TRENDS 1 2 TERRANOVA CONTENTS

Evolution of a Property: 06 FOCUS ON SUNILAND SHOPPING CENTER

Marketing 38 DESTINATION DINING. THE MODERN Trending 12 RISE OF FOOD HALL EXPERIENCE. THE DOUGHNUT

HIGH STREET RETAIL: 21 RIDING THE WAVE -Dade Market Report

TRENDS 3 © 2016 TUMI, INC.

LINCOLN ROAD  305 531 2476 4 TERRANOVA

HOL16_TERRANOVA_TRENDS_MAG_LINCOLN_RD_8.5x11_RHP_LHP.indd 1 10/24/16 12:13 PM With each issue of TRENDS, CHAIRMAN/PUBLISHER we continue to discover the Stephen H. Bittel many niches and nuances that make South ’s retail EXECUTIVE VICE PRESIDENT / EDITOR-IN-CHIEF landscape so unique. From Mindy McIlroy urban high streets and major shopping destinations, to local entrepreneurs and creative business owners, the market is an ever-evolving mosaic that MANAGING EDITOR serves millions of residents and visitors. At Terranova Rebecca DeVille Corporation, we’re proud to share those stories. GRAPHIC DESIGNER As members of this diverse metropolitan community, Michael Dorer we can’t help but be excited about the ongoing growth and new development in South Florida – particularly in Miami-Dade County. New, fresh, original ideas are CONTRIBUTING WRITERS Andrea Speedy bringing more dimension to the retail landscape and Angela Shlyakhov are re-inventing the way we all interact with shopping, Annalisa Damley dining, and entertainment districts. Susan Cumins

EDITOR’S NOTE One such newcomer is the food hall concept. Inspired by the communal markets of Europe featuring artisanal, PUBLISHER quality, and hand-crafted food items and cuisine, eateries (or food Terranova Corporation halls) are quickly making an impression in the U.S. “Destination Dining” on page 12 explores how Terranova is bringing this concept to Miami in one of its most popular new retail hot spots – NoLi (North Lincoln) area of Miami Beach’s . ADVERTISERS 1836 Biscayne Collins Ave Collection This issue also highlights similar up-and-coming developments Copper 29 and changes that are happening throughout Miami’s multiple The Lincoln Eatery high street markets as part of our yearly Retail Market Report. Melissa Shoes There is so much on the horizon for South Miami, Coral Gables, TC ICSC NY , Lincoln Road, and Ocean Drive – with each area Tumi making strides to carve out its own unique experience.

Terranova Corporation 801 Arthur Godfrey Road, Suite 600 Mindy McIlroy Miami Beach, Florida 33140 305.695.8700 [email protected]

TRENDS 5 EVOLUTION OF A PROPERTY:

6 TERRANOVA EVOLUTION OF A PROPERTY:

FocusSUNILAND SHOPPING on CENTER By Susan Cumins

hen Suniland Shopping Center’s value reached an impressive high, the W Terranova Corp. affiliate that had owned it for 22+plus years decided to put the high-visibility Pinecrest property on the market. In May 2016, the 82,000-square-foot shopping center was acquired by a Denver-based REIT, for $66.5 million. Bold investment strategies and judicious management initiatives, supported by superb market timing, resulted in an impressive 33% internal rate of return over the long term for investors. The yield is calculated on cash flow from operations, refinancing proceeds and sales proceeds.

TRENDS 7 Terranova Chairman Stephen H. Bittel grew up not far across a portfolio that includes premiere properties from the high-visibility strip, which was constructed in throughout South Florida. These include retail locations 1955 at 11325 South Dixie Highway (U.S. 1). What was on Miami Beach’s Lincoln Road and on Miracle Mile once a sparsely populated suburb in the southern half in Coral Gables, whose performance places them of Miami-Dade County is now in the heart of Pinecrest, firmly among South Florida’s most lucrative high street a municipality whose residents’ median incomes rank destinations. among the highest in Florida. Long familiar with the property, Bittel recalls going to the Suniland five-and- “We look at where rents can go, and we’ll pay more if dime in the years before Eckerd Drug—which was we think they’ll grow. With the Suniland purchase, we taken over by CVS—moved in. As a teen, he bought thought the rents, then in the high teens, should have his first camera at the center’s former tenant, Phil’s been in the mid-twenties per square foot. So we bought Camera Shop. Community favorites Wagons West and it with the most optimistic assumptions and, with love Pete’s Barber Shop, both among the center’s longest- and attention, we made it happen.” standing businesses, continue to prosper there, a sign of the location’s loyal customer base and landmark RELEVANCE AND VISUAL APPEAL DRIVE VALUE status. Consumers are sometimes disappointed when their favorite retailers depart, but inevitably that is because In 1994, Suniland Associates, Ltd., an affiliate of those stores were not doing well. As tastes change, Terranova Corp., purchased the Suniland Shopping properties evolve and today’s most successful Center’s main section for $9,295,000. In 1996 it community centers are heavy on restaurants, medical acquired the outparcel containing a restaurant now and financial services, and everyday consumer occupied by Flanigans, for $1,121,300. With the 2016 necessities. This trend of shopping centers to evolve sale of the 7.11-acre shopping center, Terranova’s into service-oriented gathering places is clearly investors achieved an annualized internal rate of return reflected in the types of businesses now at Suniland of 33 percent over the investment period, which Bittel Shopping Center, which was approximately 94 percent calculates as returning a remarkable equity multiple leased to 27 tenants at the time of its sale. In addition of 25 times. “While we were sad to say goodbye, we to longstanding local favorites like Pete’s Barber Shop are optimistic that the buyers, a Denver-based private and Wagons West restaurant, the center’s current REIT, will enjoy a future ownership as wonderful as tenants include a U.S. post office and an auto tag ours has been,” said Bittel. agency as well as multiple restaurants, Citibank, SunTrust, CVS, and Nicklaus Children’s Hospital. CONSISTENTLY OPTIMISTIC ATTITUDE “We paid $126 per square foot for the property using Mindy McIlroy, Terranova’s Executive Vice President debt, which seemed high then. And we sold it for and a member of the Terranova team for 19 years, about $811 per square foot, cash.” Bittel noted that his was involved with multiple aspects of Suniland’s two company’s business model has remained consistent decades of growth and value. As part of her focus on

8 TERRANOVA EVOLUTION OF A PROPERTY

happy when rents went to mid-$50s,” noted Bittel. “Some are now almost $100 a square foot, and most are in the $60 to $70 per square foot range.”

