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contentS
Evolution of a Property:
Focus on suniland shopping center
Marketing
Destination Dining. The Modern Food Hall Experience.
38 Trending
rise of the doughnut
high street retail: riding the wave Miami-Dade Market Report
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© 2016 TUMI, INC.
LINCOLN ROAD
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• 305 531 2476
editor’s note
With each issue of TRENDS, we continue to discover the many niches and nuances that make South Florida’s retail landscape so unique. From urban high streets and major shopping destinations, to local entrepreneurs and creative business owners, the South Florida market is an ever-evolving mosaic that serves millions of residents and visitors. At Terranova Corporation, we’re proud to share those stories. As members of this diverse metropolitan community, 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 bringing more dimension to the retail landscape and are re-inventing the way we all interact with shopping, dining, and entertainment districts.
One such newcomer is the food hall concept. Inspired by the communal markets of Europe featuring artisanal, quality, and hand-crafted food items and cuisine, eateries (or food 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 Lincoln Road. This issue also highlights similar up-and-coming developments and changes that are happening throughout Miami’s multiple high street markets as part of our yearly Retail Market Report. There is so much on the horizon for South Miami, Coral Gables, Collins Avenue, Lincoln Road, and Ocean Drive – with each area making strides to carve out its own unique experience.
Mindy McIlroy
Chairman/Publisher Stephen H. Bittel executive Vice President / Editor-in-Chief Mindy McIlroy managing Editor Rebecca DeVille Graphic Designer Michael Dorer Contributing writers Andrea Speedy Angela Shlyakhov Annalisa Damley Susan Cumins
publisher Terranova Corporation
advertisers 1836 Biscayne Collins Ave Collection Copper 29 The Lincoln Eatery Melissa Shoes TC ICSC NY Tumi
Terranova Corporation 801 Arthur Godfrey Road, Suite 600 Miami Beach, Florida 33140 305.695.8700 leasing@terranovacorp.com
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evolution of a property:
suniland shopping center By Susan Cumins
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hen Suniland Shopping Center’s value reached an impressive high, the 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
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Terranova Chairman Stephen H. Bittel grew up not far from the high-visibility strip, which was constructed in 1955 at 11325 South Dixie Highway (U.S. 1). What was once a sparsely populated suburb in the southern half of Miami-Dade County is now in the heart of Pinecrest, a municipality whose residents’ median incomes rank among the highest in Florida. Long familiar with the property, Bittel recalls going to the Suniland five-anddime in the years before Eckerd Drug—which was taken over by CVS—moved in. As a teen, he bought his first camera at the center’s former tenant, Phil’s Camera Shop. Community favorites Wagons West and Pete’s Barber Shop, both among the center’s longeststanding businesses, continue to prosper there, a sign of the location’s loyal customer base and landmark status. In 1994, Suniland Associates, Ltd., an affiliate of Terranova Corp., purchased the Suniland Shopping Center’s main section for $9,295,000. In 1996 it acquired the outparcel containing a restaurant now occupied by Flanigans, for $1,121,300. With the 2016 sale of the 7.11-acre shopping center, Terranova’s investors achieved an annualized internal rate of return of 33 percent over the investment period, which Bittel calculates as returning a remarkable equity multiple of 25 times. “While we were sad to say goodbye, we are optimistic that the buyers, a Denver-based private REIT, will enjoy a future ownership as wonderful as ours has been,” said Bittel.
Consistently Optimistic Attitude
“We paid $126 per square foot for the property using debt, which seemed high then. And we sold it for about $811 per square foot, cash.” Bittel noted that his company’s business model has remained consistent 8
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across a portfolio that includes premiere properties throughout South Florida. These include retail locations on Miami Beach’s Lincoln Road and on Miracle Mile in Coral Gables, whose performance places them firmly among South Florida’s most lucrative high street destinations. “We look at where rents can go, and we’ll pay more if we think they’ll grow. With the Suniland purchase, we thought the rents, then in the high teens, should have been in the mid-twenties per square foot. So we bought it with the most optimistic assumptions and, with love and attention, we made it happen.”
