Forever 21: What does the possible closure of its Lincoln Road store mean for the street?

Lincoln Road

Susan Askew
Susan Askew

Forever 21: What does the possible closure of its Lincoln Road store mean for the street?:

On one hand, another vacancy. On the other, an opportunity?

There’s a lot of confusion surrounding the bankruptcy announcement by Forever 21, specifically around which stores will close. The Lincoln Road Forever 21 store was included on a list of 178 stores that may close but there has been no definitive announcement. Michael Comras, managing member of Comco LLC which owns the property at 701 Lincoln Road that houses Forever 21, did not return calls or email requests for comment. Tim Schmand, Executive Director of the Lincoln Road Business Improvement District (BID), said he has not been told the fate of the store.
 
Comras is the CEO of the Comras Company, which according to its website, “specializes in the leasing and sale of urban and suburban retail properties across South Florida.” Miami-Dade County property records indicate Comco LLC paid $17.5 million for 701 Lincoln Road in December 2010.

If the two-story, 39,000 sq. ft. store is closed, it would create a large hole on Lincoln Road where there is already an 18% vacancy rate (measured by number of storefronts), according to a spreadsheet provided by the Lincoln Road BID. 

 


On the north side of the street, there is no break between the 600 and 700 blocks. It is a continous two block stretch with Forever 21 in the middle. To its west, the 700 block currently has three vacancies – 727 Lincoln and 1655 and 1661 Meridian. To the east, the 600 block contains the largest number of vacancies with 11 – six on Lincoln Road and four fronting Pennsylvania Avenue and one on Euclid.
 
The Lincoln Road vacancy count indicates overall there are 250 storefronts on the pedestrian mall and sections of the side streets that include Washington, Drexel, Pennsylvania, Euclid, Meridian, Jefferson, Michigan, Lenox, 17th, and Alton. Of those, 45 or 18% are currently vacant, 6 have tenants “coming soon”, and 12 are “under development." 
 
Lyle Stern is President of Koniver Stern, a retail leasing company based in the Lincoln Road District which owns 730 Lincoln Road and is invested in others. Stern, a member of the Board of the Lincoln Road BID, said he has no further information on Forever 21’s local store but pointed out the retailer’s challenges are not unique. Companies who took on massive debt and built huge stores, he said, got caught by surprise when the internet very quickly started eating into their profits. 
 
“If you’re a retailer, it happened really fast,” he said. Anyone who signed an expensive lease six to seven years ago found themselves severely impacted by online shopping just three years later and with a larger brick and mortar footprint than they need and can support. Forever 21's Lincoln Road store opened in January 2013.
 
Some tenants won’t survive, he said, using Payless Shoe Stores as an example of a retail “dinosaur.” 
 
“Forever 21, they just don’t need the number of stores or size of stores,” that they have and bankruptcy provides them the “opportunity to exit leases or renegotiate other leases,” Stern said.  

The changing retail model is affecting at least one other space on Lincoln Road, the Nespresso café and store.
 
“Nespresso has a very successful store on Lincoln Road,” Stern said. “As a company they’ve decided they don’t need cafés in the stores. They’re expensive and you have to maintain employees.” The new model is to create stores that are 2500 sq. ft., down from the original 4500 sq. ft., according to Stern. On Lincoln Road, Nespresso is building out a new store at 643 Lincoln Road with plans to close its current location at 1105 Lincoln.

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The current Nespresso retail store and café


“Other tenants – Gap’s a great example,” he added. “Gap is looking to shed hundreds of stores around the world.” Though he said he has “no unique insight” he expects “Gap, like Forever 21 may exit certain footprints they’re in and re-enter smaller footprints.” 
 
When asked about the challenges of filling large retail spaces, Stern said multi-level stores are more difficult to fill than large spaces on one level which are easy to divide. But the large, built-out retail space that Forever 21 occupies creates an opportunity, according to Stern. With the upfront costs already invested, retailers who might not have been able to afford to locate here if they had to foot the bill to convert a space themselves can now consider it.
 
“The good thing is there are also many international brands” who might “enter markets they couldn’t afford before" as spaces open up that already have the necessary infrastructure including elevators, upgraded electrical, etc. According to a write-up on the Lincoln Road Mall web page announcing the opening of Forever 21, the company “invested a small fortune to transform the landmark Saks Fifth Avenue department store on Lincoln Road Mall into a 39,000 square foot, state-of-the-art, trend-driven boutique.”

Stern said he knew of one company not yet in the U.S. that is “looking at Lincoln Road aggressively. Do they cross the finish line? I don’t know but it’s an opportunity.”
 
Stern, however, is more hopeful than concerned about Lincoln Road.
 
“I look at Lincoln Road differently,” he said.  “I’m trying to encourage all of us that live in Miami Beach to look at Lincoln Road differently." Instead of looking at the vacancies which he said is “the individual property owner’s issue,” he wants residents to look at the public space in between the buildings, what he calls an "18-acre park," as the arts and culture – and even botanical – destination that it can be.
 
Those community owned areas are slated for a $67 million makeover designed by James Corner. Miami Beach will foot the costs of construction and Lincoln Road property owners, who plan to increase their own taxes, will create events and other promotional activites to continue to bring people to the street during construction in order to minimize disruption for retailers and restaurants and, ultimately, the City's tax base.

Read more about Stern’s vision for Lincoln Road and the upcoming improvements.
 
Correction to the Nespresso store sizes. An earlier version left off a zero! We apologize for the error.
 

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