May 14th, 2011
The Miami Herald
SoHo south: That’s the Design District plan
by Elaine Walker and Andres Viglucci
Dacra is buying up more property in the Design District with plans of adding luxury fashion tenants, residences and pedestrian traffic.
Over 17 years, developer Craig Robins has nearly single-handedly turned the once-derelict Design District into a trendy destination for high-end home furnishings, art and dining. The missing piece has been the pedestrian traffic needed to create an energetic, 24-hour urban area.
That's about to change, as Robins launches a repositioning of the area to bring in a new mix of luxury international fashion retailers, boutique hotels and loft apartments. It's all about creating Miami's version of a hip neighborhood akin to New York City's SoHo or Meat Packing District.
A bold move like this isn't cheap. Robins is on a buying spree: $40 million so far this year to acquire 10 more properties. His burgeoning portfolio includes 60 percent of the entire neighborhood and the vast majority of the central core between Northeast First and Second avenues.
"By having us own so much contiguous property, the neighborhood is protected from becoming over-commercialized," said Robins, whose company Dacra was also an early South Beach developer. "We want to build a beautiful neighborhood with diverse architectural structures and businesses, all designed with a strong sense of community and a unique sense of place. We believe if you combine fashion, art and design, everyone's sales will go up."
When the last deals close within the next 60 days, Robins' will own 26 properties in the Design District, representing 700,000 square feet of mixed-use commercial property and 20 acres of land. The acquisitions were made through a combination of cash and financing arrangements with the sellers, Robins said. Some of that cash came from the sale of the remainder of Dacra's Lincoln Road holdings. Robins also has partnered with private investors.
Existing Design District tenants are excited. It's why shoe designer Christian Louboutin, one of the first luxury retailers opened a store in late 2009. Restaurateur Michelle Bernstein has had so much success with Sra. Martinez, which opened two years ago, that last month she opened a new café, Crumb on Parchment. The owner of Luminaire, the contemporary home furnishings retailer that was one of the area's first tenants, recently agreed to double the size of its space.
"We're still a little bit of a cult area," said David Wichner, boutique manager for Louboutin, which has seen its sales steadily increase as customers discover the destination location. "This place could be so much more. It's like a good meal that's missing a lot of spice. It has the potential to be an actual neighborhood like Rodeo Drive, Madison Avenue or the Meat Packing District."
Robins' plans for the Design District got an instant credibility boost in March when Louis Vuitton announced plans to open a store in the area by 2014. Expected to follow Louis Vuitton's lead are at least some — or possibly all — of the other brands owned by parent-company Louis Vuitton Moët Hennessy that currently have stores at the Bal Harbour Shops.
Robins' goal: bring in 20 to 30 luxury retailers over the next five years. He's targeting the industry's biggest names including Cartier, Prada, Chanel, Gucci, Armani, Hermes and all the LVMH brands from Dior to De Beers.
Retail industry experts say they wouldn't bet against Robins.
"Once that dam is broken the waters will rush in," said Arthur Weiner, principal of AWE Talisman, a Coral Gables firm that handles retail leasing. "Retailers have a herd mentality. They like to be with those of like mind and like vision. Miami is way too big to be limited to one luxury retail location."
Already the news of the luxury fashion arrivals is having an impact on the market's real estate. While Robins paid an average of about $300 per square-foot, some recent prices have more than doubled, local brokers said.
"There's certainly been a jump in values since the speculation of a deal with LVMH and Craig Robins," said Tony Cho, president and chief executive of Metro 1 Properties, which specializes in real estate in the Design District and Wynwood. "There's definitely an uptick in activity, some excitement and probably some speculation. It's the LVMH factor built into the price."
It's hard to believe how far the prices have come, since Robins purchased his first buildings in the mid-1990s for $20 per square-foot. Those low acquisition costs on the early purchases, have enabled Robins to take a longer view of his plans for the Design District than many other property owners.
