Miami Beach’s Lincoln Road Shopping Drag Is On the Verge of a Comeback

A decade ago, investor Michael Comras achieved the deal of his career, selling a full block on Miami Beach’s Lincoln Road shopping promenade for $370 million. At the time, the transaction, which included leases with Apple and Nike and rents north of $300 a square foot, was the second-largest real estate sale in Miami-Dade County’s history.

This year, Comras notched another major deal on the strip — only this time, as a buyer, nabbing a steep discount along the 700 block connecting to North Lincoln Lane. While he won’t comment on the deal, sources told Commercial Observer that the investor acquired the assemblage for about 40 cents on the dollar compared to what it traded for over a decade ago.

The trend illustrates Lincoln Road’s trajectory. Once the beating heart of the Miami area shopping scene, the retail street today is a shadow of its former self. Over the past decades, vacancies have risen. Beloved establishments have shuttered. And new malls have popped up elsewhere, creating increased competition for luring shoppers and retailers alike.

But, even as real estate prices fall, Lincoln Road may be turning a corner. The City of Miami Beach and some property owners are spending tens of millions of dollars to upgrade and beautify the street, while new, buzzy operators are setting up shop.

Peppered with mostly low-rise Art Deco and MiMo-style buildings, Lincoln Road runs all across South Beach, from Biscayne Bay to the Atlantic Ocean. In the 1910s, Carl Fisher, one of Miami Beach’s forefathers, developed it as a luxury shopping and dining corridor. Decades later, Morris Lapidus, the town’s pre-eminent midcentury architect who designed the famed Fontainebleau Hotel, turned the road into a pedestrian plaza. 

By the aughts and early 2010s, Lincoln Road had become the place to be. The road boasted the right mix of big-box chains, such as clothing retailers Gap and American Apparel, alongside local operations, including the Books & Books store, the Sushi Samba restaurant and the Van Dyke Cafe. The street’s location near the beach only added to the appeal.

“Once upon a time, I used to go to Lincoln Road, and I would spend the whole day there,” said Felix Bendersky, a Miami retail broker and the principal owner of F+B Hospitality Leasing. “It really did have some of the coolest bars, coffee shops and breakfast places.”

Over time, Lincoln Road became a victim of its success. As its popularity grew, so did the value of its real estate. In 2014, Morgan Stanley purchased six buildings in a deal that valued the portfolio at $342 million. The following year, Comras superseded that transaction with the $370 million sale to Zara’s billionaire founder, Amancio Ortega.

Owners raised rents. By the mid-2010s, some leases had climbed to $350 a square foot, making it difficult for businesses, especially local and independent ones, to survive. Many closed, including Books & Books and the Van Dyke Cafe. Sushi Samba was paying $100,000 a month in rent before shuttering in 2019, the Miami Herald reported. The street lost its appeal, especially among locals, who took pride in supporting home-grown businesses. 

The COVID-19 pandemic, which forced officials to block off the road, didn’t help. Today, the occupancy rate for the strip’s retail space is down to 77 percent, according to Lyle Stern, a prominent Miami retail broker, the co-founder of Vertical Real Estate, and the president of the Lincoln Road Business Improvement District. 

“We got pushed into this economy where deals had to pencil,” Stern said. “So, as investors were chasing Lincoln Road, the pricing went up, the real estate taxes went up, the insurance went up, and the rent went up.”

Meanwhile, competition grew. Over the past decade, new shopping centers have popped up, giving shoppers and retailers more options in the central Miami region. The retail center at Brickell City Centre opened in 2016. Today, it’s fully leased with tenants that include Coach, Sephora, Hugo Boss and Aritzia. 

Since the pandemic, the Miami Design District has emerged as one of the hottest retail destinations in the country. It lured away some upmarket establishments, such as fashion brand Zadig & Voltaire and macaron maker Ladurée, from Lincoln Road. This year, another mall came onto the scene: the Miami Worldcenter master development near Downtown Miami, which houses New York restaurant Serafina as well as Lululemon and Apple stores. 

