562-2008 RDA ResoRESOLUTION NO. 562-2008
A RESOLUTION OF THE CHAIRPERSON AND MEMBERS
OF THE MIAMI BEACH REDEVELOPMENT AGENCY (RDA),
APPROVING AND AUTHORIZING THE CHAIRMAN AND
SECRETARY TO EXECUTE A RETAIL LEASE AGREEMENT
BETWEEN THE RDA AND LIQUOR LOUNGE CAFE, INC.,
FOR SUITE A IN THE ANCHOR SHOPS, LOCATED AT 1550
COLLINS AVENUE, MIAMI BEACH, FLORIDA; SAID LEASE
AGREEMENT HAVING AN INITIAL TERM OF TWELVE (12)
YEARS, COMMENCING ON DECEMBER 20, 2008, AND
ENDING ON DECEMBER 31, 2020, WITH TWO (2)
RENEWAL OPTIONS OF FIVE (5) YEARS EACH, AT THE
RDA'S SOLE AND ABSOLUTE DISCRETION, SUBJECT TO
AND PURSUANT TO THE TERMS AND CONDITIONS SET
FORTH IN THE AGREEMENT.
WHEREAS, Liquor Lounge Cafe, Inc., (Tenant) has been a tenant in good standing at the
Anchor Shops since December 20, 2000; and
WHEREAS, the Tenant's current lease is set to expire on December 19, 2010, without any
renewal options; and
WHEREAS, even though the Tenant still has more than two years remaining on its current
lease term, the Tenant is requesting a new lease, for an initial term of twelve (12) years, in order to
secure financing to undertake improvements to the premises; and
WHEREAS, on April 21St, 2008, a discussion was held at the Finance and Citywide Projects
Committee (the Committee) pertaining to Tenant's request; and
WHEREAS, the Committee directed staff to undertake an analysis of market rents in the
area, and to negotiate a new lease, toinclude apass-through provision for taxes and insurance as
well as an escalation factor; and
WHEREAS,. pursuant to the Committee's direction, RDA staff engaged Integra Realty
Resources (Consultant) to conduct a Fair Market Rent analysis involving all relevant/comparable
retail properties in the area of Collins and Washington Avenues, between 10th Street and Lincoln
Road; and
WHEREAS, the Consultant recommended a minimum base rent of $50.00/sq.ft ($9,375 per
month or $112,500 per year) on a triple net lease basis, with common area expenses (CAM) passed
through as additional rent; and
WHEREAS, on August 21, 2008, staff presented the Finance Committee with the new
proposed Lease, reflecting the Consultant's recommendations as well as the initial direction of the
Committee; and
WHEREAS, the Committee unanimously recommended entering into a new Lease
Agreement with Tenant, subject to the following: 1) the initial Lease Term will be for twelve (12)
years, commencing on December 20, 2008; 2) the initial minimum base rent will be $40.00/sq ft. for
the period from January 1, 2009 to December 31, 2009; then, commencing on January 1, 2010, the
minimum base rent would be increased to $50.00/sq ft.; with annual escalations to follow as
provided for in the Proposed Lease Summary attached hereto; and 3) renewal of the proposed
Lease, while still at the RDA's sole discretion, could also include consideration of Tenant's
implementation of planned improvements to the Premises, in accordance with a schedule of values
to be submitted for review and approval by RDA staff.
NOW, THEREFORE, BE IT DULY RESOLVED BY THE CHAIRPERSON AND
MEMBERS OF THE MIAMI BEACH REDEVELOPMENT AGENCY, that the Chairperson
and Members of the Miami Beach Redevelopment Agency hereby approve and authorize
the Chairman and Secretary to execute a Retail Lease Agreement between the RDA and
Liquor Lounge Cafe, Inc., for Suite "A" in the Anchor Shops, located at 1550 Collins
avenue, Miami Beach, Florida; said Lease Agreement having an initial term of twelve (12)
years, commencing on December 20, 2008, and ending on December 31, 2020, with two
(2) renewal options of five (5) years each, at the RDA's sole- and absolute discretion,
subject to and pursuant to the terms and conditions set forth in the Agreement.
PASSED and ADOPTED this 7th day of October, 2008
ATTEST:
CRETARY
Robert Parcher
H RMAN
Matti Herrera Bower
JMG\TH\KOB
t:\Agenda\2008\Oct7\RDA\Liquor Lounge Cafe Res.doc
APPROVED AS TO
FORM 8~ LANGUAGE
~ FOR EXECUTION
MIAMI BEACH REDEVELOPMENT AGENCY ITEM SUMMARY
Condensed Title:
A Resolution approving a new retail lease Agreement between the RDA and and Liquor Lounge Cafe, Inc., for Suite "A" in the
Anchor Shops, located at 1550 Collins avenue, Miami Beach, Florida; said Lease Agreement having an initial term of twelve
(12) years, commencing on December 20, 2008, and ending on December 31, 2020, with two (2) renewal options of five (5)
years each, at the RDA's sole and absolute discretion, subject to and pursuant to the terms and conditions set forth in the
Agreement.
Key Intended Outcome Supported:
Increase resident satisfaction with the level of services and facilities.
Supporting Data (Surveys, Environmental Scan, etc.):
Approximately 40% of retail businesses surveyed, rank Miami Beach as one of the best places to do business and 61
of the same group would recommend Miami Beach as a place to do business. The Tenant's request to renew its Lease
at the Anchor Shops supports the Survey's findings.
Issue:
Shall the RDA authorize a renewal of the Retail Lease Agreement between the RDA and Liquor Lounge Cafe, Inc., in the
Anchor Shoos?
