N.Y. Investors 'Overpaid' For Lincoln Road Site
It's not an average day when real estate investors candidly admit overpaying for a newly purchased piece of prime Miami Beach property.
That's what happened Tuesday when two New York investors announced they paid $33 million—an eye-watering $3,300 per square foot—for a retail location on Lincoln Road mall.
The property last sold for $600,000 in 1989.
"We overpaid," Samuel Schneider, managing partner of New York-based Imperium Capital LLC, told the Daily Business Review. "And we're willing to overpay—but overpay for prime property—for the long, long, long term."
Schneider's partner, Daniel Glaser, agreed with that assessment.
"We feel we paid top dollar for it," he said. "It's a low return day 1, but we're buying for the future."
Imperium partnered with New York-based Centurion Realty LLC to purchase 643-657 Lincoln Road, a 10,000-square-foot building with three shops and a restaurant on the mall between Pennsylvania and Euclid avenues. Tenants include the French Connection clothing boutique.
Tristar Capital bought 530 Lincoln Road for $30 million, or $3,000 per square foot, last month, setting a short-lived record for the South Beach retail market. A store occupied by Guess at 736 Collins Ave. in Miami Beach sold for $12.5 million, or nearly $1,500 per square foot, in November.
The Imperium investors said they believe Lincoln Road is at the cusp of becoming a place with even more exclusive retail outlets and even higher average asking rents. A June report by brokerage Cushman & Wakefield said asking rents for Lincoln Road property had risen to around $300 per square foot, a spike of 25 percent from 2012. Glaser and Schneider did not disclose the specific financials of their newly acquired property's rent roll but suggested the rents were lower.
Instead of focusing on that aspect, the investors said they're looking to acquire prime retail locations, believing the properties will eventually see heightened rents. More importantly, they see institutional investors, which are likely to acquire properties on relatively long horizons and hence make the market more illiquid, helping drive up prices in the near future.
"I think this is irreplaceable real estate," Schneider said. "In terms of South Beach, there's nothing better out there."