Andrew Trench said his local connections could only take him so far when it comes to getting into the likes of Carbone, an Italian restaurant, or Cote, a Korean steakhouse, both among famed upscale names with ties to New York that have opened in Miami during the pandemic.
“I’ve been here almost my whole life, and I can’t get into any restaurants anymore, because they’re all New York restaurants,” Trench, executive director of Cushman & Wakefield’s Miami-based office leasing team, said in an interview. “I have to call brokers I know in New York. They get me into restaurants down here in Miami, because they know the restaurant owners in New York. It’s become a lot more New Yorky here.”
As the pandemic has sparked an influx of businesses from across the country to relocate or expand in Miami, including investment giant Citadel and law firm Kirkland & Ellis, retail tenants have followed suit as they seek to capitalize on the newcomers as well as tourists with spending power.
While national brands including Levi’s, Nike and the Cheesecake Factory have opened or are planning new locations in Miami, many of the names flocking to the market often are better known for their outposts in the Big Apple.
Miami has long been a popular destination for New York sun seekers and those fleeing higher taxes, but the pandemic put the migration into “overdrive,” according to Mark Kaplan, president of the retail brokerage Ripco.
For instance, New York-based Major Food Group has opened at least five different restaurants in Miami during the pandemic as part of its global expansion — Carbone, Sadelle’s, HaSalon, Dirty French Steakhouse and ZZ’s Club — making the Magic City its second-largest market by location count, according to its website. New York is the only place it has more, with eight.
Now, Major Food Group is set to have even more restaurants in Florida than even Manhattan after two of its partners permanently moved to Miami, according to media reports. Major Food Group didn't respond to multiple requests to comment from CoStar News.
Joe’s Pizza, a popular chain that debuted in Manhattan’s Greenwich Village, opened a location in Miami’s Wynwood arts district earlier this year. Billionaire Tilman Fertitta’s upscale Catch seafood and steak restaurant group, which launched in Manhattan’s Meatpacking District, also is said to be planning its first location in the coastal city.
Kaplan, whose company counts major national retail tenants among clients, said the pandemic has amplified the longtime Miami-New York cultural connection.
“South Florida is often called [New York’s] sixth borough,” he said. “It’s an extension of New York City. ... A lot of New York [retail] tenants say, ‘It’s similar clientele that dine in my restaurants and shop in stores. It’s an opportunity to expand my chain with similar clientele.’ New Yorkers are familiar with those brands. The cost of [customer] acquisition is a lot lower.”
The interest in Miami from some of Ripco’s New York-area clients was so strong that the 31-year-old firm opened two Florida offices in the past year, one in Miami and the other in Tampa. The new offices marked Ripco’s first foray outside of the New York tri-state area, where it has six offices, Kaplan told CoStar News.
The firm has received interest from retail tenants attracted to Florida’s less-restrictive COVID-19 policies as well as property owners who have relocated their families to Florida during the pandemic and are seeking investment opportunities, he said.
“We are the poster child of companies that for a very long time have been operating and based out of New York,” Kaplan said. “The pandemic and other demographic-related changes in Florida brought us there. For years we have heard from clients in New York [that they] have been looking in Florida. Two years ago, the demands and inquiries became louder and louder. … A lot of the brands were started in New York. Once the pandemic hits, they started looking to go to Florida. They felt that was an opportunity for them to do business and grow.”
Florida Bound
New York has been the top source of the pandemic migration boom in South Florida, followed by other markets including California, studies have shown.
Nearly 260,000 people moved to Florida in the 12 months through July 2021, with the Sunshine State leading the nation in move-ins at 700 individuals per day, according to a Tampa Bay Economic Development Council study, citing census data. California and New York led the country in emigration, with over 900 people moving out a day over the same time, according to that report.
With a wave of businesses moving to Miami, new job commitments and average wages in 2021 rose to the highest level in the 36-year history of the Miami-Dade Beacon Council, the official economic development organization for Miami-Dade County. The trend has spurred a growing number of new top-tier office developments which have made Miami an outperformer in the flexible office market.