Relevance and Visual Appeal Drive Value
Consumers are sometimes disappointed when their favorite retailers depart, but inevitably that is because those stores were not doing well. As tastes change, properties evolve and today’s most successful community centers are heavy on restaurants, medical and financial services, and everyday consumer necessities. This trend of shopping centers to evolve into service-oriented gathering places is clearly reflected in the types of businesses now at Suniland Shopping Center, which was approximately 94 percent leased to 27 tenants at the time of its sale. In addition to longstanding local favorites like Pete’s Barber Shop and Wagons West restaurant, the center’s current tenants include a U.S. post office and an auto tag agency as well as multiple restaurants, Citibank, SunTrust, CVS, and Nicklaus Children’s Hospital. Mindy McIlroy, Terranova’s Executive Vice President and a member of the Terranova team for 19 years, was involved with multiple aspects of Suniland’s two decades of growth and value. As part of her focus on
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
marketing and retail leasing, she made certain that the center’s tenant mix was always in sync with the constantly changing retail landscape. McIlroy led the design initiative when, in 2006, the center underwent major exterior renovations. She worked with local architects to transform the dated facades with their barrel tile trim to the elegantly upgraded look that now defines the shopping center. Today’s stylish Caribbean-inflected exterior features durable standing-seam metal roofs, bright undercanopy lighting, tiled walkways, and stately royal palms in the landscaping. The style reflects the prosperous Pinecrest community’s aesthetics and keeps the consumers coming. “Our goal at every property is always to help tenants grow sales. To support that, we added landscaping and changed the signage. Every year we found ways to upgrade the center’s appearance,” said McIlroy. “This improved the quality of the tenants and kept pace with the center’s consistent success.” Rents are a function of sales, and the Terranova team knew the potential was there if they continually made the shopping center more attractive. “We were really
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 90,000to 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 Dadeland produced a steady stream of daytime weekday traffic, adding their business to that of neighborhood residents who patronized the restaurants and businesses on evenings and weekends. Suniland’s strategic South Dixie Highway location has always been a vital center of activity in a prosperous community. Incorporated in 1996 as the Village of Pinecrest, the municipality’s residents have significant purchasing power and are close to major employment centers including the University of Miami and major healthcare providers. In terms of the Greater Miami area, Pinecrest has a higher concentration of residents who hold white-collar jobs. A high percentage of them work in fields of information, finance and insurance, health care, and professional services, according to the municipality’s website. Forty seven percent of Pinecrest residents earn more than $100,000 and housing values and residential occupancy in the 91,312-population village are enormous. For the 22-plus years that Terranova’s group owned Suniland Shopping Center, they worked closely with community members who went on to become the Village of Pinecrest’s leadership. When the municipality was incorporated in May 1997, it leased space in Suniland for the village hall, police station, and offices. “Suniland always has been and will continue to be the
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evolution of a property
heart of the Village of “We thought 2015-2016 was Pinecrest,” Bittel noted. a good time to harvest the “Suniland always has been “When we leased the asset’s gains. The center was and will continue to be second floor to them highly occupied; we were in 1997, Suniland went welcoming the third major the heart of the Village of Pinecrest.” from being the figurative tenant, Nicklaus Children’s -Stephen H. Bittel, Chairman Terranova Corp. center of Pinecrest to 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 citythe 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 just right. Constantly looking forward, Terranova’s Deciding When to Harvest Gains acquisition team is evaluating opportunities daily to “We were very lucky in our ability to access the debt redeploy capital, drawing upon its team’s extraordinary market when rates were low,” said Bittel. “We bought depth of market knowledge, enviable financial strength, it with a loan from American Savings, which became and dynamic flair for clear-eyed optimism. First Union; next we obtained a loan from Nomura, 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."
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destinationDining The Modern Food Hall Experience. By Andrea Speedy & Annalisa Damley
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t wasn’t long ago – less than 20 years in fact – that the American Shopping Mall 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
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Look around today, however, and you’ll see both food courts and mega malls with less traffic. There are a few more guests at stand-alone restaurants just outside the mall, and large casual dining restaurants built into the mall, but nothing compared to the packed, barely-anyavailable seating crowds of just a decade ago. People haven’t stopped eating… or shopping… so where has everyone gone?
Where retail-oriented dining used to be about efficiency, this latest generation has made it all about creativity and uniqueness. Just as food trucks proved that a limited menu of locally sourced, innovatively driven cuisine could capture a huge audience, savvy culinary minds are realizing that variety is indeed the spice of life... and that food halls are the most direct route to making it sellable.
“The answer is back to high streets… and to food halls. Along America’s metropolitan high streets, independent, culturally diverse, quality cuisine concepts are popping up left and right,” says Stephen Bittel, Chairman for Terranova Corporation. “They’re recognizing guests’ desire to enjoy dining as its own destination, and it’s up to us as developers to make sure we’re responding to their needs.”
