Leases  ·  Retail

Miami Beach Greenlights Boucher Brothers Deal to Replace Nikki Beach

Major Food Group Will Also Operate the Oceanfront Property

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It’s official. Boucher Brothers will replace Nikki Beach

Miami Beach commissioners approved a deal with the concession operator to open a “high-end beach establishment” in place of the famed Nikki Beach day club, located on city-owned property at 1 Ocean Drive in the wealthy South of Fifth neighborhood.

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Boucher Brother will operate the complex — considered one of the most coveted oceanfront properties — alongside hospitality powerhouse Major Food Group as a subcontractor. The 23,000-square-foot property will house a Sadelle’s Boardwalk Cafe, a Mediterranean restaurant on the first floor, a Japanese steakhouse on the second, an outdoor lounge, a kids club, and a “retail pavilion.”

The 10-year agreement will start in 2027, a year after the end of Nikki Beach’s lease. Boucher Brothers, which manages concession stands across Miami Beach, will spend $26.2 million renovating the property and maintain 72 public parking spots on the site. 

The agreement will not require voter approval since it’s technically a concession deal and not a lease. Last month, commissioners ordered City Manager Alina Hudak to negotiate the contract.

The approval likely caps a long-standing feud between city officials and the owners of Nikki Beach, Lucia and Jack Penrod, who have leased the city-owned property since 1988.  

The married couple first opened a club called Penrod’s. A decade later, they launched Nikki Beach, a luxury day club that has served celebrities such as Kate Hudson, Naomi Campbell and Pharrell Williams, and became a global brand.

Over the years, tensions between the couple and Miami Beach commissioners steadily grew as officials tried to shed Miami Beach’s party image and complained about the noise coming from the property. 

The fight culminated earlier this year when commissioners granted Boucher Brothers control of the property at the end of Penrold’s term. In response, the Penrolds sued the city, accusing it of executing a “backroom deal.” The move forced officials to open up the bidding process. 

RH, formerly known as Restoration Hardware, offered to build a development that would cost more than $130 million. Other bidders included the Tao Group, Akerman, and operators of New York restaurant Le Jardin Boucherie. Miami Beach officials declined to consider the Penrods’s pitch because they missed the deadline by 15 minutes. 

“The city designed its RFP to result in an award to Boucher. Magically, it did,” lawyers representing the Penrods wrote to city officials earlier this week. “This was not a fair process. The preordained result is not fair. As the cherry on top, the city now tries to call a 10-year lease a concession agreement, so the public loses its right to vote.”

City staffers estimate the deal will generate at least $45 million in direct payments to the municipality. Minimum annual payments will start at $4 million and increase by 3 percent each year. The city will also receive 10 percent of annual gross receipts in addition to the $4 million minimum and another 5 percent of gross receipts, if they generate between $65 million and $70 million.

The agreement awards a bevy of other benefits, such as discounts at the complex for Miami Beach residents as well as additional annual payment to fund the salaries of two police officers. 

Julia Echikson can be reached at jechikson@commercialobserver.com