NEW OWNERS AFFIRM PINECREST’S VITALITY Pinecrest’s attractiveness and prosperity have burgeoned as well. Set between downtown Miami and suburban Miami-Dade neighborhoods to the south and west, Suniland Shopping Center on U.S.1 is a 90,000- to 100,000-car-a-day street. It serves the strongest trade area in the market, as well as consumers who come from as far away as the Florida Keys, Homestead, and Palmetto Bay. It was already thriving in the 1990s when Terranova acquired the property. In those days, office workers from produced a steady stream of daytime weekday traffic, adding their business to that of neighborhood residents who patronized the restaurants and businesses on evenings marketing and retail leasing, she made certain that and weekends. the center’s tenant mix was always in sync with the constantly changing retail landscape. Suniland’s strategic South Dixie Highway location has always been a vital center of activity in a prosperous McIlroy led the design initiative when, in 2006, the community. Incorporated in 1996 as the Village of center underwent major exterior renovations. She Pinecrest, the municipality’s residents have significant worked with local architects to transform the dated purchasing power and are close to major employment facades with their barrel tile trim to the elegantly centers including the and major upgraded look that now defines the shopping center. healthcare providers. In terms of the Greater Miami Today’s stylish Caribbean-inflected exterior features area, Pinecrest has a higher concentration of residents durable standing-seam metal roofs, bright under- who hold white-collar jobs. A high percentage of them canopy lighting, tiled walkways, and stately royal palms work in fields of information, finance and insurance, in the landscaping. The style reflects the prosperous health care, and professional services, according to the Pinecrest community’s aesthetics and keeps the municipality’s website. Forty seven percent of Pinecrest consumers coming. “Our goal at every property is residents earn more than $100,000 and housing values always to help tenants grow sales. To support that, and residential occupancy in the 91,312-population we added landscaping and changed the signage. village are enormous. Every year we found ways to upgrade the center’s appearance,” said McIlroy. “This improved the quality of For the 22-plus years that Terranova’s group owned the tenants and kept pace with the center’s consistent Suniland Shopping Center, they worked closely with success.” community members who went on to become the Village of Pinecrest’s leadership. When the municipality Rents are a function of sales, and the Terranova team was incorporated in May 1997, it leased space in knew the potential was there if they continually made Suniland for the village hall, police station, and offices. the shopping center more attractive. “We were really “Suniland always has been and will continue to be the

TRENDS 9 EVOLUTION OF A PROPERTY

heart of the Village of “We thought 2015-2016 was Pinecrest,” Bittel noted. “Suniland always has been a good time to harvest the “When we leased the asset’s gains. The center was second floor to them and will continue to be highly occupied; we were in 1997, Suniland went the heart of the Village of Pinecrest.” welcoming the third major from being the figurative tenant, Nicklaus Children’s center of Pinecrest to -Stephen H. Bittel, Chairman Terranova Corp. Hospital, to the second floor. being its literal center.” ( WCI Realty and the Village The Village’s operations of Pinecrest had occupied continued there until late 2004 when Pinecrest officials it before.) So we brought in Mark Gilbert of Cushman moved into their own custom-built municipal center. and Wakefield to market it and we were exceptionally pleased with his work,” Bittel noted. Terranova’s principals believe that serving the community is essential to their firm’s success, and they After examining multiple offers, Terranova narrowed participate in a range of neighborhood programs that the field to three groups, all of which they found to benefit local schools and organizations in every area be very well qualified. “We went back to one of those where they invest. For example, when the Village of potential buyers with some conditions, and closed Pinecrest was a tenant, it transferred an adjacent city- the deal. We are so proud to have grown the value owned alley to the property owner so that right of way of Suniland throughout our holding, and could not be would be upgraded and maintained at the same high more pleased.” level as the rest of the shopping center. The change also resulted in additional parking at the rear of the Bittel acknowledges that a success story like the buildings, a benefit to all who used the property. Suniland transaction is the result of being not only smart, but also very lucky, and hitting the timing DECIDING WHEN TO HARVEST GAINS just right. Constantly looking forward, Terranova’s “We were very lucky in our ability to access the debt acquisition team is evaluating opportunities daily to market when rates were low,” said Bittel. “We bought redeploy capital, drawing upon its team’s extraordinary it with a loan from American Savings, which became depth of market knowledge, enviable financial strength, First Union; next we obtained a loan from Nomura, and dynamic flair for clear-eyed optimism. a Japanese bank. We refinanced again with State Farm Insurance, then with PNC, and we always made distributions capital. Each time we refinanced, our rates fell. They went from 10 percent to 7 percent to 5 percent to 3.5 percent."

10 TERRANOVA TRENDS 11 12 TERRANOVA DESTINATION THE MODERN FOOD HALL EXPERIENCE. By Andrea Speedy & Annalisa Damley Dining

t wasn’t long ago – less than 20 years in fact – that the American I Food Court was the centerpiece of retail-oriented dining. Built for speed, these low-maintenance communal spaces were aimed at getting shoppers quickly back out into stores, and thus attracted quick-service, low-margin restaurants to keep malls moving at the speed of retail.

TRENDS 13 DESTINATION DINING

Look around today, however, and you’ll see both food Where retail-oriented dining used to be about efficiency, courts and mega malls with less traffic. There are a few this latest generation has made it all about creativity more guests at stand-alone restaurants just outside the and uniqueness. Just as food trucks proved that a mall, and large casual dining restaurants built into the limited menu of locally sourced, innovatively driven mall, but nothing compared to the packed, barely-any- cuisine could capture a huge audience, savvy culinary available seating crowds of just a decade ago. People minds are realizing that variety is indeed the spice of haven’t stopped eating… or shopping… so where has life... and that food halls are the most direct route to everyone gone? making it sellable.