At its purest, the food hall concept isn’t earth-shattering. For the past century, or more, collective eating places with multiple vendors hawking local fare in centralized markets have been mainstays in Europe and Asia. From steaming bowls of noodles in Singapore to tapas, ham and olives in Madrid's Mercado de San Miguel to London's famed Harrods Food Hall and the longstanding family-run stalls offering everything from mince pies to Turkish delight, the appeal of having a
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huge quantity of quality dining choices is centuries old. So it only makes sense that American cities would catch on. The resurgence of intown neighborhoods with an increasingly affluent demographic; the food truck boom which demonstrated people's enthusiasm for creative and gourmet eats; and the weekend farmers' markets which have made healthy, local produce accessible in urban areas are all driving the demand for food halls. Local chefs, gastronomic artisans, butchers, bakers, chocolatiers, and even established restaurant brands are all clamoring to be a part of it.
From Chow to Choice – A Culinary Revolution Modern shoppers have sophisticated palates and expect loftier gustatory experiences. This makes monetary sense as food service is the second-mostlucrative segment of non-anchor tenants, according to ICSC's (International Council of Shopping) numbers.
Shopping, especially in department stores, is no longer the single apex of consumer experience. As the foodie culture continues to thrive, developers are integrating food halls into new builds and mixed-use projects. One such example of this is taking place in South Florida. On Miami Beach's up-and-coming NoLi (North of Lincoln) district, in the Lincoln Road shopping and entertainment area, Terranova Corporation is constructing a premier, flagship building which will house the beach's first food hall – The Lincoln Road Eatery. From the exterior, the food hall is the focal point, visually appealing and conveniently located at street level to capture passing foot traffic. It activates the entire block. “Lincoln Road is – and has always been – very much an epicenter of shopping, dining, and entertainment on South Beach,” says Vanessa Francis, Commercial
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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 consumers in that it offers “Lincoln Road is – and has always been for and budgets… and this everyone the chance to eat – very much an epicenter of shopping, what they prefer – rather than applies to vendors and restaurateurs as much for one style or type of dining, and entertainment on South Beach” settle as it does to consumers. cuisine. -Vanessa Francis, Commercial Leasing Associate, Terranova Corp.
For restaurants, food halls are a relatively lowrisk venture with fewer start-up costs compared to a stand-alone restaurant, hence their popularity. Vendors can share the cost of rent, utilities and maintenance. This attracts both established and emerging talent. Take for example Sliderz – one of the new tenants slated for the Lincoln Road Eatery. Their made-to-order modestly portioned burger and sandwich concept hits all the right buttons for South Florida foodies. Sliderz uses grass-fed hormone-free meats; antibiotic-free, free-range poultry; line-caught fish; includes vegan and vegetarian options; has a chic contemporary vibe; and can give guests a satisfying meal experience right around a $10-per-person price point. Clearly, it’s a winner for
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Sklar’s experience is in keeping with the growth of Miami as a foodie destination where residents and visitors are increasingly calling for locally produced, artisanal fare as well as specialty dining and quality fresh food market options. The Lincoln Road Eatery is already lining up an impressive scope of vendors, full-service restaurants which showcase the talents and creativity of local chefs and food purveyors with a commitment to quality and timehonored techniques. Together, diners will be invited to embark on a culinary journey that celebrates the very best of Miami’s regional flavors and ingredients, innovative cuisine shaped by the city’s multicultural diversity, its edginess and its cosmopolitan modernity. The Lincoln Road Eatery and other food halls to come will also
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, Sunset Drive, 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, Director of Development with Terranova. “Sometimes it’s historical preservation. Other times, it involves the amount of space needed for safe construction. The higher you go, the greater the need becomes for cranes and heavy equipment that the area simply cannot accommodate. Then you also have to consider the price of Lincoln Road property – a time-consuming renovation or rebuild is many consecutive months that a property isn’t creating revenue. Many of these restrictions are eliminated or significantly eased by simply going half a block north.” Gelfman’s point also illustrates the financial motives behind Lincoln Road’s increasingly up-scale shift. Mass market and discount retailers often lack the margins to compensate for pricey lease rates, while luxury brands occupy a much more favorable position, especially with such high
year-round foot traffic. However, the middle market is a key component of the retail mix, and NoLi is poised to include it from a fashion, entertainment, and food & beverage aspect. The Lincoln Road Eatery is case in point – affordable everyday eats that energize and enrich the overall retail experience. Bittel agrees. “The Lincoln Road Eatery is just one element of NoLi’s future,” he states. “We’ve seen retail moving to this area for some time now as spillover from Lincoln Road. With that influx of consumers comes a need for smart, experience-based dining that is in-step with the flavor of South Beach. Whether you’re a traveler, local resident, or someone who works in this area, the Lincoln Road Eatery – and food halls in general will be essential retail destinations.”
