A 'hood on the move-

[The Mad Hatter!!]

A ’hood on the move


Artists and developers alike see Wynwood’s gritty image as an ideal canvas

A large, empty warehouse in the industrial Wynwood area of Miami, north of the city’s downtown, attracted plenty of potential buyers when it was listed for sale in June. The asking price: $5.8 million — nearly 80 percent more than the owners paid for it less than one year ago, according to Miami-Dade County records.

The 47,000-square-foot warehouse — like so many other industrial properties in Wynwood — may be adapted for a new, non-industrial use by its next owner.
“One prospect was going to convert it to an office building,” says real estate agent Peter Andolina, who was retained to find a buyer for the property. “Another was considering making it an art gallery and artist lofts. There was another person that looked at it as a potential nightclub.”

Artist Way Warehouses LLC, the owners of the warehouse located at 62 NE 27th St., was negotiating a contract with a potential buyer in July. But “if this deal doesn’t work out, we’ll have it under contract with someone else within the month,” says Andolina, who has been finding buyers for properties in Wynwood and the adjacent Edgewater area since 1998 — and wishes he owned some property there himself.

“I wish I had been purchasing land myself instead of just selling it” on behalf of clients, he says. “There are some properties I’ve sold three times now within that area. I’ve seen the prices go up in some cases almost 10-fold.”

Andolina is hardly the only person who wishes he had purchased real estate in Wynwood a few years ago. While artists and similar edgy businesses looking for an alternative to rising real estate prices in South Beach and the Miami Design District began moving into Wynwood a couple of years ago, the area had been side-stepped by the condo development boom overtaking much of South Florida. That is all changing, as developers look to bring restaurants, shops and high-rise condominiums to the area, which is now mainly warehouses.

Land sale prices topping $100 per square foot are now common in Wynwood, Andolina says. “For land along Northeast Second Avenue, $125 per square foot is typical,” he says. “The warehouses have been selling in the $120- to $125-per-square foot range.”

Much of the property price momentum in the Wynwood area has come from outside its northeastern corner, in Miami’s Midtown area. There, a former rail yard is being transformed into a 55-acre, mixed-use development called Midtown Miami. The planned Midtown development, which includes residential condominium buildings as well as big-box retail stores (such as Best Buy and Target) and commercial spaces, is expected to attract thousands of new residents over the next five years.

Although it is difficult to define precisely, the Wynwood area is generally east of Interstate-95, south of Interstate-195, west of North Miami Avenue, and north of 20th Street. Narrowly focused, the predominately industrial nature of the area may undergo major change in the years ahead.

Indeed, a partial transformation of Wynwood already is well under way. Scores of art galleries have moved into the area, which now boasts more than 40 — including some that moved out of the Miami Design District just north of Wynwood, displaced by rising property values.

“I was in the Design District for about a year,” says Amy Alonso, owner of Fache Arts Gallery. She has since moved her gallery south to a Wynwood address. “Now the Design District is kicking all of their galleries out. Craig Robins [a leading property owner] has increased the rents over there, and all of the galleries are leaving.”

The vibrant gallery scene in Wynwood has a fragile side, though. “Some of these galleries go for months without selling anything,” Alonso says.

Some developers hope to sell Wynwood as part of a larger arts district emerging north of downtown Miami. “We market, among other things, our proximity to Midtown, because we are just across Northeast Second Avenue from Midtown,” says Robert de la Fuenta, project developer of Soleil, a 31-story condo that will be located at 3100 Biscayne Blvd., and is now in the pre-construction phase. “It’s sort of a bigger view of the neighborhood than just Wynwood, more being a part of the new arts district in Miami. Being just north of the [Miami] Performing Arts Center, and just adjacent to the Design District and Wynwood, we’re sort of in the middle of it all.”

In addition to lower rents, some gallery owners have been lured to Wynwood because the area is home to several private art collections, housed in industrial-style fortresses and often seen by appointment only. These treasure troves include works owned by such art collectors as developer Martin Margulies, and hoteliers the Rubell family and the Goldman family, among others.

“I moved for the rent, but I also moved to be near the big collections,” says Marina Kessler, who owns a Wynwood art gallery at 2628 NW Second Ave. Art enthusiasts who view the private collections often visit nearby galleries, including hers, Kessler says. She cites the contemporary Margulies and Rubell collections, in particular, as major draws, saying, “These two collections are absolutely unique and big and very special.”

