Wynwood: A work in progress
With Zika worries gone, a look at deals shaping the trendy nabe
October 05, 2016
Wynwood made international news this summer when it became the first area in the continental U.S. to report locally transmitted cases of the Zika virus. The issue was a constant focus of conversation and anxiety among the area’s commercial property owners and their tenants as foot traffic slowed. Some restaurant and bar owners reported as much as a 50 to 60 percent drop in sales right after the Zika announcement, when tourists and local regular patrons alike sought to avoid the district. When Gov. Rick Scott proclaimed Wynwood Zika-free on Sept. 19, the neighborhood breathed a gigantic sigh of relief.
Now, Wynwood — once known for its tired warehouses and discount retail storefronts — could once again focus on its emerging status as a flourishing commercial and residential center.
The transformation of the one-time industrial corner of Miami dates to the 2002 debut of Art Basel Miami Beach. In the intervening years, the international jet set drawn to this art show has often sought out the artists working in studios inside of Wynwood’s converted warehouses. This artistic influx contributed to Wynwood’s evolution from a district filled with tired warehouses and discount retail storefronts to a neighborhood on the cusp of becoming a flourishing commercial and residential center.
The neighborhood achieved a new status in 2009, when Tony Goldman, who had already spearheaded gentrification efforts in New York and Miami Beach, created the Wynwood Walls, an open-air mural project with contributions from globally known street artists like Shepard Fairey and Ron English. Soon other big-name New York developers like David Edelstein and Moishe Mana were following Goldman’s lead.
Development in the district took a huge leap forward in 2015, when Miami created the Wynwood Neighborhood Revitalization District, a zoning overlay to encourage the construction of more condominiums, rental apartments and retail shops. Since then, a slew of high-density mixed-use projects have been proposed. Altogether, they could add about 1,000 residential units and 3.9 million square feet of retail space.
Local lawyer Alex Perkins, who has worked on many deals in the neighborhood, said the area is living up to the high expectations the development community had when the special district was created. He said the transformation is occurring more quickly here than it did in the nearby Design District. “I think investors will do quite well on their returns,” he said.
Wynwood’s funky allure has attracted many hip, up-and- coming retailers. In June, Amsterdam-based Scotch & Soda announced that it would be closing its Design District store and relocating to a 2,300-square- foot space at 219 Northwest 23rd Street, a Wynwood building that the Comras Company of Florida, founded by Michael Comras, bought for $1.6 million in 2011. The retailer will become neighbors with clothing store Kit & Ace, which has leased 1,500 square feet in this building. At nearby 2399 Northwest Second Avenue, the hip Detroit-based watch, bicycle and leather goods retailer Shinola took a 1,300-square- foot corner store in 2015.
Naturally, the high demand for retail space has been boosting rental rates. In April, retail rents in the area ranged from $40 to $100 a square foot, up sharply from an average of $15 a square foot in 2010, according to the Commercial Industrial Association of South Florida.
And the rising rents have spurred commercial investment. In August, New York-based Atlas Real Estate Partners sold a corner retail building on 23rd Street and North Miami Avenue for $8.5 million, more than twice the $3.6 million the company had paid for the property in July 2014.
Atlas is not the only big-name New York real estate player bullish on Wynwood right now. Israeli-born entrepreneur Mana has spent in excess of $20 million acquiring roughly 25 acres where he plans to build Mana Wynwood, a massive cultural and international trade-focused mixed-use project. And Brooklyn-based RedSky Capital submitted plans in July for 222 Wynwood, an eight-story loft building on vacant land the company purchased for $5.85 million in 2015.
Jonathon Yormak, a principal of New York-based East End Capital, which recently completed the retail building Wynwood Arcade at 50 Northwest 24th Street, said his firm went on a $100 million buying binge in the district for a nine-month period in 2014 and 2015. “We’ve invested in Williamsburg and Soho,” he said, “and Wynwood has the same DNA.”
David Polinsky, a principal of Fortis Development Group and the developer of the condo at 250 Wynwood, said the projects in the pipeline have the potential to transform the district into a true 24-hour neighborhood. “The train is still rolling in Wynwood,” Polinsky said. “It’s the right number of projects going up at the right time.”
As the commercial popularity of the area grows, the challenge will be keeping the tenant mix eclectic enough for Wynwood to retain its trendy reputation, said Tere Blanca, founder and CEO of Blanca Commercial Real Estate.
“It would be great for developers in Wynwood to select retail tenants that not only contribute to the bottom line, but can also integrate with the unique experience of the neighborhood,” she said. “I think owners like RedSky and East End have that experience and really understand what has to happen to shape the neighborhood.