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high street riding the wave miami-dade urban street report 2016 By Andrea Speedy
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resh 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
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Retail Report
A recent developer’s symposium held near the beginning of Q3 2016 revealed that overall retail vacancy in Miami is at an impressively low 3.1%. By comparison, Manhattan averages a vacancy rate of nearly 3.7% with retail rents that can be more than triple Miami’s prices. Throughout the greater Miami area, rental rates average between $150 and $300 per square foot for top retail high streets such as Lincoln Road, Collins Avenue, and Ocean Drive on Miami Beach; Sunset Drive in South Miami; and Miracle Mile in Coral Gables, and they’re expected to continue to fetch premium rates for years to come.
A Return to Urban Lifestyles A key element driving the performance of Miami’s high streets has been a decades-long shift in residential development towards connected citycentric living. More and more of Miami’s residents are choosing to live near business, shopping, dining, and entertainment districts that are minutes from home, as opposed to a long drive away in heavy traffic. Similarly, office workers are seeking to maximize lunch-hour breaks and have the ability to run errands or meet with colleagues after work – all without worrying about parking or driving. Miami’s key high streets are among the most established, centralized destinations within their respective areas – and are therefore poised to deliver on market demand. As new residential projects continue to come online over the next few years, the role of high street retail will become an even more essential part of the daily lifestyle experience. This trend has already been evident over the past few decades along Lincoln Road on Miami Beach. The 1990s redevelopment of the neglected district into
Vacancy Rate
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2015
2016
12.23%
12.49%
5.61%
an outdoor pedestrian shopping destination was a concept ahead of its time. Over the years it has become “the” space for consumer brands to set up flagship locations in one of the city’s hottest retail districts. Most recently, this demand has led to new construction and expansion of existing buildings along Lincoln Road, as well as a renewed focus on the NoLi (North Lincoln) district adjacent to the main thoroughfare that boasts better vehicle access and more space than traditional storefronts. Likewise, South Miami has shaken off its reputation as a sleepy little suburb and has become an epicenter for new boutique fashion, home goods, local bistro dining, upscale nightlife, and forward-thinking foodand-beverage concepts. Sunset Drive is bustling and vibrant, with a steady stream of business fueled by local patrons and less reliance on tourism than other parts of Miami. Even “traditional” Coral Gables is evolving to become more city-centric with a reinvention of Miracle Mile designed to answer the call for increased dining, entertainment, and shopping options within one of the densest downtown districts in all of Miami. With more than 1.5 million square feet of office space either approved for, or already in development within the city of Coral Gables, Miracle Mile will be called upon like never before to answer a huge demand for goods and services… and the high street is ahead of pace to welcome the surge.
Moving Away from Malls Paralleling the re-urbanization of Miami is a nationwide trend away from the traditional shopping mall concept
Submarket
Avg. Asking Rent 2015
2016
Lincoln Road
$346.23
$344.12
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
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that once dominated the retail landscape. Nearly all retailers except department-store anchors are finding that high streets not only meet their needs in terms of space and amenities, but also deliver better foottraffic and street views than within-the-mall locations. Shopping centers that have been able to integrate a pedestrian-friendly concept have managed to slow attrition somewhat, but are still struggling with how to reinvent food courts, deliver entertainment options, and enrich guest experiences without a sizeable or complete redevelopment. See What’s Replacing Food Courts on Page 12
Miami is no stranger to this challenge. However, as popular malls scramble to respond to consumer behavior, high streets are not only thriving, they’re taking ownership of what the future retail landscape may be. Free from the unwieldy size and scope of shopping malls, high streets are more nimble, and can make incremental adjustments to achieve considerable gains. Take for example the redevelopment plans for Lincoln Road and Miracle Mile – which will improve the outdoor experience and add alfresco dining space, gathering spots, and enhanced flow of pedestrian traffic. Lincoln Road will be adding more central walking and travel space, thus easing the compact outdoor dining scene typical along the popular thoroughfare. Integrated public seating, better shade structures, and
the elimination of rarely-used band shells and raised garden beds will accommodate more guests – which is key as retailers continue to draw and attract new traffic. Just north of Lincoln Road, on Lincoln Lane, a new 42,000-square-foot retail destination is currently under development by Terranova that will re-energize the prime property that lies just footsteps from the New World Symphony park and exhibition space, Atlantic Beach Sands, five-star Collins Avenue hotels, and the Jackie Gleason Center for the Performing Arts. A smart design will feature indoor space, but with a more engaging marketplace atmosphere, also a far cry from traditional retail malls of the past. As well, the property will answering consumer demand for larger value-oriented retail with Marshalls already signed on as a key tenant and more variety for casual dining options – featuring Miami’s first food-hall concept. This new non-mall thinking is poised to make the space the landmark of NoLi (North Lincoln), an area that has been ripe for redevelopment for decades. Terranova is also rethinking the actual Lincoln Road landscape with a concept on 801 Lincoln Road that will move dining skyward to a third-floor rooftop position. With both indoor and outdoor seating, guests here will have arguably some of the best views on South Beach.