Bernstein remembers when she wanted to open her first restaurant, Michy's, seven years ago and couldn't reach a deal with Robins on rent in the Design District so she had to go farther north.
"He didn't know me, and he didn't want to give me a break," said Bernstein, whose new café Crumb is in a Robins-owned building. "He's had so many opportunities to just rent spaces out to get easy money. He's been very particular about what he's creating. He doesn't want to rush it."
For help drafting his master plan, Robins has turned to Duany Plater-Zyberk and Co., the renowned Miami planning firm that champions traditional urban design. The company also is responsible for the town of Seaside in the Florida Panhandle and Miami 21, the city's new, pedestrian-friendly zoning code. Robins previously worked with DPZ on the plan for Aqua, his traditional-meets-modern residential development on Miami Beach's Allison Island.
Robins has been meeting with city officials for months discussing his vision for the area. Mayor Tomas Regalado is already onboard as a supporter.
"It would connect Midtown and the Design District and then Wynwood would benefit, too," Regalado said. "Midtown is really alive, and I think the Design District could be the same. It's a great project, and I am fully committed. It's great for the city. We are really hoping this will happen."
The owners of Midtown Miami say the Design District plans will only serve to complement—not compete—with what they are doing.
"It will bring more people to the area, and that's a major plus," said Deborah Samuel, director of operations for Midtown Miami. "The Design District and Midtown have really become one neighborhood. Each area will have its own little niche."
Although Robins would have the right to build about 3 million square feet on his Design District holdings, he says he plans to stick with the current scale of the neighborhood.
The area's low scale and continuous storefronts provide a solid framework for a walkable district. Dacra's holdings also include a number of vacant lots and surface parking lots ripe for redevelopment.
With the notable exception of some signature historic buildings like the Moore and the Buick, and recent additions like the neo-traditionalist Oak Plaza buildings, which flank a narrow brick-paved alley, much of the architecture is unremarkable. Many of the smaller buildings are bare, single-story boxes designed as basic showrooms or warehouses, and could easily be replaced or enlarged by going up.
But Robins says he would bulldoze no more than 10 percent of existing buildings, focusing instead on renovation or building on undeveloped land.
The only high-rise building Robins envisions might be an office tower on Biscayne Boulevard, at least several years down the road.
"Our plans will be much more in the spirit of the Art Deco district and less in the spirits of the high-rise structures you see in downtown Miami," Robins said. "That is just not what we do."
At least some area residents in the adjacent Buena Vista East historic neighborhood remain skeptical. They had a running battle for several years with Robins over the allowable heights of new buildings backing onto 42nd Street. After reaching a compromise with the city that would limit heights to three stories bordering their one- and two-story neighborhood, residents were surprised to learn that, at Robins' behest, the city commission was considering increasing those heights to as much as 53 feet, said Wendy Stephan, former president of the neighborhood association. In the end, the heights were raised slightly, to 40 feet.
"I do support residential, as opposed to high-falutin' Christian Louboutin,'' Stephan joked. "We don't want anything towering over homes. We're looking for a little bit of sensitivity on his part. Not that anything they've done has been offensive. Everything they have done hitherto has been reasonable. But the history is not hopeful. He was very angry when things didn't go his way. He's not a good listener."
To foster greater walkability, Robins is considering some pedestrian alleys to split blocks, the way Oak Plaza connects Northeast 39th and 40th streets, said city planning director Francisco Garcia. Dacra is also asking the city to close a narrow, one-block street that connects Oak Plaza's southern end to Northeast 38th Street. The narrow street is lined with Robins properties on both sides.
So far, though, the city is balking at that request.
But Garcia said the city likes Dacra's approach — so much so that he said he has encouraged Robins to bring in other property owners to develop a broad master plan for the entire district — and is awaiting a detailed submission. Because Dacra has amassed so much property, Robins will likely apply for a special area exception under Miami 21 that would allow him to ask for rezoning and some greater design flexibility to, as Garcia said, "enhance the walkability and quality of the district, to widen sidewalks and introduce civic spaces where there aren't any."