Those two private collections are among the nearly 40 gallery owners, artists studios and private collections that have banded together to form the Wynwood Arts District Association. Most open their doors to the public during the second Saturday of each month for an evening “Gallery Walk” that generally involves more driving than walking (few of the galleries are close together).

Like other gallery owners, Kessler, one of the leaders of the Wynwood Arts District Association, worries about the prospect of paying ever-higher rent for the purple building (a former factory) that houses her gallery. She moved to Wynwood from a pricey Miami Beach location in 2003.

Keenly aware of property appreciation in the area, landlords in Wynwood generally have been less than lenient with gallery owners, according to Kessler. “Their rents have increased significantly, and they have changed the type of deals they offer significantly,” she says.

She and other gallery owners say developer interest in Wynwood is a mixed blessing that promises to bring more pedestrian traffic to the area, but at the risk of pricing gallery owners out of the market.
“If everyone in the area understands the value of having the galleries and keeping them in Wynwood, I think that would be very helpful,” says Lourdes Guerra, CEO of Ohworld Advertising Group.

“We don’t want this to become the next Coconut Grove.” Guerra moved her agency’s office last year from Brickell Avenue to Wynwood, occupying space in the back of a 3,700-square-foot structure fronted by a photo gallery called Filtro.

Giselle de Vera, Guerra’s business partner in Filtro, worries that the area does not have enough foot traffic to sustain the industry. But, her photo gallery is doing fine for now, she says, in part because, “there are some serious photography collectors, like
Marty Margulies, right around the corner.”

Artists are also right around the corner in Wynwood, working (and in many cases living) in converted buildings that now serve as loft-style work space for painters, photographers, sculpture specialists and the like. Many of those lofts are already owned by their occupants. Developers are planning more, such as the Cynergi lofts, which de Vera says start at $250,000 a pop.

Dividing older industrial buildings into loft spaces could bring more residents to Wynwood, complementing a steam of visitors expected to come from the Midtown Miami development and a row of high-rise condos under construction along Biscayne Boulevard.
“It would be great if it could become more pedestrian,” de Vera says of Wynwood. “Like Lincoln Road, but without the [retail] chains.”

However, not every Wynwood property owner has grand plans to redo their buildings to attract more foot traffic. For example, Jonathan Eismann, owner of the Pacific Time restaurant on Lincoln Road in South Beach, bought a cluster of Wynwood buildings as a very long term investment.

“I’m not a developer,” Eismann says. “In the future, I might decide to joint venture with a developer, but at this point, I’m just an investor, and investors in this kind of market just buy and hold.”
If more people do hit Wynwood’s streets, they would bring a greater sense of security to the area. A South Beach resident, de Vera says she and her co-workers have experienced no serious problems at their Wynwood work space after one year of doing business there — but not without a measure of vigilance.

“None of us is ever here alone ,” de Vera says. “You have your moments, with some derelict or something, but we haven’t had any problems.”
De Vera, who was born and raised in Miami Beach and spent her 20s in New York, says Wynwood has the edge and hipness that South Beach once had. “South Beach … was a very cool place, and it’s not so cool anymore,” she says. “I lived in a place like this in New York. There’s a lot more possibilities here, though, because it’s so untouched.”

>>From Residential To Industrial — And Back Again
Despite its current industrial demeanor, Wynwood once had more homes and apartment buildings than anything else. The development of I-95 led to zoning changes that facilitated Wynwood’s evolution from a predominately residential neighborhood to an industrial district.

Consider the recollections of Larry Mizrach, whose family has a history in the Wynwood area dating back 57 years, when his father bought a garage in Wynwood and converted it to house his garment business.
“My family has been in that area since 1948, when it was 90 percent houses,” says Mizrach, who was in the garment business himself. “I sold the company and decided to become a [real estate agent] and specialize in Wynwood in 1987, when it was the pothole of the world.”

Times have changed. “Property which was selling in 1990 for $10 to $12 a square foot is now going for $120 to $150 a square foot,” he says. “The houses in the neighborhood are slowly but surely being sold to investors, and the prices have doubled or tripled on the houses in the last three or four years.”

Mizrach has represented multiple sellers of warehouses who transferred their properties to a real estate investment venture by Tony Goldman, a pioneer developer in South Beach and New York City’s SoHo district, and his son Joey Goldman, the managing partner of their venture.