“The answer is back to high streets… and to food At its purest, the food hall concept isn’t earth-shattering. halls. Along America’s metropolitan high streets, For the past century, or more, collective eating places independent, culturally diverse, quality cuisine with multiple vendors hawking local fare in centralized concepts are popping up left and right,” says Stephen markets have been mainstays in Europe and Asia. Bittel, Chairman for Terranova Corporation. “They’re From steaming bowls of noodles in Singapore to recognizing guests’ desire to enjoy dining as its own tapas, ham and olives in Madrid's Mercado de San destination, and it’s up to us as developers to make Miguel to London's famed Harrods Food Hall and the sure we’re responding to their needs.” longstanding family-run stalls offering everything from mince pies to Turkish delight, the appeal of having a

14 TERRANOVA DESTINATION DINING

huge quantity of quality dining choices is centuries Shopping, especially in department stores, is no old. So it only makes sense that American cities would longer the single apex of consumer experience. As catch on. The resurgence of intown neighborhoods with the foodie culture continues to thrive, developers are an increasingly affluent demographic; the food truck integrating food halls into new builds and mixed-use boom which demonstrated people's enthusiasm for projects. One such example of this is taking place in creative and gourmet eats; and the weekend farmers' South Florida. On Miami Beach's up-and-coming NoLi markets which have made healthy, local produce (North of Lincoln) district, in the Lincoln Road shopping accessible in urban areas are all driving the demand and entertainment area, Terranova Corporation is for food halls. Local chefs, gastronomic artisans, constructing a premier, flagship building which will butchers, bakers, chocolatiers, and even established house the beach's first food hall – The Lincoln Road restaurant brands are all clamoring to be a part of it. Eatery. From the exterior, the food hall is the focal point, visually appealing and conveniently located at FROM CHOW TO CHOICE – A CULINARY REVOLUTION street level to capture passing foot traffic. It activates Modern shoppers have sophisticated palates and the entire block. expect loftier gustatory experiences. This makes monetary sense as food service is the second-most- “Lincoln Road is – and has always been – very much lucrative segment of non-anchor tenants, according to an epicenter of shopping, dining, and entertainment ICSC's (International Council of Shopping) numbers. on ,” says Vanessa Francis, Commercial

TRENDS 15 DESTINATION DINING

Leasing Associate with Terranova. “However, the South Beach – but it’s an even bigger coup for the current culinary landscape on Lincoln Road is mostly upcoming Lincoln Road Eatery. Buzzy Sklar, the CEO made up of full-service restaurants, leaving an and Founder of Sliderz explains. “There is nothing opportunity for fast-casual dining options and prices offering this kind of convenience and quality on Lincoln that are affordable on a daily basis by the working and Road,” he begins. “The real estate is too expensive to residential population of the area. The Eatery not only sustain a budget-conscious, family-friendly concept answers this, but also becomes a dining destination in like Sliderz right on Lincoln Road. What Terranova is one of South Beach’s most up-and-coming new retail building at the Eatery and for all of Lincoln Lane is a hot spots, complete with a variety of dining options concept that’s ahead of the curve. We plan to make it as modern and eclectic as the beach itself.” Francis’s our flagship Sliderz location” Sklar goes on to mention insights underscore that the diversity offered by the need for menus food halls is a key motivator that match all tastes for consumers in that it offers and budgets… and this “Lincoln Road is – and has always been everyone the chance to eat applies to vendors and – very much an epicenter of shopping, what they prefer – rather than restaurateurs as much settle for one style or type of as it does to consumers. dining, and entertainment on South Beach” cuisine. -Vanessa Francis, Commercial Leasing Associate, Terranova Corp. For restaurants, food Sklar’s experience is in halls are a relatively low- keeping with the growth of risk venture with fewer Miami as a foodie destination start-up costs compared to a stand-alone restaurant, where residents and visitors are increasingly calling hence their popularity. Vendors can share the cost for locally produced, artisanal fare as well as specialty of rent, utilities and maintenance. This attracts both dining and quality fresh food market options. The established and emerging talent. Take for example Lincoln Road Eatery is already lining up an impressive Sliderz – one of the new tenants slated for the Lincoln scope of vendors, full-service restaurants which Road Eatery. Their made-to-order modestly portioned showcase the talents and creativity of local chefs and burger and sandwich concept hits all the right buttons food purveyors with a commitment to quality and time- for South Florida foodies. Sliderz uses grass-fed honored techniques. Together, diners will be invited hormone-free meats; antibiotic-free, free-range poultry; to embark on a culinary journey that celebrates the line-caught fish; includes vegan and vegetarian very best of Miami’s regional flavors and ingredients, options; has a chic contemporary vibe; and can give innovative cuisine shaped by the city’s multicultural guests a satisfying meal experience right around a diversity, its edginess and its cosmopolitan modernity. $10-per-person price point. Clearly, The Lincoln Road Eatery and other food it’s a winner for halls to come will also

16 TERRANOVA benefit tourists and help support the retail market by extending shoppers’ length of stay in the area.

Mindy McIlroy, Executive Vice President at Terranova believes it is this symbiosis that is redefining the future of retail and retail dining. “If you look at Lincoln Road, , Miracle Mile, Ocean Drive, Collins Avenue, and any of South Florida’s high streets, you’ll see they’re at or reaching capacity. It becomes our responsibility as developers to think of how to best add to these destinations without taking away the inherent character that draws people there in the first place,” she says. “There’s a delicate balance we try to achieve in creating new experiences and new spaces that are interesting and exciting to consumers, but that also offer value and a chance at success for shops, restaurants, and other retail partners. One doesn’t work without the other.”

Even long-time retailers in the area have noticed a growing sub-market just steps from the actual Lincoln Road thoroughfare. Sean Donaldson Hair – the Miami boutique salon outpost of the British-born celebrity stylist, has seen a transformation taking place in their corner of Meridian Avenue near Lincoln Road. “This little pocket of space has become a very in-demand area recently,” said Donaldson’s business partner. “What used to be little cafés and boutiques are now brand-new spots for top brands. We’ve watched it change around us and we like what we’re seeing so far.”

