As a prime location for national and international fashion retailers, Lincoln Road retail rents have risen between 20% and 30% over the past year, reaching up to $140 per sf for prime spaces, according to Luis Pantin, brokerage coordinator with Cushman & Wakefield's Miami office. Rents there started the year in the $80 to $110-per-sf range. Additionally, vacancy rates on Lincoln Road ended the year at less than 1%.
Retail brokers in Miami compare the atmosphere of Lincoln Road—a heavily traveled pedestrian any time of year, in almost any climate—to New York's Madison Avenue. Tenants consider the corridor a prime opportunity for branding as well as a popular shopping destination.
"The corridor has exploded in the last five years in terms of rental rates," says Drew A. Kristol, associate member of the Marcus & Millichap national retail group in Miami.Rents on Lincoln Road now rank the street among the top ten most-expensive retail venues in the United States, according to a Cushman & Wakefield year-end report. One of the top deals recently closed involved prime retail property at 1024-1026 Lincoln Road that sold for slightly over $1,600 per sf.
Rents on Ocean Drive and Collins Avenue also continue to climb, pushing out tenants who are unable or unwilling to pay rising rents. Spaces with big names such as Armani, Polo and Kenneth Cole on Collins Avenue are paying rents from $80 to $100 per sf, says Kristol. Other major retail corridors like Washington Street, Alton Road and Fifth Street are also experiencing rent hikes, he adds.
Vacancy rates on Ocean, Washington, and Collins Avenue are in the low single-digit percentiles, according to Pantin. South Beach can attribute much of this retail success to its reputation as a tourist hot spot, says Pantin. Even though the residential market is affected by the current national economic downturn, retail continues to exceed expectations, especially because of international tourists, he says.
Tourism in Miami-Dade County is on the rise, with an additional 4.9 million domestic and international passenger counts reported by Miami International Airport for 2007, according to a CB Richard Ellis retail report. With the US dollar's value shrinking, international tourists are able to do more with their money, contributing to a strong and resilient local economy, says the report. Experts point to the fact that South Beach is a desirable destination that caters to every demographic and has enjoys dense walking traffic, which is key for retail.
The future of the area is just as bright as the current outlook. Fifth & Alton, a new major development in construction, is expected to deliver a 185,000-sf retail center that will include 950 parking spaces upon scheduled completion in the third quarter of 2009.
"Rents will continue to escalate as long as major retailers feel it's to their advantage to have exposure and the traffic is still as high as it is," says Kristol. He projects retailers will start to push farther eastward where rents are not as high as those on Lincoln Road.
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