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1615-27 Various Miami Beach TUE AUG 16 1994 ED: FINAL SECTION: FRONT PAGE: lA LENGTH: 33 . 13" LONG ILLUST: SOURCE: LIZETTE ALVAREZ Herald Staff Writer DATELINE: MEMO: SOUTH BEACH WORRIES ABOUT ITS CHARACTER The old Washington Avenue barber shop is gone. So is the beauty salon and the bodega. They were replaced by expensive clothing stores, upscale vintage thrifts and trendy restaurants. Now they' re gone, too. Suddenly, the chic SoBe shops and the funky independents that give SoBe a homegrown feel have something in common: they're buckling under as rents soar and tourists stay away. Stores, restaurants, bars, all the things that define the neighborhood' s character and serve its eclectic crowd, are going through a dizzying spell of change. Andrew Blake bought into the SoBe dream two years ago. Buggatti, his upscale clothing store, replaced a fruit stand. He didn't care that the rent tripled practically overnight. He gladly paid $4 , 000 a month. Now he regrets it as he sits in his shop, surrounded by shelves full of designer clothing that no one is buying. "If it continues this way, we will leave. All the money we have spent will go to waste, " he says, ruefully admitting that he overestimated the appeal of South Beach. "At the beginning, in 1991 and 1992, when the beach started getting big, it was such hype. The prices went up and up. Some people went on ahead. I was one of those people. And now I 'm paying the price. "Something will have to happen. Either they will have to produce masses of people or rents will have to go down. If not, it will be ghost town. " The new SoBe -- the Glitzy SoBe trying to expand beyond Ocean Drive -- is going through growing pains, leaving business people and residents wondering if the area is headed in the right direction. "It got hot too fast, too soon, " said Jozef Alhale, a real estate analyst with J.B. Alhale and Associates in Miami. "When you 're talking about paying almost $50, 000 a year before you turn on the lights, you ' re going to see lots of turnover. It (rent) has to come down for it to survive. " Residents say Washington Avenue used to be theirs -- a place where they could get a prescription filled, get a hair cut, cash a check, buy cheap food. It was Main Street USA. "It didn't have one single identity but you could get almost anything done, " said Scott Robins, chairman of the Washington Avenue Association. Then chic nudged out the practical mix. In 1993, there were 39 specialty stores and 28 restaurants on Washington Avenue, taking over spots once occupied by fish markets, hardware stores, fabric shops, dry cleaners and medical offices. The new stores and shops cater mostly to tourists. But many European tourists -- the kind who favor specialty boutiques over malls -- are staying home or shopping elsewhere. "The perception of crime in Miami in the fall didn't help the season, " said Saul Gross, who owns commercial property on Washington Avenue. This winter, Euro-tourism in Greater Miami dropped 34 percent compared with January to April last year. South Beach was less affected than the rest of the county but still felt the pinch. Pockets of Washington Avenue are now places that don't make sense for anybody, not the residents who want neighborhood services or the merchants trying to support five-digit rents. The super-heated hype that encouraged trendy businesses to agree to stiff rents -- upwards of $45 a square foot for space that just two years ago rented for $25 -- masked the true nature of South Beach. Incomes have crept up and retirees have been displaced by boomers and Generations Xers . Still, SoBe is very much a working-class community. The average income per person in SoBe in 1990 was about half that of people living on the rest of the Beach, according to the Miami Beach Development Corporation. The average household income was $19, 027 . "People have this assumption that there are all these people with all this money here, " said Debbie Ohanian, who owns Meet Me in Miami at the corner of 12th street. "Most people here are waitresses and waiters. " Store owners are just now getting a reality check. "There were a lot of people who went in thinking South Beach was ' It, ' said Juan Tejeda, who invested his savings in an antique shop only to go out of business last year. "It was blown out of proportion. It was the American Riviera and all the movie stars were moving in. But that does not sustain a business on a daily basis. " That ' s no more evident than in the 1200 block of Washington Avenue, a corridor of high-fashion clothing, high-tech workouts and high-decibel clubs. It epitomizes the new South Beach. More than half of the veteran storefront businesses on the east side of the block say they are in danger of going under if something doesn't change. Meanwhile, the kinds of establishments where residents once shopped and ate continue to be forced out as their leases come due. The list is long: grocery stores, Latin cafeterias, banks, affordable clothing stores. The transition is not always graceful. Leo Denville was behind the cash register when his landlord showed up one day last year. Denville' s grocery store could stay, he was told, but at a new rent. Denville says he made several offers, none of them enough. America moved in, a slick boutique where men rummage for Calvin Kleins and Sendra boots. Shop owner Danny Setton paid premium price last year -- $4 , 000 a month including taxes, four times what Denville paid. He expected to make lots of money. It hasn' t happened yet. The store is clamoring for customers. "There is not enough traffic, " Setton said. Some experts say Washington Avenue ' s fits and starts are predictable. They say the area hasn't come close to hitting its peak. New businesses may be struggling, but entrepreneurs are undaunted. As soon as one shop closes, prospective tenants line up for the space, eager to dish out $45 for each square foot, building owners say. Vacancy rates remain almost negligible -- 1 to 3 percent. "These are growing pains, " said John Brandt, whose family has owned a large portion of the building on the 1200 block for 40 years. "There will be some fatalities along the way . . . . It ' s going to go through its cycles. " His prediction: "Next year will be even better. " Alfie Zazon, owner of Elle Studio, just moved into the 1200 block in April. He ' s already planning to expand -- into the pawn shop next door. "I believe that South Beach could be something like the Cote D'Azure of America, " he said. "Nobody is making money here, but everyone is waiting for the right moment. It has not reached a high point yet. " That point could be reached relatively soon, when several big projects are complete. In the pipeline: a new convention center hotel, a movie theater and more than a dozen upscale condo buildings that will bring thousands of residents with disposable incomes to the area. "You will see people who are influential and who can afford a high standard of living moving into the area, " Alhale said. "You will see more and more services. There will be a real need for them when you have all those condo projects completed. " That comes as little solace to the Washington Avenue merchants who say they are barely hanging on this summer. "It is a bomb waiting to explode if people don't get a handle on it, " said Don' t Panic owner Skyler Thomas, citing high rents as well as the street' s rundown look. "One block looks nice, one block looks horrible. In a corner where you have a beautiful store, someone is throwing up in front of it. " BIG CHANGE ON WASHINGTON AVENUE This graphic or story was produced on the Macintosh graphics system and could not be included in this text library database. Please refer to microfilm for this date. ADDED TERMS: END OF DOCUMENT.