Item Summa /Recommendation:
On April 215 , 2008, a discussion was held at the Finance and Citywide Projects Committee meeting pertaining to a
proposed retail lease renewal at the Anchor Shops involving Liquor Lounge Cafe, Inc. (Tenant). Even though the Tenant
still has more than two years remaining on its current lease term, the Tenant is requesting to renew its lease for an
additional ten years in order to secure financing to undertake improvements to the premises.. The Committee requested
an analysis of market rents iri the area and for staff to renegotiate the proposed Lease accordingly together with some
form of pass-through provision for taxes and insurance, as well as an annual escalating factor.
The RDA subsequently engaged Integra Realty Resources (Consultant) to conduct a Fair Market Rent Analysis involving
all relevant/comparable retail properties in the area. In the case of Liquor Lounge, the Consultant recommended a
minimum base rent of $50.00/sq.ft or $9,375 per month; $112,500 per year, on a triple net lease basis, with common
area expenses (CAM) passed through as additional rent. Staff subsequently renegotiated the terms of the proposed
Lease, in accordance with the Consultant's recommendations aswell asthe initial direction of the Finance Committee.
The revised lease terms were brought back to the Committee for consideration on August 215, 2008. The Committee
adopted a unanimous motion recommending in favor of entering into a new Lease Agreement with Liquor Lounge,
subject to the following changes: 1) the Initial Lease Term should be extended from ten (10) years to twelve (12 years,
commencing on December 20, 2008, instead of December 20, 2010. (Note: The Tenant's current Lease which expires
on December 20, 2010, would be terminated upon commencement of the new Lease); 2) the new minimum base rent
of $50.00/sq.ft would apply on January 1, 2010, with annual escalations to follow as provided for in the attached
proposed Lease Summary; and 3) renewal of the proposed Lease would be subject to the Tenant's implementation of
planned improvements to the premises in accordance with a schedule of values to be submitted for review and approval
by the Administration.
Adviso Board Recommendation:
Finance and Citywide Projects Committee -April 21 and August 21, 2008 - Recommended in favor of executing a
new lease subject to the conditions noted above.
Financial Information:
Source of Amount Account Approved
Funds: ~
OBPI Total
Financial Impact Summary:
Citv Clerk's Office Les~islative Trac
Kent Bonde
Si n-Offs•
de elopment Coordinator ~
m MIAMIBEACH
Assistant Director
,, M RDA ~ ~_
DATE D 7 4 8
m MIAMIBEACH
City of Miami Beach, 1700 Convention Center Drive, Miami Beach, Florida 33139, www.miamibeachfl.gov
MIAMI BEACH REDEVELOPMENT AGENCY MEMORANDUM
TO: Chairman and Members of the Miami Beach Redevelopment Agency
FROM: Jorge M. Gonzalez, Executive Director
DATE: October 7, 2008
sua~ECT: A RESOLUTION OF THE CHAIRPERSON AND MEMBERS OF THE
MIAMI BEACH REDEVELOPMENT AGENCY (RDA), APPROVING AND
AUTHORIZING THE CHAIRPERSON AND SECRETARY TO EXECUTE
A RETAIL LEASE AGREEMENT BETWEEN THE RDA AND LIQUOR
LOUNGE CAFE, INC., FOR SUITE A IN THE ANCHOR SHOPS,
LOCATED AT 1550 COLLINS AVENUE, MIAMI BEACH, FLORIDA; SAID
LEASE AGREEMENT HAVING AN INITIAL TERM OF TWELVE (12)
YEARS, COMMENCING ON DECEMBER 20, 2008, AND ENDING ON
DECEMBER 31, 2020, WITH TWO (2) RENEWAL OPTIONS OF FIVE (5)
YEARS EACH, AT THE RDA'S SOLE AND ABSOLUTE DISCRETION,
SUBJECT TO AND PURSUANT TO THE TERMS AND CONDITIONS SET
FORTH IN THE AGREEMENT.
ADMINISTRATION RECOMMENDATION
Adopt the Resolution.
ANALYSIS
On April 21St, 2008, a discussion was held at the Finance and Citywide Projects Committee
(the Committee) meeting pertaining to a proposed retail lease renewal at the Anchor Shops
involving Liquor Lounge Cafe, Inc. (Tenant).
By way of background, Liquor Lounge has been a tenant in good standing at the Anchor
Shops since December 20, 2000, operating an upscale lounge that offers a wide variety of
liquors and cordials including beers, ales and wines from around the world, a light dining
menu and periodic live jazz performances. Liquor Lounge's Lease was originally approved
in conjunction with and as part of an early termination settlement agreement involving a
previous tenant. Liquor Lounge assumed the same rent structure as in the previous tenant's
lease as well as the remaining term, which expires on December 19, 2010, without any
renewal options.
Even though the Tenant still has more than two years remaining on its current lease term,
the Tenant is requesting to renew its lease for an additional ten years in order to secure
financing to undertake improvements to the premises. It should be noted that at the time
Liquor Lounge assumed the lease from the previous tenant, it made a significant investment
to upgrade and improve the space.
Redevelopment Agency Memorandum - Anchor Shops
Retail Lease Renewal
October 7, 2008
Page 2 of 4
The original lease proposal presented to the Committee contemplated an initial term of ten
(10) years, with two (2) five (5) year renewal options, subject to the sole and absolute
discretion of the RDA. The initial base rent proposed was $91,140 annually ($40.00/sq.ft.),
for years one (1) through five (5), and escalating to $95,697 annually ($42.00/sq.ft.) for years
six (6) through ten (10).
The Committee expressed concern with the proposed rent structure, speculating that the
market area could command a higher rent, with some form of pass-through provision for
taxes and insurance, as well as an annual escalating factor. To this end, the Committee
requested an analysis of market rents in the area and for staff to renegotiate the proposed
Lease accordingly.