The spread of Lincoln Road retail into the NoLi district was inevitable. Residential property to the south of Lincoln has always stood as one edge of any possible expansion. Vertical development came next, but with those projects mostly well underway, it is NoLi that holds the most future potential. “There are a lot of hard limits in place when you’re dealing with an actual Lincoln Road address,” explains Josh Gelfman, year-round foot traffic. However, the middle market is Director of Development with Terranova. “Sometimes a key component of the retail mix, and NoLi is poised it’s historical preservation. Other times, it involves to include it from a fashion, entertainment, and food the amount of space needed for safe construction. & beverage aspect. The Lincoln Road Eatery is case The higher you go, the greater the need becomes in point – affordable everyday eats that energize and for cranes and heavy equipment that the area simply enrich the overall retail experience. cannot accommodate. Then you also have to consider the price of Lincoln Road property – a time-consuming Bittel agrees. “The Lincoln Road Eatery is just one renovation or rebuild is many consecutive months element of NoLi’s future,” he states. “We’ve seen retail that a property isn’t creating revenue. Many of these moving to this area for some time now as spillover from restrictions are eliminated or significantly eased by Lincoln Road. With that influx of consumers comes simply going half a block north.” Gelfman’s point also a need for smart, experience-based dining that is illustrates the financial motives behind Lincoln Road’s in-step with the flavor of South Beach. Whether you’re increasingly up-scale shift. Mass market and discount a traveler, local resident, or someone who works in retailers often lack the margins to compensate for this area, the Lincoln Road Eatery – and food halls in pricey lease rates, while luxury brands occupy a much general will be essential retail destinations.” more favorable position, especially with such high

TRENDS 17 18 TERRANOVA TRENDS 19 20 TERRANOVA HIGH STREET RIDING THE WAVE MIAMI-DADE URBAN STREET REPORT 2016

By Andrea Speedy

FRESH OFF ONE OF THE BUSIEST AND LARGEST NEW DEVELOPMENT CYCLES THE AREA HAS EVER SEEN, METROPOLITAN MIAMI-DADE IS CONTINUING TO THRIVE WHILE MANY OTHER URBAN MARKETS ARE SLOWING DOWN. EVEN AS RESIDENTIAL SALES ARE LEVELING OFF, MIAMI’S RETAIL COMPONENT IS STRONG, GROWING, AND PUSHING TO RESPOND TO EVER-INCREASING DEMAND FOR HIGH-STREET LOCATIONS IN THE CITY’S MOST POPULAR NEIGHBORHOODS.

TRENDS 21 RETAIL REPORT

A recent developer’s symposium held near the an outdoor pedestrian shopping destination was a beginning of Q3 2016 revealed that overall retail concept ahead of its time. Over the years it has become vacancy in Miami is at an impressively low 3.1%. By “the” space for consumer brands to set up flagship comparison, Manhattan averages a vacancy rate of locations in one of the city’s hottest retail districts. Most nearly 3.7% with retail rents that can be more than recently, this demand has led to new construction and triple Miami’s prices. Throughout the greater Miami expansion of existing buildings along Lincoln Road, as area, rental rates average between $150 and $300 per well as a renewed focus on the NoLi (North Lincoln) square foot for top retail high streets such as Lincoln district adjacent to the main thoroughfare that boasts Road, Collins Avenue, and Ocean Drive on Miami better vehicle access and more space than traditional Beach; Sunset Drive in South Miami; and Miracle Mile storefronts. in Coral Gables, and they’re expected to continue to fetch premium rates for years to come. Likewise, South Miami has shaken off its reputation as a sleepy little suburb and has become an epicenter A RETURN TO URBAN LIFESTYLES for new boutique fashion, home goods, local bistro A key element driving the performance of Miami’s dining, upscale nightlife, and forward-thinking food- high streets has been a decades-long shift in and-beverage concepts. Sunset Drive is bustling and residential development towards connected city- vibrant, with a steady stream of business fueled by centric living. More and more of Miami’s residents are local patrons and less reliance on tourism than other choosing to live near business, shopping, dining, and parts of Miami. entertainment districts that are minutes from home, as opposed to a long drive away in heavy traffic. Similarly, Even “traditional” Coral Gables is evolving to become office workers are seeking to maximize lunch-hour more city-centric with a reinvention of Miracle Mile breaks and have the ability to run errands or meet designed to answer the call for increased dining, with colleagues after work – all without worrying about entertainment, and shopping options within one of parking or driving. Miami’s key high streets are among the densest downtown districts in all of Miami. With the most established, centralized destinations within more than 1.5 million square feet of office space either their respective areas – and are therefore poised to approved for, or already in development within the city deliver on market demand. As new residential projects of Coral Gables, Miracle Mile will be called upon like continue to come online over the next few years, the never before to answer a huge demand for goods and role of high street retail will become an even more services… and the high street is ahead of pace to essential part of the daily lifestyle experience. welcome the surge.

This trend has already been evident over the past few MOVING AWAY FROM MALLS decades along Lincoln Road on Miami Beach. The Paralleling the re-urbanization of Miami is a nationwide 1990s redevelopment of the neglected district into trend away from the traditional shopping mall concept

