Daily Business Review Paola Iuspa-Abbott May 2011
Miami’s Design District — revitalized not too long ago by the arrival of upscale furniture and home decor showrooms — is poised to be reshaped again.
Dacra Development, headed by longtime developer Craig Robins, is pushing to build a retail center and an underground parking garage on nearly three acres in the 18-block community north of downtown Miami.
The storefronts and garage would join other developers’ proposed retail and office projects two blocks away.
Dacra intends to attract more retail space to the district at a time when French designer Louis Vuitton has said it is leaving the affluent Bal Harbour Shops next month and plans to open an outpost in Aventura and possibly in the Design District.
It’s not clear when and where in the Design District Louis Vuitton might open, but some area property owners have an idea.
“I presume it’s going to go in [Dacra’s] new building,” said Design District property owner and developer Russell “Rusty” Atlas. “That’s the logical place for [Louis Vuitton] to go.”
A Louis Vuitton representative in New York did not return a telephone call for comment.
Dacra chief operating officer Steven Gretenstein said it is too early to discuss the proposed retail project. For now, the company is seeking city approval to close Northeast Court to make room for the future project.
“The [proposed project] is too close the alley,” he said. “We are working on a master plan. When the plan is complete and we are further along with the design of that building, we will elaborate.”
Dacra executives discussed the sketchy retail plan with the Miami Planning, Zoning and Appeals Board earlier this month. The board opposed closing First Court.
The proposed project covers two blocks between Northeast Second and First avenues and 38th and 39th streets. The site includes a 1.05-acre parcel Dacra acquired for $1.37 million in December.
Robins’ project would further move the Design District away from the low-traffic furniture and home decor showrooms that helped revive the former industrial area nearly a decade ago.
“The Design District grew from a place where there was nowhere to eat or shop for clothes to a place that has three of the best restaurants in Miami within a one-block radius and some of the top fashion boutiques,” said property owner and developer Asi Cymbal, president of Cymbal Development in Miami.
Cymbal is planning an office and retail project and a separate retail center two blocks north of Dacra’s proposed site. He is currently seeking tenants for the future projects.
Cymbal said he has pre-leased half of the proposed office building, which will have 36,000 square feet of office space, 9,000 square feet of retail space and a 90-space garage. When he has enough space pre-leased, he will then seek financing, he said.
The other project would have 40 stores in about 40,000 square feet of space, approximately 50 residential condos and a 220-space garage.
He wants to begin construction on both developments in early 2013.
“All the retailers we are talking to are fashion boutiques, restaurants, cafes and art galleries,” he said. “Clearly, it is a deviation from a low-traffic furniture environment into a higher traffic food and beverage, entertainment and fashion environment.”
‘Going For Retail’
Atlas said he will lease space only to retailers that sell “things that you can pick up and walk out of the store.” He no longer pursues interior design firms or showrooms.
“You have to move one way or the other and since Dacra is pushing for retail, we are sticking to our guns and going for retail,” he said.
The district is lively on weekdays, when most of the home decor stores and showrooms are open, but is dead at night and on weekends. Property owner and real estate broker Jeff Morr predicts the district will be a different place to visit in the next few years.
“The Design District is [going to be] the next Lincoln Road but with more expensive shops,” said Morr, chief executive officer of Majestic Properties, a real estate company based in the neighborhood.
Lincoln Road is one of Miami-Dade County’s most sought after locations by national and international retailers. Retail space rents can top $150 per square foot along the pedestrian mall in South Beach.
Rental rates in the Design District can range from $40 to $70 a square feet, Morr said.
Retail broker Paco Diaz, with CB Richard Ellis, said the district has improved but it will take years for its retail offerings to catch up to Lincoln Road, Bal Harbour or Aventura.
“The Louis Vuitton [decision] is a great deal for the Design District and you are going to see rental rates go up if more retailers of that sort come to the district,” he said. “But for now, the Design District is basically four streets.”
Street Closure?
Dacra is known for buildings that attract foot traffic and energize sleepy streets. The proposed retail center will use the same formula. Robins hired Miami noted architect and urban planner Elizabeth Plater-Zyberk, a co-founder of Duany Plater-Zyberk & Co. in Miami and dean of the University of Miami’s School of Architecture, to help design the project.
Plater-Zyberk did not return a telephone call before deadline.
To accommodate the underground garage, Dacra wants the city to close First Court. That could be a challenge since the thoroughfare is used by emergency vehicles when nearby main arteries are congested. Miami’s Planning, Zoning and Appeals Board on May 4 opposed the closure of Northeast First Court.
Attorney Neisen Kasdin, who represents Dacra and its affiliates, told the board the developer was working on an “agreement” with the City of Miami Fire Department to help mitigate any impact by the road closure.
Kasdin, office managing shareholder of Akerman Senterfitt in Miami, told the board he planned to show a written agreement to the city when the application goes before the Miami City Commission for consideration. Kasdin referred questions to Dacra executives.
Parking Woes
In addition to expanding the district’s retail offerings, Dacra’s proposed project would add some much-needed parking to the neighborhood, which includes clothing stores and restaurants such as Y-3, Sebastian James and Marni, Christian Louboufin and Michael’s Genuine Food & Drink, Sra. Martinez and Fratelli Lyon.
Building owners have been busy remodeling and adapting old warehouses to retail use, but few properties have onsite parking. Despite the area’s rebound, few new buildings or parking lots have been constructed.
Hoping to overcome parking difficulties, property owners have created a valet system. Shoppers can park in the district for $3 a day Monday through Saturday.
Improving parking is critical to upgrading the district, said Atlas, who owns Atlas Plaza, home to the restaurant, Michael’s Genuine. Atlas is in the process of obtaining city approval to build a three-story, 10,000-square-foot office building across the street from Dacra’s future retail project. Atlas said Continental Bank in Miami committed two weeks ago to finance construction of his project. He declined to discuss the loan amount or cost of the project.
Design District parking has long been a major concern of Robins.
“Providing parking is essential to the growth of the entire area,” Gretenstein said. “Demand for parking is starting to exceed supply. We are willing to subsidize parking to make sure that it remains inexpensive.”
Dacra has been negotiating since 2004 with the Miami Parking Authority to build a 404-space garage on land the agency owns at 3800 NE First Ave.
No deal has been reached and the authority is facing aself-imposed July 1 deadline to make a decision.
“I am still looking at the possibility of building the garage ourselves,” said authority executive director Art Noriega. “If we can’t put it together ourselves by July we will sell the land. Simple as that.”
Gretenstein said Dacra is interested in buying the land and building the garage.
“We are currently studying the possibilities, assuming that in time the area will need significantly more than just a 400-car garage,” he said.