Pursuant to the Committee's direction, the RDA engaged Integra Realty Resources
(Consultant) to conduct a Fair Market Rent Analysis involving all relevant/comparable retail
properties in the area of Collins and Washington Avenues, between 10th Street and Lincoln
Road. According to the Consultant, unadjusted lease rates in the area generally range from
$40.00/sq.ft. to $65.00 sq.ft., with lease terms averaging three to five years. Lease rates
were quoted on a triple net basis. In the case of Liquor Lounge, the Consultant is
recommending a minimum base rent of $50.00/sq.ft or $9,375 per month; $112,500 per
year, on a triple net lease basis, with common area expenses (CAM) passed through as
additional rent. A copy of the study's Certification And Fair Market Rent Analysis sections are
included with this memorandum.
It should be noted that in the case of the Anchor Shops, all current leases are gross leases,
with Tenants responsible for their own utility expenses, which are metered separately.
Property taxes are not passed through as an expense to the tenants but are absorbed as an
operating expense of the garage and retail operations. In 2007, property taxes on the facility
were $391,551. Also, with the garage being covered under the City's self-insurance fund,
there isn't an actual tangible insurance cost for the facility. However, for the purpose of
determining an insurance contribution factor to include in the CAM rate, the City's insurance
broker was able to come up with a rate of .2236 per $100 of total building replacement
value. Based on a projected replacement value of $20 Million ($25,000/space), the cost of
insurance was estimated at $46,520. Based on the forgoing information as well as the
attached CAM schedule, CAM was calculated at $1.52/sq.ft., which in the case of Liquor
Lounge would result in an additional rent of $286 per month; $3,427 per year.
As directed, staff renegotiated the terms of the proposed Lease, the terms of which were
reflective of the Consultant's recommendations aswell asthe initial direction of the Finance
Committee. The revised lease terms were brought back to the Committee for consideration
on August 21St, 2008. The Committee adopted a unanimous motion recommending in favor
of entering into a new Lease Agreement with Liquor Lounge, subject to the following
changes: 1) the Initial Lease Term should be extended from ten (10) years to twelve (12
years, commencing on December 20, 2008, instead of December 20, 2010. (Note: The
Tenant's current Lease which expires on December 20, 2010, would be terminated upon
commencement of the new Lease); 2) the new minimum base rent of $50.00/sq.ft would
apply on January 1, 2010, with annual escalations to follow as provided for in the attached
proposed Lease Summary; and 3) renewal of the proposed Lease would be subject to the
Tenant's implementation of planned improvements to the premises in accordance with a
schedule of values to be submitted for review and approval by the Administration.
Redevelopment Agency Memorandum - Anchor Shops
Retail Lease Renewal
October 7, 2008
Page 3 of 4
The current proposed terms are as follow:
Commencement Date: December 20, 2008
Initial Lease Term: Twelve (12) years.
Renewal Options: Two (2) options @ five (5) years each, subject to
Landlord's sole and absolute discretion.
Base Rent: The minimum of $50.00/sq.ft; $9,375 per month; $112,500
per year; or 5% of Gross Income, whichever is greater.
Rent Commencement Date: January 1, 2009 (With new rent to commence on January 1,
2010)
Annual Rent Increase: The lesser of CPI or 3%
CAM Pass-Through: $1.52/sq.ft.;$286 per month; $3,427 per year, subject to
adjustment annually for property taxes and insurance.
Renewal Option Period Reset to prevailing market rate at the time renewal option
Rent: is granted.
A copy of the proposed Lease Summary, providing additional detail of the proposed terms is
also included with this memorandum.
As noted in the April 21St Committee Memorandum, staff has reviewed and is satisfied with
the Tenant's financial references and business experience, which includes the operation of
four successful restaurant/bars in Miami Beach, including the recently opened BBQ Beach,
also located at the Anchor Shops. Additionally, although not required, the Administration
has conducted a formal Planning Analysis, to determine the suitability of executing a new
Lease with Liquor Lounge, in terms of its consistency with the City's goals and objectives
and conformance with the Comprehensive Plan. A copy of the Analysis is also included with
this memorandum.
Also, as indicated throughout, the Tenant not only has a proven track record on the
premises, but is also committed to its long-term future. This is particularly evident given the
Tenant's previous and planned level of capital investment in the property. Given the current
downturn and future uncertainties in the economy, seeking a higher rent or a different tenant
for the space would not only put a viable business out of business, but would also likely
result in the loss of significant lease revenues until such time that a new tenant was secured
for the space.
Based on the forgoing information, the Administration recommends in favor of executing a
new Lease with Liquor Lounge Cafe, Inc., based on the terms as proposed.
JMG/TH/KOB
T:Wgenda\2008\Oct 7\RDA\LIQUOUR LOUNGE.MEMO.DOC
Redevelopment Agency Memorandum - Anchor Shops
Retail Lease Renewal
October 7, 2008
Page 4 of 4
Enclosures:
- Integra Realty Resources Fair Market Rental Analysis Summary
- CAM Calculation Schedule and Assumptions
- Revised Proposed Lease Term Summary -between RDA and Liquor Lounge Cafe, Inc.
- Planning Analysis dated March 3, 2008
LANDLORD:
TENANT:
Miami Beach Redevelopment Agency, a public body
corporate and politic
1700 Convention Center Drive
Miami Beach, Florida 33139
Liquor Lounge Cafe, Inc., a Florida corporation
4299 Collins Avenue
Miami Beach, Florida 33140
DATE OF EXECUTION: , 2008
ANCHOR SHOPS AT SOUTH BEACH
RETAIL LEASE
F:\ECON\$ALL\RDAWnchor_Ret\Liquour Lounge\New Lease Draft.doc
~I~
LEASE SUMMARY
The following is a summary of basic lease provisions with respect to the Lease. It is an integral part of the
Lease, and terms defined or dollar amounts specified in this Summary shall have the meanings or amounts as
stated, unless expanded upon in the text of the Lease and its Exhibits, which are attached to and made a part of
this Summary.