Joey Goldman says his father’s perseverance as a developer in South Beach during the 1980s, when the area’s reputation was more notorious than narcissistic, has been a model for him to follow in Wynwood. The duo has acquired about 20 properties there since early 2004. He says they have bought “tens of millions” of dollars worth of Wynwood warehouses in close proximity to each other, covering about 10 acres.
“My father came to South Beach in ’85 and he had to tough it out there, so I am not expecting this to be an overnight situation,” says the 32-year-old Goldman. “But I really see Wynwood as the new art and entertainment destination for Miami. It’s really the center of town, if you think about it.”

Goldman has thought about it carefully as he prepares a master plan for redeveloping the Wynwood holdings, under the auspices of Goldman Real Estate LLC, a subsidiary of the Goldman Properties Co. “I’m working on a master plan right now with a very well-known architect in Miami,” he says. .i think its chad oppenheim,because he designed an art gallery for him which got approved the other day.
Rather than an all-at-once transformation, Goldman says he expects to redevelop one or two properties at a time over a period of at least 10 years and perhaps as long as 20 years. “The idea would be to build residential mixed-use space. The buildings could be anywhere from three to 10 stories,” he says. He and his father may take on partners as they go on a project basis.

“The scope of the project has grown larger than my dad ever thought it would get. It’s because I’ve really given my heart and soul to this area,” Goldman says.
While he is slowly redeveloping the properties, Goldman’s current tenants in Wynwood, all of them companies with warehouse operations, generate income while Goldman and his father ponder alternate uses for the buildings they occupy.

High on Goldman’s priority list is getting more dining options into the neighborhood. Restaurants are few and far between in Wynwood, a blue-collar, largely Puerto Rican community whose main culinary attraction may be Enriqueta’s Cafeteria on Northeast Second Avenue, a popular stop for cops. “I think a lot of areas change when they have restaurants,” Goldman says. “As part of our plan, we’re looking to encourage the opening of a dozen restaurants, and we’re looking to open one or two ourselves.”

Is he comfortable walking around Wynwood at night? “I’ve been there at night a few times and it’s very cool,” Goldman says. “Could it be safer? Of course, if the streets were all lit and the buildings were all lit at night and people were living there, and there were restaurants. That’s what makes an area safer: people on the streets.”

So far, Goldman and other real estate investors are sidestepping small clusters of single-family homes and apartment buildings as they increase their investment in the area. “I’m not looking to gentrify a pedestrian, residential neighborhood that has been there a long time,” Goldman says. “The area I’m looking to redevelop is primarily industrial, and I’m not looking to displace anyone. I don’t own any residential properties. It’s all warehouses, land.”

Real estate broker and developer David Lombardi, owner of Lombardi Properties in Miami, is further along the Wynwood investment and development track. He is part of an investor group that has bought dozens of Wynwood properties.

In August, the group is set to open the doors of its first ground-up development in the area, Wynwood Lofts, a 36-unit building with zoning that permits both residential and commercial uses of the units. The initial price range of the project, located on NW 23rd Street, was $169,000 to $275,000 per unit. Higher construction costs pushed the pre-construction price for the smallest units up to more than $200,000. The total cost for the sold-out project was $5 million, including $4 million of construction, says Lombardi.

His investor group is now moving ahead with a similar project, a 108-unit building called Pompeii that will stand 10 stories tall at a nearby site, also located on NW 23rd Street. pre-construction unit prices range from more than $230,000 to $400,000. Architectural drawings have been finished and the Lombardi group is currently pulling permits.

Long before he got into Wynwood property investments, Lombardi made a living as a broker of high-end Miami Beach residential real estate, and used the commissions he earned to buy apartment buildings and other income-producing properties. When he sensed opportunity in Wynwood about five years ago, Lombardi says, “It dawned on me that it would be advantageous to have a large concentration of affordable cheap warehouse space.” At the time, loft rental rates hovered around $20 to $30 a square foot in the Miami Design District, and artists paid around $60 a square foot on Lincoln Road in South Beach.

Altogether, Lombardi says, he and his fellow real estate investors have purchased about 45 properties in Wynwood in the last five years. His core group of three co-investors includes certified public accountants Michael Goldstein and Sandy Horowitz, who are principals of a Coral Gables accounting firm, and general contractor Billy Miranda, who owns a Medley-based construction company.

Most of the buildings the group bought were empty. “Within three months of buying each one, I had them rented,” Lombardi says. His long-term plan is one of gradual redevelopment. “We’re going to reposition each piece, one by one, every couple of years.”