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Retailers will receive the benefit of a steady stream of foot traffic passing by ground-floor retailers while going to and from the restaurant. Likewise, Miracle Mile is seeking to return to its high street roots, but with a fresh contemporary approach. As dining and entertainment have become more prevalent on the mile, there has been an increased need for broader sidewalks and more ample space for outdoor dining and events. The streetscape project currently underway in the area will more than double the size of sidewalk and pedestrian space, add better lighting, offer less exposure to automobile exhaust, and relocate parking to new, more centralized garages rather than directly in front of shops and restaurants. In doing so, retailers will gain better street-level visibility and exposure, add flexible outdoor space for dining or exhibitions, and increase length of stay and spending opportunities among guests who frequent the area. Because the projects are located along high streets as opposed to within shopping malls, renovation can be contained to only those areas impacted by the design. For instance, on Lincoln Road, where many retailers are choosing to go vertical, they may do so with just a single building, rather than an entire wing
of a traditional shopping mall. Streetscape projects like those on Miracle Mile and Lincoln Road can be executed in well-planned phases that need not require closures by retailers – again, very unlike a pedestrian traffic redesign of a conventional shopping mall. Even in the case that a shopping mall would willingly close an entire wing to address such concerns through heavy construction, the finished result would still be unlikely to offer major roadway frontage due to the nature of shopping mall parking lots. The future of high streets not only shows them embracing their positions, but also using their size and street presence to their advantages.
The Current Scene on the Streets Across the board – Miami’s high streets are strong retail markets – even in the face of current redevelopment projects and neighboring construction. South Miami’s Sunset Drive, for example, stands at just 1.19% vacancy with average retail rents around $70 per square foot. Likewise, Miracle Mile in Coral Gables is at only 5.82% vacancy with $60 per square foot average rents while in the midst of the streetscape and sidewalk improvement project approved by its BID last year. Lincoln Road and Collins Avenue are 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.
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Sunset Drive Miami’s latest “it” destination is winning with retail vacancies at all-time lows. The area is so in demand that businesses are pushing further south along 73rd Street, and down along 58th Avenue and 59th Avenue as new space becomes available in parking structures and office buildings. Future projections only show more consumer activity coming to the area, with an expected 1,000 to 2,000 new residents for South Miami over the next five years, and an influx of 150,000 residents to the entire Miami-Dade metro area over the same time period.
REDEVELOPMENTS, ADDITIONS, RENOVATIONS •
Sunset Place shopping center is planning a massive redevelopment of its 10-acre space. Current plans would include new residential midrise construction on the property’s north end on the corner of US1 and Red Road. Retail along Red Road and Sunset Drive would be re-imagined with more street frontage.
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The Crossroads (5700-5734 Sunset Drive) is in the process upgraded awnings, new paint, and lighting for signage and sidewalks
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New tenants along Sunset Drive include Dr. Smood Restaurant, Temple Restaurant, Smooshies, Razzle Dazzle Barbershop, Elephantito Baby & Child, Isabel Tavarez Boutique, J McLaughlin, Janette & Co., Il Vaporetto, Arango Design Store, and 5 Station Table & Bar
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Mellow Mushroom added to Sunset Place frontage on Sunset Drive
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Lululemon retains Sunset Drive space but converts to Iviva brand (children’s activewear by same parent brand)
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Frontgate Home Furnishings Outlet Pop-Up occupies Red Road/U.S. 1 corner space at Sunset Place
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Jimmy Johns comes to Red Road frontage of Sunset Place (previously underutilized as backwindow space only)
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Brother Jimmy’s BBQ Space at Sunset Place along Sunset Drive to introduce new restaurant concept by same owners
NOTABLE DEMOGRAPHICS South Miami is a neighborhood valued greatly for its schools, both public and private, and its neighborhood lifestyle – for which the South Miami high streets are delivering in a big way for its residents and homeowners. The smart mix of boutique retail, entertainment, dining, and more is well balanced for the demographic market, which is fairly evenly spread across the household income spectrum. The median listing price in the 33143 zip code that encompasses most of South Miami is $380,000, with many single-family homes priced at $600,000 or above. Approximately 43.4% of the market owns homes valued between $400,000 and $749,999 with another 26.7% owning homes valued between $250,000 and $399,999.