Vacancy Rate Avg. Asking Rent Submarket 2015 2016 2015 2016

12.23% 12.49% Lincoln Road $346.23 $344.12

5.61% 2.45% Ocean Drive $175.00 $175.00

23.19% 14.76% Collins Avenue $137.08 $149.56

5.54% 5.82% Miracle Mile $57.37 $59.10

1.2% 1.2% Sunset Drive $70.00 $72.83

22 TERRANOVA that once dominated the retail landscape. Nearly all the elimination of rarely-used band shells and raised retailers except department-store anchors are finding garden beds will accommodate more guests – which that high streets not only meet their needs in terms is key as retailers continue to draw and attract new of space and amenities, but also deliver better foot- traffic. traffic and street views than within-the-mall locations. Shopping centers that have been able to integrate a Just north of Lincoln Road, on Lincoln Lane, a new pedestrian-friendly concept have managed to slow 42,000-square-foot retail destination is currently under attrition somewhat, but are still struggling with how to development by Terranova that will re-energize the reinvent food courts, deliver entertainment options, prime property that lies just footsteps from the New and enrich guest experiences without a sizeable or World Symphony park and exhibition space, Atlantic complete redevelopment. Beach Sands, five-star Collins Avenue hotels, and See What’s Replacing Food Courts on Page 12 the Jackie Gleason Center for the Performing Arts. A smart design will feature indoor space, but with a Miami is no stranger to this challenge. However, as more engaging marketplace atmosphere, also a far popular malls scramble to respond to consumer cry from traditional retail malls of the past. As well, the behavior, high streets are not only thriving, they’re property will answering consumer demand for larger taking ownership of what the future retail landscape value-oriented retail with Marshalls already signed may be. Free from the unwieldy size and scope of on as a key tenant and more variety for casual dining shopping malls, high streets are more nimble, and can options – featuring Miami’s first food-hall concept. This make incremental adjustments to achieve considerable new non-mall thinking is poised to make the space the gains. Take for example the redevelopment plans for landmark of NoLi (North Lincoln), an area that has Lincoln Road and Miracle Mile – which will improve been ripe for redevelopment for decades. the outdoor experience and add alfresco dining space, gathering spots, and enhanced flow of pedestrian Terranova is also rethinking the actual Lincoln Road traffic. Lincoln Road will be adding more central walking landscape with a concept on 801 Lincoln Road that will and travel space, thus easing the compact outdoor move dining skyward to a third-floor rooftop position. dining scene typical along the popular thoroughfare. With both indoor and outdoor seating, guests here will Integrated public seating, better shade structures, and have arguably some of the best views on South Beach.

TRENDS 23 Retailers will receive the benefit of a steady stream of a traditional shopping mall. Streetscape projects of foot traffic passing by ground-floor retailers while like those on Miracle Mile and Lincoln Road can be going to and from the restaurant. executed in well-planned phases that need not require closures by retailers – again, very unlike a pedestrian Likewise, Miracle Mile is seeking to return to its high traffic redesign of a conventional shopping mall. Even street roots, but with a fresh contemporary approach. in the case that a shopping mall would willingly close As dining and entertainment have become more an entire wing to address such concerns through prevalent on the mile, there has been an increased heavy construction, the finished result would still be need for broader sidewalks and more ample space unlikely to offer major roadway frontage due to the for outdoor dining and events. The streetscape project nature of shopping mall parking lots. The future of high currently underway in the area will more than double streets not only shows them embracing their positions, the size of sidewalk and pedestrian space, add better but also using their size and street presence to their lighting, offer less exposure to automobile exhaust, advantages. and relocate parking to new, more centralized garages rather than directly in front of shops and restaurants. In THE CURRENT SCENE ON THE STREETS doing so, retailers will gain better street-level visibility Across the board – Miami’s high streets are and exposure, add flexible outdoor space for dining or strong retail markets – even in the face of current exhibitions, and increase length of stay and spending redevelopment projects and neighboring construction. opportunities among guests who frequent the area. South Miami’s Sunset Drive, for example, stands at just 1.19% vacancy with average retail rents around Because the projects are located along high streets $70 per square foot. Likewise, Miracle Mile in Coral as opposed to within shopping malls, renovation can Gables is at only 5.82% vacancy with $60 per square be contained to only those areas impacted by the foot average rents while in the midst of the streetscape design. For instance, on Lincoln Road, where many and sidewalk improvement project approved by its retailers are choosing to go vertical, they may do so BID last year. Lincoln Road and Collins Avenue are with just a single building, rather than an entire wing also over-achieving despite active redevelopment and construction projects. Vacancies on Lincoln Road are at 12.49% with average retail rents averaging $344 per square foot – among the highest in Miami. Collins Avenue vacancies are lower than 2015 at 14.76% with rental rates at nearly $150 per square foot. Ocean Drive, which stays in high demand year after year does so again in 2016 with only 2.45% vacancy and rents at $175 per square foot.

WHAT’S AHEAD DOWN THE RETAIL ROAD? Miami’s high streets are strong, getting stronger, and have yet to reach their full potential. Consumer behaviors and tourism point towards exciting things on the horizon for these established retail hot spots, especially as they come into their own as destinations in and of themselves. Centralized locations, excellent accessibility, and forward-thinking approaches to new development and redevelopment are drawing both local residents and visitors into the high streets like never before. Improved public transportation options such as trolleys, ride sharing through Uber, and a move towards city-centric living will maintain this trend for years to come.

24 TERRANOVA TRENDS 25 26 TERRANOVA RETAIL REPORT

NOTABLE DEMOGRAPHICS SUNSET DRIVE South Miami is a neighborhood valued greatly for its Miami’s latest “it” destination is winning with retail schools, both public and private, and its neighborhood vacancies at all-time lows. The area is so in demand lifestyle – for which the South Miami high streets are that businesses are pushing further south along 73rd delivering in a big way for its residents and homeowners. Street, and down along 58th Avenue and 59th Avenue The smart mix of boutique retail, entertainment, as new space becomes available in parking structures dining, and more is well balanced for the demographic and office buildings. Future projections only show more market, which is fairly evenly spread across the consumer activity coming to the area, with an expected household income spectrum. The median listing 1,000 to 2,000 new residents for South Miami over the price in the 33143 zip code that encompasses most next five years, and an influx of 150,000 residents to of South Miami is $380,000, with many single-family the entire Miami-Dade metro area over the same time homes priced at $600,000 or above. Approximately period. 43.4% of the market owns homes valued between $400,000 and $749,999 with another 26.7% owning REDEVELOPMENTS, ADDITIONS, RENOVATIONS homes valued between $250,000 and $399,999. • Sunset Place shopping center is planning a massive redevelopment of its 10-acre space. SUNSET DRIVE SPOTLIGHT – Current plans would include new residential mid- REDEVELOPMENT OF SUNSET PLACE rise construction on the property’s north end on Purchased last year, the 500,000-square-foot outdoor the corner of US1 and . Retail along Red mall on the corner of Sunset Drive and Red Road Road and Sunset Drive would be re-imagined with is actively working towards a complete re-position. more street frontage. Early plans being proposed include knocking down • The Crossroads (5700-5734 Sunset Drive) is in the northeast section of the mall and adding two the process upgraded awnings, new paint, and apartment buildings with 400 units, a 200-room hotel, lighting for signage and sidewalks and ground-floor retail that could be accessed by both.