Real estate services firm JLL, in a retail study on U.S. cities this month, said Miami’s substantial migration is encouraging a retail boom. "Already a prime tourist destination, [South Florida] has seen a major influx of permanent residents; as a result, Miami has seen greater multifamily rent growth than any of the other prime urban cities. ... Unsurprisingly, Miami has also seen some of the greatest retail rent growth in the country, with rents showing an annual appreciation of 9.5%" in the third quarter, the study said.
The retail demand has been helped by an increasing number of domestic tourists, who make up for the loss of many international visitors.
Miami’s domestic tourism foot traffic more than doubled in September from September 2019 pre-pandemic, with the rate of increase outpacing other major U.S. cities including Boston, New York and Chicago, according to the JLL study, citing Placer.ai data.
"There’s a waiting list for good [retail] space" in Miami, David Emihovich, a managing partner at brokerage firm Katz, told CoStar News, adding that the stream of people to Florida has boosted retail tenant demand across the state and benefited even small markets. "It’s completely a landlord’s market. It’s very competitive for tenants to find deals right now, particularly in South Florida. ... Rents have gone up through the roof."
Pandemic Pivot
New York brands aren’t the only ones expanding in Miami.
The Henry, billed as "the greatest neighborhood restaurant" with locations in places such as Los Angeles’ trendy West Hollywood, is set to open its first East Coast location next year in Brickell City Centre, a $1 billion, 4.9 million-square-foot, mixed-use complex packed with luxury shops, restaurants and entertainment options in Brickell, Miami's financial center, Michael Sneed, director of retail marketing for the property, said in an interview. New York’s Black Tap burger chain also is opening at Brickell City Centre, while Puttshack, a mini-golf restaurant concept from London, launched its fourth U.S. location there in October.
"The pandemic was really a game-changer for us," Sneed said. With so many people being in Miami, "we were able to pivot really quickly and discover who our new customer was and what they really wanted from our development. Our leasing activity over the past two years really reflects this new Miami resident. ... There’s been a huge influx of residents from New York and Los Angeles and other parts of the country. ... Our tenant mix reflects brands that are more recognizable across the spectrum."
That’s a change from when Brickell City Centre opened in 2016 and its retail strategy focused more on "hyper luxury and unique boutiques and brands that you couldn’t really find anywhere else," he said.
In a telling sign of the Florida migration, Brickell City Centre’s two condominium towers sold out during the pandemic to residents moving in primarily from New York and Los Angeles, according to Sneed. In contrast, pre-COVID, a lot of the condos were bought as second homes by people who reside mainly in Latin America, he said.
As more companies have put roots down in Miami, Swire Properties, the developer behind Brickell City Centre, which already has two office buildings which are 100% leased, is partnering with New York-based Related Cos. to develop One Brickell City Centre, Sneed said. The development is expected to be the tallest office tower in Florida upon completion.
Outside of the restaurant space, Miami’s new retail tenants since the start of the pandemic include many concepts that were founded in New York or have gone live with their first store in the Big Apple. Showfields, which emphasizes brand discovery by hosting different rotating pop-up shops, debuted in New York’s NoHo area and has since opened a store along Miami Beach’s famous Lincoln Road shopping strip.
Online men's active apparel label Rhone, founded in the New York suburb of Stamford, Connecticut, put its first brick-and-mortar location in Manhattan’s Hudson Yards, the largest private U.S. real estate development. In October, it opened a physical store at Brickell City Centre, the company said on its website.
New York’s 260 Sample Sale, which hosts discount shopping events for well-known luxury fashion labels, has opened a location in Miami’s Wynwood area.
A reverse byproduct of COVID-19 and the migration to Florida is creating discounts for some Miami brands looking to break into New York, according to Ripco’s Kaplan. As New York’s retail market fell out of favor during the pandemic, it’s attracted the attention of tenants looking to take advantage of rents falling below their peak levels.
"That flow of demand was north to south. Now it goes both ways. The residents sort of go both ways," Kaplan said. "Now you see on the retail side. Once you have the brand equity with the locals, that’s the prime opportunity to expand."
For instance, Kyu, a wood-fired, Asian-inspired restaurant founded in Miami in 2016, and fast-casual chain Carrot Express, which started inside a gas station in Miami’s South Beach over 30 years ago, have both opened their first Manhattan locations during the pandemic.