SUNSET DRIVE SPOTLIGHT – REDEVELOPMENT OF SUNSET PLACE Purchased last year, the 500,000-square-foot outdoor mall on the corner of Sunset Drive and Red Road is actively working towards a complete re-position. Early plans being proposed include knocking down the northeast section of the mall and adding two apartment buildings with 400 units, a 200-room hotel, and ground-floor retail that could be accessed by both. Renderings provided as part of the planning phase also show new street-facing storefronts along both Red Road and Sunset Drive, with interior retail space to maintain the pedestrian-and-courtyard concept, but with a refreshed design sensibility. The AMC movietheatre anchor would likely stay in place, though it is possible that the brand may also take advantage of construction to renew or reinvent its product offering to be more in line with the new cinema-café experience that’s rapidly gaining ground in South Florida.
TENANT MOVES •
Marhaba Restaurant moved from 102 Sunset to 5861 Sunset
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Peace Love World relocated from 5818 Sunset to just next door at 5820 TRENDS
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MIRACLE MILE In the heart of The City Beautiful, Miracle Mile is on
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the cusp of what is likely to be the most prosperous era in its history. The $20 million streetscape project to expand sidewalks, improve pedestrian atmosphere, and create a more engaging outdoor environment is well underway – and is slated for completion ahead of numerous projects that will be bringing more than 1.5 million square feet of new office space to the area. With that space, comes more people, office tenants and workers who will expect to be able to find dining options, technology services, and shopping all steps from their places of business. Likewise, nearby residential development will bring new residents who will turn to the already-established presence of stores, restaurants, and businesses located on “the Mile.”
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REDEVELOPMENTS, ADDITIONS, RENOVATIONS
The aim is to attract more customers to the mile for longer stays and potentially more spending. With nearly 25% of Coral Gables households averaging incomes of $200,000+, it certainly makes sense to try and keep their spendable income within the city. Owner Occupied Housing Values in Coral Gables also supports a push towards a more robust retail and entertainment district, with 22.8% of homes valued at $500,000 to $749,000; 16.3% of homes valued at $750,000 to $999,999; and a staggering 33.2% of homes valued at more than $1 million.
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The southwest corner of Miracle Mile nearest Le Juene Road is under construction for the streetscape project. Sidewalk access is reduced, though pedestrian crossings across Miracle Mile remain open. Businesses are also open during this time and visible signage is redirecting traffic to nearby parking at reduced rates.
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Copper Twentynine, Oroa Eichholtz Furniture, I. Designs, Brugen’s Art Gallery, Bloom Jewelry, Haagen Daaz, My Ceviche, Giola Gelato, Pita n' 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
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Ross Dress for Less expanding by 8,000 square feet on corner of Miracle Mile and Douglas Road (37th Avenue)
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I & A Tuxedos moved from 336 Miracle Mile to 252 Miracle Mile
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Gables Coin moved from 322 Miracle Mile to 82 Miracle Mile
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Bloom moved into the former Stanleigh’s space at 290 Miracle Mile
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Spy World relocated to 96 Miracle Mile
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The popular La Provencal restaurant moved towards a more central new location at 266 Miracle Mile
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Radio Shack permanently closed its Coral Gables location (as company continues to shrink)
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Gables Bridal moved off Miracle Mile to new space east of Douglas Road
In an area that measures just under four square miles, the downtown Coral Gables area is home to more than 200 major U.S., European, and Latin American companies – many of whom are headquartered in this part of the city. Close to 400,000 professionals work within Coral Gables, which is a sizeable portion of the entire employed workforce of more than 1 million persons for Miami-Dade County. So it’s unsurprising that the existing 10.8 million square feet of office space in Coral Gables will not be enough to sustain future demand, which is a main reason the city commission has been quick to approve the influx of additional office and retail square footage currently under development.
CORAL GABLES SPOTLIGHT – MEDITERRANEAN VILLAGE The years ahead will see the building and construction of the largest development in Coral Gables’ history – Mediterranean Village, just a few blocks south of Miracle Mile on Ponce de Leon Boulevard. Approved in summer 2015, the 6.74-acre site is supposed to include 300,000 square feet of retail and restaurant space; 300,000 square feet of office space; a 184-room hotel; 230 residential units; a 2-story underground garage; and various surrounding streetscapes and green spaces along the property’s borders. The developers abandoned earlier plans to include a movie theatre and child-care space, and also agreed to move the main entry ways and egress off of Ponce de Leon Boulevard. Construction is expected to take 36 months to complete, though little disruption is expected to typical downtown Coral Gables traffic or daily operations. Once finished, 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.