1. Date of Lease Execution: , 2008
2. "Landlord": Miami Beach Redevelopment Agency
3. Landlord 's Address: Miami Beach Redevelopment Agency
1700 Convention Center Drive
Miami Beach, Florida 33139
Attention: Executive Director
with a copy to:
City of Miami Beach
Miami Beach Redevelopment Agency
1700 Convention Center Drive
Miami Beach, Florida 33139
Attention: Legal Department
4. "Tenant": Liquor Lounge Cafes, Inc.
5. Tenant's Address: Liquor Lounge Cafe, Inc.
4299 Collins Avenue
Miami Beach, Florida 33140
Attention: Mr. Timothy Wilcox, President
6. "Guarantor": Liquor Lounge Cafes, Inc.
7. Guarantor's Address: Mr. Timothy Wilcox
4299 Collins Avenue
Miami Beach, Florida 33140
8. Premises (section 1.1): As shown on Exhibit "B"
1550 Collins Avenue -Suite 1
Miami Beach, Florida 33139
9. Gross Rentable Area of
Premises (section 1.1): Approximately 2,250 rentable square feet, plus the
square footage of the outdoor patio area described in
section 3.8 of the Lease.
10. Gross Rentable Area of
Retail Space (section 1.11: Approximately 20,500 rentable square feet
F:\ECON\$ALL\RDA\Anchor Ret\Liquour Lounge\New Lease Draft.doc
~II~
11
12
Permitted Use of
Premises (section 3.1):
Term of Lease (section 1.1):
First-class, up-scale lounge selling a wide variety and
selection of liquors and cordials, including: the sale of
cocktails, beers, ales, and wines from around the world,
fresh sgeezed juices fruit drinks; the right to prepare a
light dining menu for on-premises consumption; the right
to provide for the seating of patrons; the right to provide
live entertainment in the form of live jazz and/or piano
playing, subject to and in compliance with the City's
Noise Ordinance (as may be amended from time to
time); and the right to table service and table settings
(and subject to the prohibited uses described in
Exhibit "D" to the Lease).
Twelve (12) years
"Commencement Date": December 20, 2008,
"Rent Commencement Date": January 1, 2009
"Expiration Date" Twelve (12) years after the "Rent
Commencement Date."
"Renewal Options": Two (2) options of five (5) years,
after the Expiration Date of the Lease Term. Tenant
must notify Landlord in writing, one hundred and eighty
(180) days prior to the Expiraton Date of its intent to
exercise the Renewal Option.
13. "Minimum Rent" (section 2.2):
LEASE YEAR
2
3-12
ANNUAL MINIMUM RENT*
$88,740
A minimum of $112,500.00 or 5% of
Gross Receipts , whichever amount
is greater.
See Note (``)
MONTHLY PAYMENT
(INCL. SALES TAX)
$7,912.65
$10,031.25
See Note (*)
Note (") Beginning on January 1, 2011, and at the beginning of each succeeding year thereafter during the Term
of the Lease, the Minimum Rent shall be adjusted by multiplying the Minimum Rent then being paid by a fraction,
the numerator of which shall be the Consumer Price Index - U.S. City average for urban wage earners and clerical
workers all items (1982-84 equals 100) ("CPI") for the third month-preceding the month of adjustment, and the
denominator of which shall be the CPI for the fifteenth month preceding the month of adjustment. Anything herein
to the contrary-notwithstanding, in no event shall Minimum Rent in any year be less than the Minimum Rent paid
for the immediately prior year. Should the CPI become unavailable, a reasonable substitute prepared by the U.S.
Department of Labor or other source, as designated by Landlord, shall be used. Minimum Rent shall continue to
F:\ECON\$ALL\RDA\Anchor_Ret\Liquour Lounge\New Lease Draft.doc
(iii)
be payable in monthly installments as otherwise described above until Landlord notifies Tenant of the new monthly
Minimum Rent installment amount. Landlord shall attempt to so notify Tenant prior to the commencement of each
adjustment date. However, failure of Landlord to timely notify Tenant of the new monthly Minimum Rent
installment amount shall not be deemed a waiver by Landlord of the increased rental; the new monthly amount (or
any portion to previously paid) shall be payable, retroactive to the commencement of the new adjustment date,
upon notification by Landlord to Tenant of the new monthly Minimum Rent installment amount. Notwithstanding
the foregoing, the annual Minimum Rent shall not be increased by more than three percent (3%) from the
Minimum Rent payable for the immediately prior year.
14. Additional Rent: N/A
15. Percentage Rental (section 2.3): N/A
16. Prepaid Rent: N/A
17. First Month Rent: Due on January 1, 2009
18. Security Deposit (section 2.7): $10,031.00 (excludes sales tax) (due upon execution of
Lease.
19. Cost Pass-Throu ghs (CAM) (section 2.4): Proportionate share of Property Taxes and Insurance
on the Anchor Shops and Parking Garage.
COMMON AREA MAINTENANCE (CAM)
LEASE YEAR COST PER SQUARE FOOT" MONTHLY/ANNUAL
PAYMENT
1 n/a n/a
2 $1.52 $286/$3,427
3 - 12 See Note (*) See Note (*)
Note (*) Beginning on January 1, 2011, and at the beginning of each succeeding year thereafter during the Term
of the Lease, the CAM rate shall be adjusted to reflect the actual pro-rata share of property tax and insurance
costs incurred by the Landlord during the previous calendar year.
20. Option Period(s) Rent:
Upon notification of the Tenant's request to exercise its renewal option(s), as provided for in Section 13 of the
Lease Summary, the Landlord shall engage an independent appraisal firm to determine comparable prevailing
market rents and shall adjust the rent during the renewal period accordingly.