• New tenants along Sunset Drive include Dr. Smood Renderings provided as part of the planning phase Restaurant, Temple Restaurant, Smooshies, also show new street-facing storefronts along both Razzle Dazzle Barbershop, Elephantito Baby & Red Road and Sunset Drive, with interior retail space Child, Isabel Tavarez Boutique, J McLaughlin, to maintain the pedestrian-and-courtyard concept, but Janette & Co., Il Vaporetto, Arango Design Store, with a refreshed design sensibility. The AMC movie- and 5 Station Table & Bar theatre anchor would likely stay in place, though it is • Mellow Mushroom added to Sunset Place frontage possible that the brand may also take advantage of on Sunset Drive construction to renew or reinvent its product offering to be more in line with the new cinema-café experience • Lululemon retains Sunset Drive space but that’s rapidly gaining ground in South Florida. converts to Iviva brand (children’s activewear by same parent brand) • Frontgate Home Furnishings Outlet Pop-Up occupies Red Road/U.S. 1 corner space at Sunset Place • Jimmy Johns comes to Red Road frontage of Sunset Place (previously underutilized as back- window space only) • Brother Jimmy’s BBQ Space at Sunset Place along Sunset Drive to introduce new restaurant concept by same owners

TENANT MOVES • Marhaba Restaurant moved from 102 Sunset to 5861 Sunset • Peace Love World relocated from 5818 Sunset to just next door at 5820

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• Gables Bridal moved off Miracle Mile to new space MIRACLE MILE east of In the heart of The City Beautiful, Miracle Mile is on the cusp of what is likely to be the most prosperous NOTABLE DEMOGRAPHICS era in its history. The $20 million streetscape project In an area that measures just under four square miles, to expand sidewalks, improve pedestrian atmosphere, the downtown Coral Gables area is home to more and create a more engaging outdoor environment is than 200 major U.S., European, and Latin American well underway – and is slated for completion ahead companies – many of whom are headquartered in this of numerous projects that will be bringing more than part of the city. Close to 400,000 professionals work 1.5 million square feet of new office space to the within Coral Gables, which is a sizeable portion of area. With that space, comes more people, office the entire employed workforce of more than 1 million tenants and workers who will expect to be able to find persons for Miami-Dade County. So it’s unsurprising dining options, technology services, and shopping all that the existing 10.8 million square feet of office space steps from their places of business. Likewise, nearby in Coral Gables will not be enough to sustain future residential development will bring new residents who demand, which is a main reason the city commission will turn to the already-established presence of stores, has been quick to approve the influx of additional office restaurants, and businesses located on “the Mile.” and retail square footage currently under development.

REDEVELOPMENTS, ADDITIONS, RENOVATIONS The aim is to attract more customers to the mile for • The southwest corner of Miracle Mile nearest longer stays and potentially more spending. With Le Juene Road is under construction for the nearly 25% of Coral Gables households averaging streetscape project. Sidewalk access is reduced, incomes of $200,000+, it certainly makes sense to though pedestrian crossings across Miracle Mile try and keep their spendable income within the city. remain open. Businesses are also open during Owner Occupied Housing Values in Coral Gables also this time and visible signage is redirecting traffic to supports a push towards a more robust retail and nearby parking at reduced rates. entertainment district, with 22.8% of homes valued • Copper Twentynine, Oroa Eichholtz Furniture, at $500,000 to $749,000; 16.3% of homes valued at I. Designs, Brugen’s Art Gallery, Bloom Jewelry, $750,000 to $999,999; and a staggering 33.2% of Haagen Daaz, My Ceviche, Giola Gelato, Pita n' homes valued at more than $1 million. Schwarma, 411 Empanadas, Moray's Jewlers, Strato Appliances, Crema Gourmet, Loui Friendly Food, Pool Lab, Trouville Pizza, and Shoes by Jay Marcus among newcomers to Miracle Mile • Ross Dress for Less expanding by 8,000 square feet on corner of Miracle Mile and Douglas Road CORAL GABLES SPOTLIGHT – (37th Avenue) MEDITERRANEAN VILLAGE The years ahead will see the building and construction TENANT MOVES of the largest development in Coral Gables’ history • I & A Tuxedos moved from 336 Miracle Mile to 252 – Mediterranean Village, just a few blocks south of Miracle Mile Miracle Mile on Ponce de Leon Boulevard. Approved in summer 2015, the 6.74-acre site is supposed to include • Gables Coin moved from 322 Miracle Mile to 82 300,000 square feet of retail and restaurant space; Miracle Mile 300,000 square feet of office space; a 184-room hotel; • Bloom moved into the former Stanleigh’s space at 230 residential units; a 2-story underground garage; 290 Miracle Mile and various surrounding streetscapes and green spaces along the property’s borders. The developers • Spy World relocated to 96 Miracle Mile abandoned earlier plans to include a movie theatre and • The popular La Provencal restaurant moved child-care space, and also agreed to move the main towards a more central new location at 266 Miracle entry ways and egress off of Ponce de Leon Boulevard. Mile Construction is expected to take 36 months to complete, though little disruption is expected to typical downtown • Radio Shack permanently closed its Coral Gables Coral Gables traffic or daily operations. Once finished, location (as company continues to shrink) Miracle Mile’s already established retail component will be well positioned to capture traffic from residents and office workers alike, with the Miracle Mile streetscape project expected to be complete years prior. 28 TERRANOVA TRENDS 29 RETAIL REPORT

• The new two-story, 14,000+-square-foot Nike Store LINCOLN ROAD with rooftop basketball court is making significant The Miami Beach retail scene has long been defined construction progress. The outer shell is nearly by high-street shopping, partly because of the island complete and installation of a metal mesh façade city’s small geographic footprint, but also because with wind sensors and LED lights is expected to of the high costs of real estate in the area. For the begin soon past few decades, Lincoln Road has been the premier high street on Miami Beach, so much so that it is a • A new Sephora will be moving into the former destination unto itself… and it shows no signs of Britto Gallery space near the corner of Lincoln slowing down. Rents have remained at a market- Road and Meridian Avenue leading average of $345 per square foot over the • Sugar Factory, Pandora Jewelry, and Beach Bunny past two years. Vacancies have stayed near 12.5%, Swimwear also join the list of new retailers along though this number also includes vacancies due to Lincoln Road redevelopment and current construction. As new storefronts come back online, vacancies are likely to • Streetscape improvement projects throughout return to previous levels below 10%. Lincoln Road are continuing in phases