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Retail Report
Lincoln Road The Miami Beach retail scene has long been defined by high-street shopping, partly because of the island city’s small geographic footprint, but also because of the high costs of real estate in the area. For the past few decades, Lincoln Road has been the premier high street on Miami Beach, so much so that it is a destination unto itself… and it shows no signs of slowing down. Rents have remained at a marketleading average of $345 per square foot over the past two years. Vacancies have stayed near 12.5%, though this number also includes vacancies due to redevelopment and current construction. As new storefronts come back online, vacancies are likely to return to previous levels below 10%.
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North Lincoln (No-Li) spaces adjacent to Lincoln Road, along 17th Street have been steadily attracting new tenants such as Shake Shack, Yard House, BDry Blow Dry Bar, and Suit Supply A New 42,000-square-foot retail concept on Lincoln Lane will feature Marshall’s, and an upcoming highly-anticipated Food Hall concept 801 Lincoln Road is being renovated to keep its historic front façade, but then expanding to N. Lincoln Lane with Anthropologie and upward, offering a unique third-floor rooftop restaurant that will offer a birds-eye view of Lincoln Road
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The new two-story, 14,000+-square-foot Nike Store with rooftop basketball court is making significant construction progress. The outer shell is nearly complete and installation of a metal mesh façade with wind sensors and LED lights is expected to begin soon
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A new Sephora will be moving into the former Britto Gallery space near the corner of Lincoln Road and Meridian Avenue
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Sugar Factory, Pandora Jewelry, and Beach Bunny Swimwear also join the list of new retailers along Lincoln Road
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Streetscape improvement projects throughout Lincoln Road are continuing in phases
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The Britto Gallery has relocated from its long-time spot near Meridian Avenue to a new, soon-to-open location closer to Alton Road
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French Connection (FCUK) moved closer to the beach to 643 Lincoln Road
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Bebe ladies fashions took over the prominent 8,000-square-foot corner location at 900 Lincoln Road (formerly Pasha’s restaurant)
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Steve Madden will be relocating to the 400 Block of Lincoln Road from the 800 block
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Aldo Accessories will also be relocating from the 800 block – to 637 Lincoln Road
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Alchemist clothing relocated to 1111 Lincoln Road 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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Retail Report
Collins Avenue As one of Miami Beach’s most notable high streets, Collins Avenue has long been an area of reinvention and evolution. The 1-mile stretch of roadway between 5th Street and Espanola Way marks the “prime” position along this historic roadway that follows the entire South Florida coastline. With that spotlight comes competition, and with competition comes various renovations and redevelopments as property owners and tenants alike both seek new, more lucrative opportunities. Such was the case for Collins Avenue in 2015, when many buildings were under construction. Vacancies peaked at a high of 23.19% during this time, but have since nearly reduced by half to just 14.76% with some renovation projects still not quite complete.
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A huge 10,000-square-foot build out is underway for H&M at 763 Collins
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Other new tenants include Planet Blue Boutique at 852 Collins and bdba at 656 Collins
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825-827 Collins Avenue is under construction with a new retail concept expected to debut in the upcoming year
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852 Collins Avenue is being redeveloped from a purely residential property to a mixed-use building that combines residential and approximate 4,200 square feet of ground-floor retail space
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900 and 910 Collins are both also being renovated with plans towards including more ground-floor retail storefronts and/or restaurant space
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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
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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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Retail Report
Ocean Drive The legendary strip of Art-Deco hotels and beachfacing 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
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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.
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TRENDING
rise of the
doughnut By Angela Shlyakhov
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s far as desserts go, sugar makes us all a wee bit crazy. First 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 are now attracting even more customers but they are not just appealing to our men and women in blue anymore and the old stereotypes of the typical donut muncher. Now they are highly sought after by glamourous divas and fashionable men who partake in their delights and bring them as fancy house gifts for dinner parties as desserts and delightfully display them at posh birthdays, weddings and other glam events. One uber fashionable site appropriately titled highsnobiety.com even prominently displays a sushi donut and they look delicious decorated with black sesame, ginger, wasabi, cashew and avocado. These donuts seem healthy too. Other fancy donuts are bacon paired with a maple glaze or icing, M&M and potato chip donuts and many other artisanal donuts. The donut came to Manhattan, then still New Amsterdam, under the distasteful Dutch name of olykoeks--"oily cakes." Since the name oily cakes was 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.