21. Comprehensive General
Liability Insurance (section 6.1): $1,000,000.00
22. Monthly Promotional CharcLe
(section 13.1): N/A
23. Broker(s) (section 14.12): N/A
24. Completion Date for Tenant's Work
(section 5.1): N/A
F:\ECON\$ALL\RDA\Anchor_Ret\Liquour Lounge\New Lease Draft.doc
(IV)
25. Trade Name (section 3.1): Liquor Lounge Cafe
F:\ECON\$ALL\RDA\Anchor Ret\Liquour Lounge\New Lease Draft.doc
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m MIAMIBEACH
PLANNING DEPARTMENT
INTEROFFICE MEMORANDUM
TO: Tim Hemstreet, Assistant City Manager
Digitally vgned by Pochard Lorber
FROM: Jorge G. Gomez, Planning Director(~~L ~ ~a<„.o :Ra ~°9 'e~r„~."`~"
YY~` (~~ ernallalorGer@miamlbexhflgov,c~US
Dah: 300BA3.03 10:0):39 -05'00'
DATE: .March 3, 2008
SUBJECT: Analysis of Proposed Lease with Liquor Lounge Cafe, Inc.
Anchor Shops, 1550 Collins Avenue -Suite 1
Pursuant to your request, this memorandum will serve as a planning analysis of the
proposed lease agreement between the City of Miami Beach and Liquor Lounge Cafe, Inc.,
for a ten (10) year lease of retail space within the Anchor Shops, located at 1550 Collins
Avenue, for use as a bar/restaurant/entertainment establishment.
Section 82-38 of the Code of the City of Miami Beach requires that any proposed sale or
lease of City-owned land be analyzed from a planning perspective so that the City
Commission and the public are fully appraised of all conditions relating to the proposed sale
or lease. The following is an analysis of the criteria delineated in the Code:
1. Whether or not the proposed use is in keeping with city goals and objectives
and conforms to the city comprehensive plan.
Consistent -The Future Land Use Map of the City's Comprehensive Plan
designates the site as P, Parking, reflecting the main use of the property as a
parking garage. This designation permits commercial uses when located on
frontage opposite a land use category that permits commercial use. The site is
surrounded by property designated CD-3 High Density Commercial, RM-3 High
Density Residential Multifamily, and MXE Mixed-Use Entertainment. Therefore, the
use of a retail space within property as a commercial use within the parking garage
is permitted by the Comprehensive Plan.
2. The impact on adjacent property, including the potential positive or negative
impacts such as diminution of open space, increased traffic, noise level or
enhanced property values, improved development patterns and provision of
necessary services. Based on the proposed use of the property, the city shall
determine the potential impact of the project on city utilities and other
infrastructure needs and the magnitude of costs associated with needed
infrastructure improvements. Should it become apparent that further
evaluation of traffic impact is needed, the proponent shall be responsible for
obtaining a traffic impact analysis from a reputable traffic engineer.
Proposed Lease -Liquor Lounge Cafe
Anchor Shops, 1550 Collins Avenue
March 3, 2008
Page 2
Consistent -The Liquor Lounge has occupied the subject space in its existing
configuration since 2000; therefore, no significant change in conditions would result
from the approval of the proposed ten year lease. The continuation of the use of
this space for this purpose should not have significant negative impacts on the
surrounding area.
3. A determination as to whether or not the proposed use is in keeping with a
public purpose and community needs, such as expanding the City's revenue
base, reducing City costs, creating jobs, creating a significant revenue stream
and improving the community's overall quality of life.
Consistent -The retail lease generates an income stream for the City, and the
lounge provides jobs for local hospitality workers. As long as this venue operates in
a responsible way, it has the potential to be an asset to this area of the City.
4. Determination as to whether or not the development is in keeping with the
surrounding neighborhood, will block views, or create other environmental
intrusions, and evaluation of the design and aesthetic considerations of the
project.
Consistent -The establishment is already in operation, and has not created
significant negative effects on the surrounding neighborhood. There have been no
noise violations or other significant code violations in the past four years.
5. The impact on adjacent properties, whether or not there is adequate parking,
street, and infrastructure needs.
Consistent -The retail space is located within amulti-story parking garage
structure, ensuring adequate parking. Since the establishment is in currently in
operation, no further infrastructure needs are anticipated.
6. A determination as to whether or not alternatives are available for the
proposed disposition, including assembly of adjacent properties, and whether
the project could be accomplished under aprivate-ownership assembly.
Consistent -This criterion is not applicable as the establishment is already
operating within the subject space, and the proposed lease extends the term of the
lease.
7. Within the constraints of public objectives, the department should examine
financial issues such as job generation, providing housing opportunities, and
the return to the City for its disposition of property.
Consistent -The existing establishment slightly increases the job base of the City
(e.g., bartenders, waiters, etc.). The proposed lease would be expected to maintain
this level of job creation. No housing opportunities are created by the proposed
lease.
Proposed Lease -Liquor Lounge Cafe
Anchor Shops, 1550 Collins Avenue
March 3, 2008
Page 3
8. Such other issues as the Planning Department may deem appropriate in
analysis of the proposed disposition.
Consistent -While the approval of any alcoholic beverage establishment carries a
degree of concern from the Planning Department, this particular venue has operated
responsibly for the past several years, and appears to be a good corporate citizen of
Miami Beach.
JGG/RGL
F:\PLAN\$ALL\Richard\Working Folder\Shapiro Liquor Lounge planning analysis.doc
FAIR MARKET RENT APPRAISAL
OF THE
Anchor Shops, Suite 1
1550 Collins Ave.
Miami Beach, Miami-Dade County, Florida 33139
PREPARED FOR:
Kent O. Bonde
Redevelopment Coordinator
City of Miami Beach
1700 Convention Center Dr.
Miami Beach, Florida 33139
EFFECTIVE DATE OF THE APPRAISAL:
June 4, 2008
PREPARED BY:
INTEGRA REALTY RESOURCES -MIAMI
File Number: 123-2008-0080
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~1~~V~ Realty Resources
Local Fxpertise...Natiorlally
~.
