Business Monday

Bal Harbour

As the luxury market evolves, so does Bal Harbour Shops

 

The founder of Bal Harbour Shops defied his critics and created one of the world’s top luxury shopping destinations. But now the property and the Whitman family face new challenges amid a changing marketplace and increasing competition.

History of the Bal Harbour Shops

1956: Whitman family buys commercial land in Bal Harbour for $500,000 from developer Robert C. Graham for what would eventually become the Bal Harbour Shops

1957: Graham decides not to be partners with Whitman and sells the family the rest of the land for $750,000.

1965: FAO Schwarz becomes first tenant to open at Bal Harbour Shops. Other original tenants were Martha, Lily Dache, Maus & Hoffman, Abercrombie & Fitch, Schrafft’s Restaurant, Andrew Geller and Nessa Gaulois

1971: Neiman Marcus opens a two-story store, its first outside of Texas

1973: Neiman Marcus adds a third floor

1976: Saks Fifth Avenue opens

1978: Gucci is the first international luxury retailer to open

1983: Bal Harbour Shops opens a second level

2001: Bal Harbour Shops suffers its first annual sales decline following 9/11

2013: The Whitman family announces plans to partner with Swire Properties in the development of Brickell CityCentre


ewalker@MiamiHerald.com

“One of the things I admire most about Stanley and his family is that they’re very protective of the center,” said Wayne Hussey, senior vice president of real estate and store development with Neiman Marcus, who previously held the same position with Saks Fifth Avenue. “Stanley is a man of his convictions. He’s very forthright and candid. With Stanley, you know the playing field and where you stand. You have to respect him for that.”

Challenges to legacy

For decades, Whitman has fought to protect Bal Harbour’s unique position in the market. Now, that legacy faces what could be its greatest challenge.

For years the family argued there was room for only one luxury destination in Miami-Dade and Broward counties and used leases with “radius’’ clauses to discourage rivals. Now, the Whitman family has decided to take ownership in two other retail projects in South Florida. The Whitmans have partnered with Swire Properties on the retail component of Brickell CityCentre and are also part of one of the two groups bidding to redevelop the Miami Beach Convention Center.

Those moves came as a reaction to a changing retail marketplace that has the Bal Harbour Shops facing the stiffest competition in its history. Some of Bal Harbour’s most prominent luxury retailers — Louis Vuitton, Cartier, Hermes, Dior and Celine — have closed their doors in Bal Harbour and opened in the Miami Design District.

Whitman blames it all on the fourth richest man in the world. That would be Bernard Arnault, chairman and chief executive of the French luxury giant Louis Vuitton Moët Hennessy, whose stable of brands have lead the way in the departure from Bal Harbour. L Real Estate, a Paris-based investment fund backed by LVMH, is partnering with Craig Robins on the redevelopment of the Design District.

“Without [Arnault] there wouldn’t be a Design District,” Whitman said. “He wanted more space and we didn’t have it.”

Whitman’s son Randy and grandson Matthew Whitman Lazenby, who handled the negotiations, say they made every effort to work with Louis Vuitton and the other brands. Executives from Louis Vuitton and LVMH declined to comment for this story.

“They gave us an ultimatum: give us 20,000 square feet or we’re going to leave,” Randy Whitman said. “To kick out 10 to 20 tenants to accommodate them that just was not fair.”

Whitman’s ‘set of rules’

Yet, luxury retailers and others close to the industry say the story isn’t as black-and-white as what the Whitmans describe. For decades the Whitman family has had a reputation in the industry of being arrogant. They used their power to dictate how much space each retailer could have and who would get the choice first floor locations. Punishment meant exile to the second, less trafficked, level.

The Bal Harbour leases originally prohibited retailers from having another store south of Worth Avenue. In recent years, that was cut back to prohibiting another store in Miami-Dade County, unless retailers wanted to pay Bal Harbour a portion of the sales at the second store. The only exception was following the settlement of litigation related to the opening of the Village of Merrick Park.

“Stanley’s method of protecting his turf served him very well for quite a long time,” said Arthur Weiner, chairman of AWE Talisman, a Coral Gables firm that handles retail leasing and development. “He had a set of rules and he made those rules very clear. They may have been rude. They may have been limiting. They may have been distasteful, but he saw it as his job.”

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