REDEVELOPMENTS, ADDITIONS, RENOVATIONS TENANT MOVES • North Lincoln (No-Li) spaces adjacent to Lincoln • The Britto Gallery has relocated from its long-time Road, along 17th Street have been steadily spot near Meridian Avenue to a new, soon-to-open attracting new tenants such as Shake Shack, Yard location closer to Alton Road House, BDry Blow Dry Bar, and Suit Supply • French Connection (FCUK) moved closer to the • A New 42,000-square-foot retail concept on Lincoln beach to 643 Lincoln Road Lane will feature Marshall’s, and an upcoming • Bebe ladies fashions took over the prominent highly-anticipated Food Hall concept 8,000-square-foot corner location at 900 Lincoln • 801 Lincoln Road is being renovated to keep its Road (formerly Pasha’s restaurant) historic front façade, but then expanding to N. • Steve Madden will be relocating to the 400 Block Lincoln Lane with Anthropologie and upward, of Lincoln Road from the 800 block offering a unique third-floor rooftop restaurant that will offer a birds-eye view of Lincoln Road • Aldo Accessories will also be relocating from the 800 block – to 637 Lincoln Road

30 TERRANOVA • Alchemist clothing relocated to from its former address at 438 Lincoln

NOTABLE DEMOGRAPHICS Overall, the retail mix along Lincoln Road is trending more up-scale, designer, and high-end. Discount brands and value shops are quickly being moved to adjacent streets as recognized international labels and specialty boutiques grab up expensive storefronts. Supporting the upward shift are strong wages by locals and a thriving year-round tourism scene. Miami Beach residents have a higher-than-typical average income of $73,573 per household, and more than 8.2% of households have an annual income of $200,000 or more. Add to that nearly 1.4 million residents in the surrounding Miami-Dade county area with an average household incomes of $62,852; and nearly 1.9 million residents in neighboring Broward County with median household incomes of $63,300. These are shoppers and patrons not usually included in tourist expenditures or overnight visitation, but still contribute greatly to the year-round market strength of Miami Beach high street districts. Of the 15 million annual tourists to the greater Miami area, Miami Beach captures approximately 48% of the audience – 56% of whom make it a point to experience the energy and vibrant retail scene of Lincoln Road.

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32 TERRANOVA RETAIL REPORT

COLLINS AVENUE REDEVELOPMENTS, ADDITIONS, RENOVATIONS As one of Miami Beach’s most notable high streets, • A huge 10,000-square-foot build out is underway Collins Avenue has long been an area of reinvention for H&M at 763 Collins and evolution. The 1-mile stretch of roadway between 5th Street and Espanola Way marks the “prime” • Other new tenants include Planet Blue Boutique at position along this historic roadway that follows the 852 Collins and bdba at 656 Collins entire South Florida coastline. With that spotlight • 825-827 Collins Avenue is under construction comes competition, and with competition comes with a new retail concept expected to debut in the various renovations and redevelopments as property upcoming year owners and tenants alike both seek new, more lucrative opportunities. Such was the case for Collins Avenue in • 852 Collins Avenue is being redeveloped from a 2015, when many buildings were under construction. purely residential property to a mixed-use building Vacancies peaked at a high of 23.19% during this time, that combines residential and approximate 4,200 but have since nearly reduced by half to just 14.76% square feet of ground-floor retail space with some renovation projects still not quite complete. • 900 and 910 Collins are both also being renovated with plans towards including more ground-floor retail storefronts and/or restaurant space

TENANT MOVES • Many retailers displaced by development and new construction on Lincoln Road have found new positions along Collins Avenue. These include Surf Style, Fit 2 Run, and True Religion • MAC Cosmetics moved across the street to 673-A Collins

NOTABLE DEMOGRAPHICS Part of what makes the Collins Avenue retail landscape so unique is that it is also home to both significant residential and hotel properties. Often, street-level retail is located at the base of such buildings which offers a steady stream of foot traffic. Like other Miami Beach destinations, Collins Avenue has a strong local market at its base, with annual household incomes largely between $73,573 and $200,000. The median age of 40 is also favorable, with high-earning locals still in their prime and enjoying spending outside the home. Tourism numbers are favorable here in the heart of South Beach as well – guests typically stay for 6 nights. This positions Collins Avenue as the most conveniently located destination for beach goers to obtain various retail items or enjoy a casual bite to eat.

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OCEAN DRIVE The legendary strip of Art-Deco hotels and beach- facing restaurants and shops continues to be one of Miami Beach’s most in-demand places for visitors and retailers alike. Few other high streets in South Florida offer the same direct Atlantic Ocean views and none can offer the eclectic historic character and nightlife for which Ocean Drive is known worldwide. As such, retailers fortunate enough to secure a space on Ocean Drive tend to stay as long as possible, making it a very stable and predictable market year after year. Further, historic preservation typically limits huge renovation and expansion projects, which serves to further solidify the retail landscape.

REDEVELOPMENTS, ADDITIONS, RENOVATIONS • A sizable portion of the very few vacancies on Ocean Drive can be attributed to construction on the 600 block of Ocean Drive. A new 135-room boutique hotel is expected to come online in early 2017 with three new restaurants totaling 8,100 square feet as part of its retail offering • The Cardozo Hotel at 1300 Ocean Drive is also nearing completion on renovations – and should reopen its ground-floor restaurant and retail space by the end of 2016 or beginning of 2017

NOTABLE DEMOGRAPHICS Because the Ocean Drive retail mix is almost completely driven by hotel and visitor traffic (as opposed to residents) the strength of the Miami Beach tourism market indicates continued success for Ocean Drive. Miami Beach traveling parties typically consist of 2 to 3 guests, who each spend approximately $1,300 per day on lodging, restaurants, shopping, and entertainment. 2015 proved to be the most active year on record for travel to Miami and the Beaches (2016 data has yet to be compiled), with an uptick of 6.4% over 2014. This year is anticipated to turn in a similar performance which would mean more than 15 million visitors will have come to the greater Miami area – and close to half of those will either stay on Miami Beach or visit Ocean Drive.