June 11, 2008
Mr. Kent O. Bonde
Redevelopment Coordinator
City of Miami Beach
1700 Convention Center Dr.
Miami Beach, Florida 33139
Re: Fair Market Rent Appraisal
of The Anchor Shops, Suite 1
' 1550 Collins Avenue
Miami Beach, Florida 33139
Integra -Miami File No. 123-2008-0080
Dear Mr. Bonde:
In accordance with your request, Integra -Miami has appraised the Fair Market Rent of the
captioned retail space currently known as the Anchor Shops, located within the Lowes Parking
Garage at 1550 Collins Avenue, Miami Beach, Florida, 33139.
The purpose of this appraisal is to develop an opinion as ~to The Minimum Rent; and address
Percentage Rent of Gross Sales, based upon a natural breakeven point under the property's
Highest and Best Use.
The subject property under appralsement is a 2,250E square foot retail suite located within the
20,500 gross square foot Anchor Shops on the ground floor of the City of Miami Beach's
municipal parking garage (Lowes Parking Garage) at Collins Ave. and 16~' Street.
The leasehold space is currently under a Lease Agreement entered into on December 20, 2000,
between Liquor Lounge Cafe ,Inc. (as Licensor) and the City of Miami Beach (as Licensee).
The initial term of this Licensed Agreement was for ten (10) years, effective October 20, 2000,
with an expiration date of December 19, 2010. The current lease rate is $88,740 annually or
$39.44 per square foot, modified gross. The tenant is responsible for electric and interior
maintenance.
The Redevelopment Agency (RDA) is currently in the process of negotiating a new lease for the
subject space with the current tenant. The City is contemplating an initial term of ten (10) years
with two conditional five (5) year renewal options.
The intended use of Integra Miami's Fair Market Rent Appraisal is to aid the City of Miami
Beach in structuring and negotiating a new leasehold for this retail space.
1~
94~ 5. Dadela~d Boulevard, PH-i - Miarni, R 33156-2817 Phone: 3fl5-670-D001 Fax; 305-67D-2276
r._l
Kent O. Bonde
City of Miami Beach
June 11, 2008
Page Two
We trust that our fmdings, conclusions and opinions contained within this Report provides the
City with relevant information for the decision making process.
Respectfully submitted,
INTEGRA REALTY RESOURCES -MIAMI
_~ ~,
Michae annon, MAI, SRA, ASA, FRICS, CRE
Executive D ctor
State Certified General Real Estate Appraiser
FL Certificate No. RZ684
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)94
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Integra Realty Resources
Miami
ANCHOR SHOPS (SUITE 1 ~ CERTIFICATION
CERTIFICATION
We certify that, to the best of our knowledge and belief:
• The statements of fact contained in this report are true and correct.
• The reported analyses, opinions, and conclusions are limited only by the reported
_ assumptions and limiting conditions, and are our personal, impartial, and unbiased
professional analyses, opinions, and conclusions.
• We have no present or prospective interest in the property that is the subject of this
report and no personal interest with respect to the parties involved.
• We have no bias with respect to the property that is the subject of this report or the
parties involved with this assignment.
• Our engagement in this assignment was not contingent upon developing or reporting
predetermined results.
_
• Our compensation for completing this assignment is not contingent upon the
development or reporting of a predetermined value or direction in value that favors
the cause of the client, the amount of the value opinion, the attainment of a stipulated
result, or the occurrence of a subsequent event directly related to the intended use of
this appraisal.
• Our analyses, opinions, and conclusions were developed, and this report has been
prepared, in conformity with the requirements of the Code of Professional Ethics and
Standards of Professional Appraisal Practice of the Appraisal Institute, which
includes the Uniform Standards of Professional Appraisal Practice (USPAP).
• The use of this report is subject to the requirements of the Appraisal Institute relating
to review by its duly authorized representatives.
• Michael Y. Cannon, MAI, SRA, ASA, FRICS, CRE and Chris Librizzi have made
personal inspections of the property, and surrounding area, that is the subject of this
re
ort
p
.
• No one provided significant real property appraisal assistance to the person(s) signing
this certification.
• This appraisal is not based on a requested minimum valuation, a specific valuation, or
the approval of a loan.
• We have not relied on unsupported conclusions relating to characteristics such as
race, color, religion, national origin, .gender, marital status, familial status, age,
receipt of public assistance income, handicap, or an unsupported conclusion that
homogeneity of such characteristics is necessary to maximize value.
• We have experience in appraising properties similar to the subject and are in
compliance with the Competency Rule of USPAP.
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Integra Realty Resources
Miami
0
ANCHOR SHOPS (SUITE 1 ~ CERTIFICATION
• As of the effective date Michael Y. Cannon, MAI, SRA, ASA,FRICS, CRE and Chris
Librizzi have completed the continuing education program of the Appraisal Institute,
American Society of Appraisers, and/or the State of Florida Requirements.
Concluded Opinion(s)
Based on the appraisal analysis, and subject to definitions, assumptions, and limiting
conditions stated in the reported, it is concluded that the Market Rent, factoring the
Leasehold's Minimum Rent, Percentage Rent of Gross Income, and Breakeven Point under a
Highest and Best Use is, as of the Effective Date of Appraisal, May 15, 2008 as follows:
• A Leasehold's Minimum Rent:
• A Percentage Rent of Gross Income:
• A Breakeven Point:
. (Natural Break)
$112,500 Per Year ($50.00/SF)
5.0%
$2,138,000 Of Annual Sales Income
($112,500 - .OS) _ $2,250,000
The concluded Market Rent for the subject space would be a minimum rent of $50.00
per square foot or $112,500 annually.