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The first donut machine did not come along until 1920, in New York City, when Adolph Levitt, an enterprising refugee from czarist Russia, began selling fried donuts from his bakery. Starved theater crowds pushed Levitt to make a gadget that churned out the tasty rings faster, and he did. Thankfully, today, we no longer have to starve for donuts. These craft and artisanal donut shoppes are expanding and hanging up signs right in our backyards.
Mojo Donuts - Pembroke Pines, FL Shelly and Shawn Neifeld found their magic charm in Mojo Donuts in 2013 in a little strip mall in Pembroke Pines. The innovative couple, with nearly 30 years experience in the food industry, opened one of the first hand crafted donut stores in the Broward County area. Mojo's Maple Bacon, The Esmeralda, Mojo Monkey, Lime-in-da Coconut, Cookie Monster, Gourmet French Cruller and the famous Deco Delight donut with banana cream filling, popularized by Deco Drive, sell out in hours. At the end of September, the groundbreaking creative couple is opening a Mojo Donuts & Fried Chicken store at 8870 Bird Road, in Miami.
The Salty Donut - Miami, FL "Bringing Craft Donuts to Miami" is this delightfully hip decadent donut creators' intelligentsia trio's, Andy Rodriguez, Executive Pasty Chef Max Santiago and Amanda Pizarro, slogan. The fab trio sure did bring the scrumptious photogenic supermodel of donuts to Miami, the hour long lines and their Hear Ye! Hear Ye! We're SOLD OUT with love signs are proof. Aside from serving their high fashion year-round Maple Bacon, Baked Chocolate, Brown Butter + Salt, Traditional Glazed Buttermilk donuts, they also serve donuts using the freshest seasonal ingredients, such as blackberry jam, pumpkin, passion fruit and are now even serving vegan donuts. The Baked Sweet Potato Vegan donut is a call out to all CrossFit lovers and is a collaboration with Noah Olsen of the 2014, 2015 and 2016 CrossFit Games. The gluten free Samoa donut is another fan favorite. These trio donut intellects also serve appropriately enough... Intelligentsia Coffee and also offer Iced Cinnamon Toast Crunch Lattes and Homemade Salted Caramel Lattes. Rodriguez attributes The Salty Donut's success to having an amazing product, never sacrificing quality for profitability, great branding and the operation being run incredibly efficiently and lean. Donuts are made in microbatches throughout the day and a full-time driver shuffles the donuts between Chef Max's kitchen and the two locales. The trio has come a long way in just one short year since their inception and selling their craft donuts out of a vintage 1950s aljoa trailer during Art Basel. This creative artisanal donut shoppe and coffee bar has two pop-up locales - one at 50 N.W. 24th St., #103 in Wynwood and the other is in the backyard of Confidante Hotel, 4041 Collins Ave. in Miami Beach. Rodriguez is excited that the trio recently signed a lease for a permanent location in Wynwood on N.W. 23rd Street.
Velvet Creme Doughnuts - mIAMI, fl "A Miami Icon since 1947" is making a riveting revival. This famous doughnut store was located in Little Havana and a second store was located near the University of Miami. A family illness shut down the business in 2000. Robert Taylor, Jorge Rios and Krista Rios are breathing new life into this legend by shopping around for a permanent location in Miami's S.W. 8th Street neighborhood. The plan is to have a grand opening by early 2017. Currently, one food truck sells this icon. A franchise is being developed whereby the owners would have first right of refusal and only two food trucks can sell the doughnuts in each county. Taylor has already made the frozen-doughnut option work at Miami-Dade County BJ's Wholesale Club locales earlier this year. He is currently working aggressively on getting larger packs of 12 ($6.00) to 24 ($8.00) doughnuts in even more big-box stores. Taylor believes that "since people do not want to eat all of the doughnuts in one sitting, a customer can take out as many doughnuts as they like, thaw them out, nuke them for 8 seconds and have the rest later." The doughnuts are delicious and economical since they have a six month shelf-life. The famous doughnuts are sold at various concession stands at Marlins Park. The grand opening will be epic. Welcome back to Miami, Velvet Creme. Here's to another half century. The moral of this story is that the donut has been around for centuries... it's just had a recent artisanal facelift and rebranding. The mainstay donut shops like Dunkin' Donuts and Krispy Kreme Doughnuts, with a whopping charted 145 year success rate between them, have plated the way for the beautiful colorful artsy new youngsters. Even though the elder donut stores are still steadfastly present and are overseeing the tasty youthful newcomers, we all delightfully welcome the new innovators into our neighborhoods and know that they are here to stay.
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