34 TERRANOVA TRENDS 35 36 TERRANOVA TRENDS 37 TRENDING

rise of the

DOUGHNUTBy Angela Shlyakhov

s far as desserts go, sugar makes us all a wee bit crazy. First A came the cupcake craze, then the frozen yogurt craze, then the cronut craze and now... it's the old stand-by glamorously revamped with fancy names... it's the 2016 decadent DOUGHNUT or DONUT craze and the retailers could not be any happier.

Donuts have had a recent glamorous makeover and The first donut machine did not come along until 1920, are now attracting even more customers but they in New York City, when Adolph Levitt, an enterprising are not just appealing to our men and women in refugee from czarist Russia, began selling fried donuts blue anymore and the old stereotypes of the typical from his bakery. Starved theater crowds pushed Levitt donut muncher. Now they are highly sought after by to make a gadget that churned out the tasty rings glamourous divas and fashionable men who partake faster, and he did. Thankfully, today, we no longer have in their delights and bring them as fancy house gifts to starve for donuts. These craft and artisanal donut for dinner parties as desserts and delightfully display shoppes are expanding and hanging up signs right in them at posh birthdays, weddings and other glam our backyards. events. One uber fashionable site appropriately titled highsnobiety.com even MOJO DONUTS - PEMBROKE PINES, FL prominently displays a sushi Shelly and Shawn Neifeld found their magic donut and they look delicious charm in Mojo Donuts in 2013 in a little strip decorated with black mall in Pembroke Pines. The innovative sesame, ginger, wasabi, couple, with nearly 30 years experience in cashew and avocado. These the food industry, opened one of the first donuts seem healthy too. hand crafted donut stores in the Broward Other fancy donuts are County area. Mojo's Maple Bacon, The bacon paired with a maple Esmeralda, Mojo Monkey, Lime-in-da glaze or icing, M&M and Coconut, Cookie Monster, Gourmet French potato chip donuts and many Cruller and the famous Deco Delight donut other artisanal donuts. with banana cream filling, popularized by Deco Drive, sell out in hours. At the end of September, The donut came to Manhattan, then still New the groundbreaking creative couple is opening a Mojo Amsterdam, under the distasteful Dutch name of Donuts & Fried Chicken store at 8870 , in olykoeks--"oily cakes." Since the name oily cakes was Miami. not sweeping the nation, the donut, a red white and blue, all American creation, first appeared in the late 1800s as a contraction of the original spelling.

38 TERRANOVA THE SALTY DONUT - MIAMI, FL VELVET CREME DOUGHNUTS - MIAMI, FL "Bringing Craft Donuts to Miami" is this delightfully "A Miami Icon since 1947" is making a riveting hip decadent donut creators' intelligentsia trio's, revival. This famous doughnut store was located in Andy Rodriguez, Executive Pasty and a second store was Chef Max Santiago and Amanda located near the University of Miami. A Pizarro, slogan. The fab trio sure did family illness shut down the business bring the scrumptious photogenic in 2000. Robert Taylor, Jorge Rios and supermodel of donuts to Miami, the Krista Rios are breathing new life into hour long lines and their Hear Ye! this legend by shopping around for a Hear Ye! We're SOLD OUT with love permanent location in Miami's S.W. 8th signs are proof. Aside from serving Street neighborhood. The plan is to their high fashion year-round Maple have a grand opening by early 2017. Bacon, Baked Chocolate, Brown Currently, one food truck sells this icon. Butter + Salt, Traditional Glazed A franchise is being developed whereby Buttermilk donuts, they also serve the owners would have first right of donuts using the freshest seasonal refusal and only two food trucks can sell ingredients, such as blackberry jam, the doughnuts in each county. Taylor pumpkin, passion fruit and are now has already made the frozen-doughnut even serving vegan donuts. option work at Miami-Dade County BJ's Wholesale Club locales earlier this The Baked Sweet Potato Vegan donut is a call out to year. He is currently working aggressively on getting all CrossFit lovers and is a collaboration with Noah larger packs of 12 ($6.00) to 24 ($8.00) doughnuts in Olsen of the 2014, 2015 and 2016 CrossFit Games. even more big-box stores. Taylor believes that "since The gluten free Samoa donut is another fan favorite. people do not want to eat all of the doughnuts in one These trio donut intellects also serve appropriately sitting, a customer can take out as many doughnuts enough... Intelligentsia Coffee and also offer Iced as they like, thaw them out, nuke them for 8 seconds Cinnamon Toast Crunch Lattes and Homemade and have the rest later." The doughnuts are delicious Salted Caramel Lattes. Rodriguez attributes The Salty and economical since they have a six month shelf-life. Donut's success to having an amazing product, never The famous doughnuts are sold at various concession sacrificing quality for profitability, great branding and stands at Marlins Park. The grand opening will be the operation being run incredibly efficiently and lean. epic. Welcome back to Miami, Velvet Creme. Here's to Donuts are made in microbatches throughout the day another half century. and a full-time driver shuffles the donuts between Chef Max's kitchen and the two locales. The trio has come The moral of this story is that the donut has been a long way in just one short year since their inception around for centuries... it's just had a recent artisanal and selling their craft donuts out of a vintage 1950s facelift and rebranding. The mainstay donut shops like aljoa trailer during Art Basel. Dunkin' Donuts and Krispy Kreme Doughnuts, with a whopping charted 145 year success rate between This creative artisanal donut shoppe and coffee bar them, have plated the way for the beautiful colorful has two pop-up locales - one at 50 N.W. 24th St., artsy new youngsters. Even though the elder donut #103 in and the other is in the backyard of stores are still steadfastly present and are overseeing Confidante Hotel, 4041 Collins Ave. in Miami Beach. the tasty youthful newcomers, we all delightfully Rodriguez is excited that the trio recently signed a welcome the new innovators into our neighborhoods lease for a permanent location in Wynwood on N.W. and know that they are here to stay. 23rd Street.

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