Competitors Draw Blood in Convention Center Battle

MIAMI-As Miami Beach weighs two plans for the redevelopment of the Miami Beach Convention Center and its 52-acre site, Portman-CMC and South Beach ACE continue to go for one another's jugulars. The latest battle is over who is bringing how much commercial and retail space to the landmark project.

ACE emphasizes an operating proforma recently filed with the City states that Portman plans 186,200 square feet of retail and commercial space. That's roughly 50% more than the 125,000 square feet of its Letter of Intent.

Portman takes exception to South Beach ACE's finger-pointing. Charles Pinkham, vice president of Development at Portman Holdings, tells GlobeSt.com the proforma filed with the City—which is displayed on a Microsoft Excel spreadsheet—combines retail and cultural uses on one page for the group's own mechanics purposes.

“We're proposing 125,000 square feet of retail,” Pinkham says. “Our retail plan has been consistent since our final presentation to the public and reflects the community's desire to make sure it's appropriately sized, walkable and complements the retailers on Lincoln Road. Our overall approach with the retail portion is to have the convention center district link to Lincoln Road and the square, which will create more pedestrian access to Lincoln Road.”

What's more, Pinkham says the cultural space Portman is proposing, also known as Gallery Tower, will rent for “well-below market value.” He explains that the plan is to build the space, hand it over to the cultural user and ask them to cover operating costs. According to Pinkham, the “operational costs and rent of the cultural space is about a third of the market's retail rental rate.” South Beach ACE disagrees.

“Portman-CMC continues to misrepresent its Gallery Tower as a 'cultural building' that will provide a public benefit, when in fact it will comprise commercial space they show generating rents well above the market, as evidenced by their operating proforma,” Jeff Weinstein, a principal with the group, tells GlobeSt.com. “This distortion is misleading the public about Portman-CMC's true plans for the convention center site.”

The proforma filed with the City also shows Portman plans commercial kiosks around the site and along Washington Avenue that they have not defined in scope, according to public documents submitted to the City. ACE maintains that that runs contrary to the Miami Beach community's public opposition to significant retail and commercial space on the convention center site.

Still, Portman argues there's not much of a difference between what it is proposing and what its competitor is proposing. Portman says it has proposed 125,000 square feet of retail compared to South Beach ACE's 59,500 square feet of retail on the ground floor of a renovated 17th Street Garage and the nearby 40,000 square feet of food and beverage space in a standalone building as part of the group's hotel program. Portman contends the differences are only about 25,000 square feet.

In addition to the wrangling over what does and doesn't account for retail space in the public documents, a dispute is also arising from the percentage rate program. Portman's Pinkham argues that a key differentiator between the two plans boils down to economics. That is, Portman's economics work better on the retail space.

“One of the reasons we've been upfront about how much retail we have planned is that it impacts revenue to the City,” he says. “We've committed to paying 25% of gross revenue as rent on all freestanding retail and food and beverage venues, giving the city and its residents their fair share. We don't hide our retail space to save on costs.”

South Beach ACE takes exception to that statement. Weinsten says Portman will never produce percentage rent because the total revenues would have to generate nearly $25 million to hit the percentage rent cap. He also contends the retail rent Portman-CMC is projecting is unrealistic—it dictates prices to a market where prices are already established.

“For retail north of 17^th street, there's only one comparable group that you can look to and that's the 1701 Meridian building, which is getting about $30 a square foot net for ground floor retail space,” Weinstein says. “Meanwhile Portman-CMC expects to get $150 or $200 per square foot. At that rate, tenants are going to choose to be on Lincoln Road. It's a defenseless position that will drive tenants away.”

When it comes to office space, Portman-CMC's projected rents are more than a high-rise office space on Brickell Avenue at about $50 per square foot gross when you factor in expenses, according to the proforma filed with the City. We caught up with Gordon Messenger, the exclusive leasing agent for 420 Lincoln, an office building on Miami Beach, to get his take on office rents.

“For class A buildings with no parking, you are looking at the low $30s full-service gross,” Messenger tells GlobeSt.com. “You won't get even close to $50 gross. You are not even getting $50 gross for brand new class A office space at buildings like 1450 Brickell and 600 Brickell. I've been leasing office space on Miami Beach since 2004. I can't tell you any time we even approached $40 a foot.”

A Portman spokesperson tells GlobeSt.com, "We're planning on releasing a list of supporters in the next week." The South Beach ACE proposal has won widespread support from Lincoln Road businesses and property owners.

ACE endorsements include Vornado Realty Trust, owner of the Regal Cinema Building at 1100 Lincoln Road; Fryd Properties, which owns property on Lincoln Road, Washington Avenue, 41st Street, Alton Road, and 5th Street; Lincoln Center Associates, which owns 618-690 Lincoln Road; the owner of The Sterling Building at 927 Lincoln Road; 900 Lincoln Road owner Gombinski Properties; the Brody family, owners of 1000 Lincoln Road; and RC LR Holdings, LLC, which owns the Van Dyke Building at 846 Lincoln Road.

Among the factors that have contributed to this support is the prospect of bringing OMA's iconic designs to Miami Beach. South Beach ACE principal Robert Wennett was among the first developers to bring a world-renowned architecture firm to city when he built the 11 11 Lincoln Road complex in 2010. Since then, the mixed-use development designed by Herzog & de Meuron has emerged as a Miami Beach landmark and a source of positive economic impact for the neighborhood.

“As a Lincoln Road property owner, I support the City's efforts to redevelop the Miami Beach Convention Center,” says Sam Herzberg, CEO of The Sterling Building, Inc. “I have reviewed both plans and feel the South Beach ACE proposal is a better fit for our community. South Beach ACE understands what Miami Beach needs, and members of its team have already demonstrated an ability to change our City for the better through smart development and world-class design.”