At first glance, Lincoln Road keeps drawing crowds as a top shopping and dining destination in Miami Beach.
But the 10-block stretch running east-west between Alton Road and Washington Avenue, officially Lincoln Road Mall, is losing steam, market metrics show.
The retail vacancy rate was 8.5 percent in 2016, higher than the 5.4 percent the previous year, and it climbed this year to 13 percent, according to Colliers International South Florida. Net absorption has been negative since 2014, down 46,803 square feet in 2016 and it’s down 1,983 square feet so far this year.
“It’s basically telling you that more people left than came in,” said Boris Kozolchyk, Colliers executive vice president of retail services in Miami.
To be clear, retail experts say Lincoln Road is still a thriving pedestrian promenade.
“Fundamentally, Lincoln Road is still Lincoln Road,” said Frank Begrowicz, director of retail brokerage for Cushman & Wakefield in Miami. “There’s the energy about it.”
Robert Granda, director of retail investment sales for South Florida for commercial real estate services firm Franklin Street in Plantation, echoed that.
“I’m not saying Lincoln Road is dying or anything to that effect,” he said.
But a shift in demographics, a failure by landlords and tenants to see eye-to-eye on rents and the effects of e-commerce are contributing to changes for Lincoln Road, according to South Florida retail market experts.
Millennials increasingly are shunning Miami Beach for the mainland, including Brickell, downtown Miami and the Biscayne Boulevard corridor, Granda said.
That, coupled with a surge of live-work-play developments where people reside near jobs and entertainment, has hurt Lincoln Road, he said.
“Before all this retail explosion on Biscayne Boulevard and Brickell and downtown Miami, in order for them to go shopping … for example, at a higher-end store, they would either go west toward Dadeland or they would get on the causeway, jump over the bridge and they are in South Beach. They no longer have to do either one,” Granda said. “They can literally go downstairs and get what they need. … This live-work-play concept, the mixed-use areas like Brickell City Centre, have affected places like the Beach. It’s a new age. It’s a new generation.”
Begrowicz and Kozolchyk agreed Lincoln Road is facing fresh competition.
Miami Beach “is not the only game in town anymore,” Begrowicz said. “There are all these things now that are not just the shining object over here.”
Kozolchyk noted, “You have Wynwood, Midtown, the Brickell area, the expansion of Aventura Mall.”
The retail market on Lincoln Road took off in particular after the Great Recession, Kozolchyk added.
In 2015, a company tied to Spanish billionaire Amancio Ortega, founder of the Zara apparel and accessories chain, bought a Lincoln Road stretch for $370 million.
“All of the sudden you look at the number when investment funds that came from New York and paid $3,000, $4,000, up to $5,000 per square foot of building” after Ortega’s deal, Kozolchyk said. ”These are big numbers that demanded big rent.”
Of nine prime Miami-Dade County retail destinations, the highest average asking retail rent is Lincoln Road at $305 per square foot triple net for about 200 retail spaces, according to the 2017 Miami Retail Major Markets Report by Cushman & Wakefield.
Lincoln Road’s popularity has fluctuated over time. The strip was big in the 1930s but declined during and after World War II. Vehicles were shut out in the 1950s. The late ’80s and early ’90s were a low point with Miami Beach undergoing an overwhelming demographic shift from old to young.
Frank Gehry’s New World Center concert hall, which opened in 2011, and the 1111 Lincoln Road garage and retail center, which opened in 2010, helped rejuvenate the neighborhood. But Lincoln Road tenants and landlords are now tangling over rents.
“Right now there is a disconnect between what landlords expect to get on Lincoln Road and what tenants are willing to pay for Lincoln Road,” Granda said.
Tenants are unwilling and unable to afford higher rents in part because they are losing customers to the newer retail destinations on the mainland, he added.
Experts see Lincoln Road poised for changes. The city is designing improvement including landscape upgrades.
Some landlords might lower rents, others might hold steady, while new types of tenants might set up shop, experts said.
“What Lincoln Road is undergoing is a reevaluation of what Lincoln Road will be. I don’t have the answer,” Kozolchyk said. “Will it be OK? Absolutely.”