials noted Miami Beach has negotiated transfer-fee provisions in other public land deals, including the Convention Center hotel and Lincoln Lane projects.

Suarez also proposed that the city receive a share of revenue from the members club restaurant in the building, pointing to the city’s percentage-of-sales lease with Smith & Wollensky as a model. Rivani argued the comparison wasn’t equivalent because the city is Smith & Wollensky’s direct landlord, while he will be leasing space to a restaurant tenant.

Miami Beach City Commissioner Joe Magazine, who has been friends with Rivani since before the investor acquired property in 2024, sponsored and championed the lease extension. At the first reading, Magazine said Rivani purchased the property when it was about 30 percent occupied and struggling to attract Class B office rents. Since then, the building has become nearly fully leased and commands significantly higher rents, Magazine said.

The most high-profile tenant is Playboy, which in May expanded its lease by 5,700 square feet to 25,865 square feet, giving the company the six-story building’s entire top floor, according to an SEC filing.

Playboy’s flagship office would include creator studios and a Playboy Club featuring a restaurant and a members-only section inspired by the Playboy Mansion in Los Angeles. The last of Playboy’s original clubs closed in Lansing, Michigan, in 1988, ending a U.S. network that at its peak included 22 clubs. Playboy revived the concept three decades later with a Midtown Manhattan club that opened in September 2018 but closed in November 2019.

The publication amended its original lease, delaying the start of its 11-year term to Jan. 1, instead of this summer. The amended agreement keeps the annual base rent at $2.12 million but reduces annual rent escalations to 2.5 percent from 3 percent. It also narrows Playboy’s rent abatement to the first seven months, replacing an earlier agreement that provided 12 months of abatements over the first three years.

Rivani also owns the former Lincoln Theatre building at 551 Lincoln Road. He paid $37 million last year for the property, which is anchored by an H&M store.

He recently sold Wynwood Jungle, a retail plaza in Miami’s Wynwood neighborhood, for $26 million as part of an ongoing sell-off of a retail and hospitality portfolio he acquired between 2021 and 2024.