Pricing for Lincoln Road retail is at an all-time high, Finkle said. Lincoln Road was one of the few retail streets in the U.S. that grew rental rates through the recession, and many are very bullish on its ability to continue that growth going forward. Investors are placing a significant amount of value on the future potential revenue, in addition to in-place revenue.
Joe Sitt, chairman of Thor Equities, was one of the first institutional investors to see Lincoln Roads potential when he started buying property more than five years ago. At the time Sitt says other institutional investors laughed because they thought the market was too much of a party town. Now those same investors are outbidding him. Sitt says Vornado paid about 30 percent more for the Lincoln Center property than he thought it was worth.
Im spoiled by where it was before. Now that theyre getting crazy numbers, its more tempting to stay on the sidelines, said Sitt, who says Lincoln Road property remains an important part of his $7 billion real estate portfolio. Were still big believers in the long-term viability of Lincoln Road and the market in general. I still believe its got a little more room to grow because when institutions come in, they often overpay.
The high prices of real estate sales on Lincoln Road also trickles down to tenants. Many of the locally-owned tenants that once gave Lincoln Road its artsy feel have been found themselves priced off the street. In the next couple years, even some of the Roads first national tenants will face the prospect of rents increasing more than four-fold or having to relocate.
Thats all helping to fuel demand for expanding the success beyond the one eight block-long streCity officials have been promoting the development of Lincoln Lane, the old alley located just north of Lincoln Road that faces the New World Center park, and the area stretching up to 17th Street. Comras nicknamed the area NOLI North Lincoln.
H&M and Forever 21 have designed stores with large glass windows facing the lane. Other national retailers like CB2 and Bang & Olufsen have already chosen to open stores on the side streets. Others like Icebox Cafe and Post Blue Jean are moving a little farther away to the burgeoning Sunset Harbour area where developer Scott Robins is leasing the ground floor of the city garage, as well as developing a retail building at 17th Street and Jefferson called the 1000 building.
Developers like Wennett and Bittel want to continue the processes, with their plans for building mixed-use projects on the city-owned parking lots north of Lincoln Road. The city of Miami Beach is currently reviewing the proposals for the Lincoln Lane parking lots, as well as developer interest in the Miami Beach Convention Center. Any of these could have a major impact on the area going forward.
For now rents on the side streets are a third to half of Lincoln Roads prices. Thats why for restaurants in particular, its a better option. Yard House is opening on Lenox just north of Lincoln Lane. Local restaurateur Amir Ben Zion opened Cooper Avenue last month on the ground floor of the New World Symphony building, while restaurateur John Kunkel will open Khong River House later this month just north of Lincoln.
If you didnt get in on the ground floor of Lincoln, you have to be on the sidelines, Ben Zion said.
But as retailers and restaurant development expands, ultimately everyone benefits.
Lincoln Road is no longer just one street, Ben Zion said. Its now an area.