Miami commercial market in a transition phase

Miami is known to attract consumers and residents with an eye for luxury.

The poshest of the posh have been attracted to Miami for years, and nowhere has that been quite as apparent as Bal Harbour Shops, where high-end brands like Chanel, Gucci, Cartier and Dior set up shop decades ago.

The open-air mall sits at the northern end of Miami Beach, and in 2012, the International Council of Shopping Centers said it was the most productive shopping center in the world when taking into account sales per square foot of retail space. However, many of those big-name tenants, including Valentino, Fendi and Louis Vuitton, have been ditching the mall for a "scruffy" city neighborhood about 10 miles away, The New York Times reported.

Some of them have said that relocating only made sense, because Bal Harbour gave off the vibe of being too exclusive and too hard to reach for many of their potential consumers. The newspaper reported that about 70 percent of Bal Harbour's sales are to foreign customers.

"I realized there was this crazy situation going on in Miami," said Craig Robins, a local real estate developer who is in talks for $1 billion worth of deals to transform the new haven: Miami Design District. "This is the third-largest luxury market in the United States and there was this remote, inaccessible, beautiful mall that controlled 100 percent of the market share."

Many of these stores desire to relocate because of Bal Harbour's tiny size – less than 500,000 square feet – which gives the mall an intimate feeling but leaves retailers wanting more space. However, a common clause signed with the mall prevented them from opening another retail location within so many miles of Bal Harbour.

Transforming a neighborhood
Robins and his development company, Dacra, have been working for years to acquire property in the Miami Design District and transform streets to make pedestrian malls and parking garages, restaurants and luxury condos, the Times reported.

However, the city's commercial market is set to change even more in recent years, as the Whitman family, which founded Bal Harbour, recently partnered with a Hong Kong real estate company for the Brickell CityCentre, a 9 million-square-foot mixed-use space in downtown Miami's financial district. About 600,000 square feet of that will be meant for retail use, and Bal Harbour tenants would be permitted to open a location in that development, according to the Times.

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