“When you hear about Lincoln Road now, everyone says the same thing: ‘There’s nothing for me to do there. The restaurants suck. Stores are not great,’” Comras said. But “this, too, will change.”

The investor is now in a position to play a big role in Lincoln Road’s resurgence. Comras acquired Morgan Stanley’s portfolio for about $140 million — well under half of what the financial juggernaut had paid for the assemblage 11 years ago. For several months, the investment bank had been trying to offload the asset to cut its losses after buying at the top of the market. The discount makes it financially feasible for the new owner to offer lower rents and perhaps attract a broader mix of tenants, beyond big-box retailers and large, sterile hospitality groups.

Some have already made plans. The h.wood Group, the hospitality company behind L.A. hot spots including Delilah, which is popular with celebrities, has inked two leases to open a restaurant and a cocktail lounge on Lincoln Road. Alo, the athleisure brand favored among influencers, chose not to lease but to buy a retail condo for $1,283 a square foot, where it will set up a store and private gym. The acquisition suggests long-term commitment to the area.

The street itself is also getting a makeover. In September, the City of Miami Beach kicked off a $30 million project to upgrade sidewalks, add public seating, improve lighting, spruce up the landscaping, and pedestrianize the adjoining Drexel Avenue for better access to the nearly 15-year-old New World Center concert hall. 

On the three blocks closest to the beach, the owners of the adjoining oceanfront hotels, the Ritz-Carlton and Sagamore, will launch a similar project next year. The $12 million plan includes expanding the sidewalks and adding public artwork, with the developers, the city and the state putting up $4 million each. The deal was contingent on the hotel owners receiving approval to add a 15-story condo tower on the Ritz-Carlton property, where two penthouses are on the market for a combined $125 million. 

“I advised that we not look at this as just an isolated project,” said Peter Kanavos, an owner of the Ritz-Carlton and Sagamore hotels. “We had to look at it as part of a community.”

Even as Lincoln Road has stumbled, it hasn’t fallen into ruin. The promenade attracts 11 million visitors a year, according to Stern. Mila, a clubby restaurant that even earned a nod from the prestigious Michelin Guide, made over $49 million in sales last year, making it the second most successful independent restaurant in the country, according to Restaurant Business.

And the street’s location by the ocean in one of Florida’s most desirable towns is still prime real estate. Since the pandemic, luxury developments have cropped up all along Miami Beach’s beachfront, including Stephen Whitkoff’s Shore Club, where a penthouse is under contract for a state record $120 million.

Challenges remain, though. Obtaining permits to build commercial kitchens is notoriously hard across Miami-Dade County, and Miami Beach is no exception. Prince Street Pizza, a popular haunt from New York, will open this month on Lincoln Road, more than a year after the signage went up on its storefront. All’antico Vinaio, the famous sandwich shop from Italy’s Florence, has yet to open, months after its announcement.

Some operators, including high-profile names, have dropped out. Major Food Group had inked a 10,000-square-foot lease to open a Sadelle’s brunch restaurant and grocer, but after two years it pulled out. The group struggled to complete its build-out and secure all the required permits, a source told CO.

Some question whether Lincoln Road will ever make a full recovery. For one, it has more than 60 different property owners, making it difficult to implement a unified vision for the entire corridor. And many of the stores are narrow with small storefronts, making it unappealing for retailers who want to display their goods to passing pedestrians.

Even as pricing comes down, rents may not be cheap enough to lure the types of establishments that once made the promenade so special. Take Sunny’s Steakhouse and the Michelin-starred Boia De, two of Miami’s best and most popular restaurants. Both opened in emerging neighborhoods, Little River and Little Haiti, where rents are affordable. The model has allowed these small, local, independent operators to thrive. Reservations are nearly impossible to snag these days, which is all the more impressive given how many restaurants closed over the summer as tourism cooled from pandemic highs.

“The landlords, who are now taking on the responsibility to bring back Lincoln Road, have to offer creative deals,” Bendersky said. “For a small place, you have to do $3 million, $6 million in sales — and a lot of operators are not doing those types of numbers right now.”

Julia Echikson can be reached a jechikson@commercialobserver.com.