2,250 square feet z $50.00/SF= $112,500 annually
~ $112,500
One Hundred Twelve Thousand Five Hundred Dollars
Based upon our independent appraisal and the exercise of our professional judgment.
INTEGRA REALTY
SRA; ASA, FRICS, CRE
State Certified-General Real Estate Appraiser
FL Certificate No. RZ684
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Integra Realty Resources
Miami
State~Certified General!
Realstate App~iser
FL Cerh~n;a~t~No. RZ3094
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ANCHOR SHOPS (SUITE 1) FAIR MARKET RENT ANALYSIS
FAIR MARKET RENT ANALYSIS
Integra -Miami has conducted relevant market research of retail properties deemed
comparable/competitive to the subject space in the South Beach sub-market area along
Collins Ave. and Washington Ave, north of 10~' Street to Lincoln Rd.
The Market Survey reflects a relatively narrow range of base rents. In our survey and
interviews of active leasing agents, we have found no distinction among restaurant and
retail space along Collins Ave. as well as Washington Ave. The only differential in lease
rates was if there was Furniture, Fixtures and Equipment included, the tenant would be
required to pay "Key" money.
Lease rates were quoted on a Triple Net basis where as the tenants were responsible for all
operating expenses to include but not necessarily limited to real estate taxes, insurance
and utilities. Unadjusted quoted lease rates ranged from $40.00 to $65.00 per square foot.
Leasable area ranged from 1,200 square feet ($60.00/SF NNN) to 6,000 ($40.00/SF NNN)
Lease terms were typically 3 - 5 years. With the exception of one property, no tenant
improvement allowance was offered, thus space was leased "as is". One space comprised
of 5,900 square feet is first generation space and any build outs are to be negotiated.
It should be noted that additional rent was not imposed by the landlord for outside
sidewalk seating (where applicable)..This additional rent is based upon terms by the City
of Miami Beach for sidewalk cafes are currently at $15.00 per square foot of the
designated sidewalk area (based upon submitted. drawings inclusive of required
setbacks). `
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htegra Realty Resources
Mieroi
ANCHOR SHOPS SUITE 1 FAIR MARKET RENT ANALYSIS
OBSERVATION
Integra -Miami's views that the City's intention is to optimize leasehodl rent for
permitted retail use.
Collins Avenue/Washington Avenue, (within a block of each other) make up Miami
Beach's designer district, with high end retailers such as Armani, Nicole Miller, Diesel,
Ralph Lauren and True Religion, located south of 10th Street. The side streets reflect
smaller, local, and one-of-a-kind boutique shops such as Ritchie Swimwear Miami Beach,
A. Dominguez, etc.
Lincoln Road Mall reflects a pedestrian only, retail commercial, restaurant and office
profile, and spans from Washington Avenue (to the east) to Alton Road (to the west). The
pedestrian friendly, open mall attracts locals and visitors to shop, eat, drink and visit
various art exhibits and venues, including events at the Regal Cinema Theatre, the City
owned Colony Theatre, and the events at the Lincoln Theatre. The Lincoln Road Mall has
become a major destination attraction of Miami Beach, and its address has attracted over
175 boutiques, fashion stores, local jewelry, electronic and national brand merchants
totaling over 1 million square feet, who cater to the increasing popularity of the overall
- atmosphere of the Mall. Upscale retailers include Belle, Victoria Secretes, William
Sonoma and Jonathon Adler to name a few.
North of 10~' Street, retailer are typicall~ local merchants, souvenir shops and
restaurant/lounges. Lease rates north of 10 Street are significantly lower than those
south of 10~' Street in the "designer district" as well as on Lincoln Road.
A survey of retail users within proximity to subject,included general retailer, full service
~ restaurants as well as limited service restaurants/liquor lounges.
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Integra Realty Resources
Miami
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ANCHOR SHOPS
A FINDINGS
FAIR MARKET RENT ANALYSIS
Integra-Miami's market• rent survey and research of retail store space along Collins Ave.
and Washington Ave. provided reliable market data which identified a number of retail
lease rates currently quoted at comparable/competitive locations.
The subject space, known as the Anchor Shops, is located on the ground floor of the seven
story Lowes Parking Garage. The location of the subject space and design features of the
parking garage significantly inhibits construction of a traditional full service restaurant
operation due to the design requirements of a full service kitchen. The subject's existing
space is best described as limited food service, and liquor lounge with full service bar. The
~ subject space, with little capital cost, could be retrofitted for other retail use.
CONCLUSION AND OPINIONS
"' CONCLUSIONS
The subject space location, within the Anchor Shops benefits significantly from the traffic
of the hotels (Lowes Hotel, Ritz Carlton, Delano, Royal Palm), parking garage, as well as
pedestrian traffic along Collins Ave.
The Lowes Hotel (780 keys); Ritz Carlton (375 keys); Delano (193 keys) and Royal Palm
(417) account for a total of 1,756 total keys (rooms). As reported by the City of Miami
Beach, the average annual occupancy in Miami Beach is 74.2% with double occupancy.
Thus on any given day, these four hotels could provide up to 2,619 guest per day.
The local hotels, daily transient pedestrian traffic (to include parking garage), as well as
the existing Collins Ave./Washington Ave. retail stores, should support a retail or a liquor
lounge facility comparable to the current tenancy.
FAIR MARKET RENT OPII~TION
Fair Market Rent Should be Based Upon the Following:
LEASEHOLD 11~IINIMUM RENT
The leasable space of 2,250 square feet's minimum guarantee rent should be based on
$50.00 per square foot or $9,375 per month; $112,500 per year on a "triple net lease
basis", with (CAM) common area expenses passed through as additional rent.
