GENERAL GROWTH Properties and Ashkenazy Acquisition Corp. are taking a stake in the Miami Design District.
The companies on Tuesday said they will pay $280 million net after debt for a 20 percent stake in the district, an 18-square-block neighborhood that boasts retailers such as Prada, Marni, Maison Martin Margiela and Rick Owens.
The district is owned by Miami Design District Associates, a partnership between Dacra and L Real Estate, a global real estate development and investment fund that specializes in luxury shopping destinations. The stake is being purchased evenly from Dacra and L Real Estate, a fund in which LVMH Moët Hennessy Louis Vuitton is a minority shareholder.
Craig Robins, founder and owner of Dacra, had the vision to transform the dilapidated Art Deco area of South Beach into the Miami Design District. He said that partnering with L Real Estate gave him access to better dialogues with luxury brands, which in turn “gave us credibility to work with other brands.”
“Marc Jacobs, Dior, Bulgari,” Robins said. “Once people knew that LVMH brands were going to come into the neighborhood, they wanted to come, too.” Cartier, Hermès and Van Cleef & Arpels also polished the gloss of MDD. “The strategic partnership with L Real Estate enabled us to strategize our merchandising in an international arena,” he said. “We’ve completed 15 buildings and 50 global flagships.”
MDD will continue to expand with the help of GGP and Ashkenazy’s investment. Robins said construction will begin in January on 20 buildings for 60 new stores. This section of MDD will also have a boutique hotel and some residential units.
With the completion of the initial phase of the Miami Design District in December, the second phase is expected to come online by 2016. Then the district is expected to house more than 120 luxury retailers, a boutique hotel, 15 to 20 restaurants, luxury residential condos and lofts, galleries and furniture showrooms. Miami Design District Associates will own and operate 1.2 million square feet of space, the majority of which will be retail. Almost a quarter of the new space will be dedicated to other uses. Future expansion could include an additional 2 million square feet of space.
“The design district has had a growing presence of art, a very solid presence of design and more and more restaurants,” Robins said. “Jean Georges Vongerichten just signed a lease to open ABC Kitchen. We’ve been expanding our cultural offering. The board of the Museum of Contemporary Art, North Miami, decided to relocate and name a new museum, the Institute for Contemporary Art, to the Design District in December. All these things are converging. We’re becoming solid.” The district has public art installations by Buckminster Fuller, Zaha Hadid, John Baldessari and Marc Newson.
“We made this investment in the Miami Design District as it is the urban retail destination in South Florida,” said Sandeep Mathrani, chief executive officer of GGP. “This provides a tremendous opportunity for GGP to add to its portfolio of unique, experience-based retail neighborhoods,” adding that “it is a destination for those who are in search of creativity, style and culture.”
Ben Ashkenazy, CEO of Ashkenazy Acquisition Corp., said, “The Miami Design District has emerged in the past few years as a leading player in the global market of luxury retail development, reinventing the model for creating neighborhoods. We made a strategic investment because we believe this will be among the most innovative and valuable retail projects in the world.”
Mathieu Le Bozec, managing director of L Real Estate, said, “The addition of GGP and Ashkenazy Acquisition Corp. is a testament to the value that has been created.”
Miami Design District pioneers such as Christian Louboutin and Martin Margiela are renovating and/or expanding their stores. “A lot of retailers came here and took temporary space while building big flagships, including Hermès, Cartier, Louis Vuitton, Prada, Céline, Pucci and Lanvin,” said Robins. “We’ll be doing global flagships for Dior, Dior Homme, Fendi, Giorgio Armani, Valentino, Ermenegildo Zegna, Loewe, Max Mara, Tom Ford, Tod’s, Loro Piana, Bulgari, Céline, Harry Winston and Versace. In addition, 15 major watch and jewelry brands will open stores such as Hublot, Piaget and IWC.
“We’re committed to the next phase with Dolce & Gabbana, Creed, Rag & Bone and Diane von Furstenberg,” Robins said. “We’ve also reached an agreement with some of the major Kering brands.”
Robins said the district will bring in contemporary brands. Zadig & Voltaire, Marc by Marc Jacobs, Helmut Lang and Theory have signed leases. Rents are about $125 a square foot plus CAM, which Robins said is a “low number compared to street retail rents in Miami.”
The Miami Design District’s buildings have been designed by a who’s who of architects. The master plan was developed by Duany Plater-Zyberk. Other participating architects include Sou Fujimoto, Aranda\ Lasch, Johnston Marklee, Neri & Hu and Studio Gang.