A test of reasonableness, based upon the "2006 Dollars and Cents" survey by the Urban
Land Institute, indicates that restaurants with liquor have an average ratio of gross
revenues to rent ranging from 7.11 % to 18.5%, with an average of 9.4%. Utilizing the
annual rent conclusion of $112,500, gross sales revenues would range from $608,108 to
$1,582,278.
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Integra Realty Resources
Miami
FAIR MARKET RENT ANALYSIS
ANCHOR SHOPS {SUITE 1)
Integra-Miami's rent survey indicates local retail space (utilizing a variety of tenant
classifications), reflects an average ratio of gross sales revenues to rent ranging from
5.26% to 20.53% with an average of 12.94%. Utilizing the annual minimum rent
conclusion at $112,500, gross sales revenues range from $547,979 to $2,138,783 annually
t with an average of $869,397.
~ BREAKEVEN POINT -X2,250,000
Retail and restaurant leases under a percentage rent range from 4% to 6% of gross annual
sales (less certain exclusions). To calculate the Breakeven Point for the percentage rent, a
minimum rent of $50.00/SF equates to $112,500 annually, divided by the percentage of
rent over the minimum rent to determine the "natural break point" for percentage rent
overages.
Under a percentage rent scenario at say 5%, the `Breakeven Point', based upon a `natural
break point' of gross annual sales equates to $2,250,000 annually. ($112,500 - .OS) _
$2,250,000. Thus, the leasehold's gross sales would have to reach $2,250,000 in annual
gross revenues before the percentage rent would take effect.
Integra-Miami can not speculate if a restaurant facility in the subject space would achieve
such gross revenues equal to the Breakeven Point of $2,250,000 or $1,000 per square foot.
The concluded Market Rate for the subject's space is supported with current lease rates
quoted on a price per square foot of leasable area at comparable/competitive locations.
It is therefore concluded, that the Fair Market Rent fbr the subject space would be based
upon a minimum base rate of $50.00 per square foot for an annual base rent of $112,500
(2,250 square feet x 50.00/SF= $i 12,500/annually):
$112,500
One Hundred Twelve Thousand Five Hundred Dollars
Based upon our independent appraisal and the exercise of our professional judgment.
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Integra Realty Resources
Miami
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ANCHOR SHOPS (SUITE 1)
PROPERTY IMPROVEMENTS
PROPERTY IMPROVEMENTS
ZTTILITY SERVICE
The site is serviced by the following utilities:
Water/Sewer: City of Miami Beach
Electricity: (FP&L) Florida Power and Light Company
PROPERTY IMPROVEMENTS
_ The following is a summary description of the improvements.
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BUILDINGS AND OTHER APPURTENANCES
Loves Parking Garage
Parking Garage
Retail Liner Space
Foundation:
Structure:
Windows:
Flooring:
Interior Walls/Ceiling:
Central Air Conditioning:
Toilet Rooms:
Condition:
311,394 Sq. Ft. (GBA)
290,3941 Sq. Ft; (804 total spaces)
Gross (22,500 Sq. Ft.) Net (19,8961 Sq. Ft.)
Reinforced Concrete
Concrete Block
Aluminum Frame
Carpet, and Tile
Wallboard Painted
Forced Air
Adequate
Average
Subject Space The subject s~ace is a prime corner location at Collins
Ave. and 16 Street, and is currently designed as a
liquor lounge store with cathedral ceilings, lazge open
lounge area and 30f foot bar. The leasable space has
very limited dry storage and cooler area in the rear.
Restroom facilities include a men's and woman's
restroom. The kitchen area is limited in size and
contains a dishwashing machine and minimal counter
space. No other built in kitchen equipment exists.
Outside sidewalk seating area is available. As
designed, the space could be utilized by a bar/restaurant
tenancy or retrofitted for other retail use.
Integra Realty Resources
Miami
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ANCHOR SHOPS (SUITE 1) PROPERTY IMPROVEMENTS
Parking Garage The Anchor Shops line, in the "Cowes Parking
Garage", a municipal parking garage owned and
operated by the City of Miami Beach. The garage has
seven (7) levels of parking totaling 290,394 gross
square feet and 804 parking spaces.
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Integra Realty Resources
Miami
According to the City of Miami Beach, an Easement
Agreement with the Cowes Hotel includes up to 561
parking spaces for Cowes Hotel valet parking and 174
parking spaces are under an Easement Agreement with
the Royal Palm Hotel for their valet parking. 15 spaces
are to a telephone equipment company.
Seven percent (7%) of the parking garage is utilized for
public parking, seventy (70%) is used by the Cowes
Hotel valet and twenty two percent (22%) for the Royal
Palm Hotel and two percent (2%) for other leases.
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ANCHOR SHOPS (SUITE 1)
CURRENT LEASEHOLD AGREEMENT
.,
Miami Beach, FL
Terms of Agreement: Ten (10) years; October 20, 2000 -October 19, 2010
Options to Eztend: No Options
License Granted: To operate the premises as a `first class, high scale' lounge
cafe
Minimum Guarantee: $7,395 Per Month (current lease rate), excluding sales tax
Rental Increase: Under the second five years of the lease period, rent shall
increase a fixed 5% for the remaining five years
Improvements and The tenant (licensee) is required to maintain and repair the
Maintenance: interior of the space at its sole expense
CURRENT LEASEHOLD AGREEMENT
The following is a brief of the Current Lease Agreement, summarized from a fmancial point
of view.
Date of Agreement: October 20, 2000
Licensor: City of Miami Beach Redevelopment Agency
Licensee: Liquor Lounge Cafe, Inc.
Location: 1550 Collins Ave suite 1
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Integra Reaity Resources
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