Lombardi received construction financing for Wynwood Lofts from Wachovia bank. “I think they [Lombardi and company] have hit on something, and we look forward to doing more with them,” says Jess Lawhorn Jr., a Wachovia senior vice president for community development finance. From his office in Miami, Lawhorn covers all of South Florida and reports to a boss in Atlanta.

“My group is looking at [Wynwood Lofts] and other projects that David is engaged in to help reinvigorate blighted areas in the Wynwood neighborhood,” Lawhorn says.

>>A Risky History
To be sure, there are serious risks for bankers and other backers of Wynwood to consider. But like other investors in the area, Lombardi has seen some of the area’s scars from a 1990 riot gradually begin to heal.

The northwest corner of Wynwood was a multi-block crime scene in December 1990, with widespread looting and burning, after six Miami police officers were acquitted of charges stemming from the death of a Wynwood drug dealer in their custody. A memorial to the victim and his nickname, “Cano,” is spray-painted on the side of a cafeteria near the corner of Northwest Seventh Avenue and Northwest 32nd Street.

The mobs that temporarily took control of the streets in 1990 left a legacy of fear that has only recently begun to recede.

“Five years ago, when I started in Wynwood, everything was barbwired, barricaded, and gated,” Lombardi says. “Now the place is opening like a flower. All that … is coming down, but it was all up because of the riot.”

Still, much of Wynwood remains hidden from view. “You can’t just drive around Wynwood and get it,” Lombardi says. “It’s an area of nondescript facades with cherry fillings: You have to go into these spaces and see what people have done to really get it.”

That is precisely what Lombardi and his crew did when they discovered a structure called the Terminal Fabric Building, constructed in 1926. Their purchase of the building was the first of their many property acquisitions in the area. At the time, Lombardi wanted to convert the building to a new use that combined living and working space for artists.

Lombardi figured that young creative people renting one-bedroom apartments on South Beach, paying $800 or $900 a month, were also renting Wynwood warehouse studio space, and paying another $800 or $900. They seemed ideal customers who would want to lump both expenses together in one larger space. “We built lofts in this factory building,” he says, “and it was a quick success.”

The City of Miami has been supportive of efforts to control crime and improve daily life in Wynwood, Lombardi says. But the city could do more on the rezoning front to make it easier to obtain approval for units that combine living and working space, he adds.

“Each time we rezone a piece, we spend six months and $30,000,” Lombardi says. “I mean, the city acknowledges that this is the way they want to see the area go. … Expedite the entire process.”
Even without an overlay, Lombardi says, “The current warehouse price [range] is $125 to $145 per square foot for the buildings.

When we started buying in Wynwood five years ago, it was $35 to $40. The land used to be $5 to $10 per square foot five years ago. Today it’s anywhere from $45 to over $100.” He suspects that price can rise as high as $140 per square foot for land on main arteries, such as 29th Street and 36th Street.

>>Pricing Out The Character?With rising sales prices for buildings and land, many in Wynwood’s arts community worry about being priced out.

“When the commercialism comes up and the rent goes up, if you don’t own your own building, you won’t be able to afford your rent,” predicts Filtro photo gallery’s de Vera.

Lombardi agrees that some marginal art galleries could be priced out of Wynwood, but he also says a new wave of more-established galleries are likely to follow in their path. “We’ve had the first generation of gallery owners come in,” he says. “What ends up happening, in the evolution, is that some shake out, unfortunately, for whatever reason. They aren’t capitalized well, they haven’t sold enough, or they just aren’t meant for business. And then the next generation seems to come in behind them.”

Reinforcing that trend, Lombardi claims, are such established art gallery owners as Fred Snitzer and Chris Ingells, who now have Wynwood locations, as well as Diana Lowenstein. Lowenstein, who owns Diana Lowenstein Fine Arts gallery in Coconut Grove, is also part-owner, together with her husband, of Lionstone Development, which owns the Ritz-Carlton South Beach, and is developing the Ritz-Carlton Residences in Miami Beach.

Lionstone has bought property at 20th Street and North Miami Avenue where it plans to build a 50,000-square-foot building with 15 art galleries and a restaurant.

Another longtime gallery owner in South Florida, Barbara Gillman, is preparing to relocate her contemporary art operation from the Miami Design District to a Wynwood address on North Miami Avenue in early August.

“It’s not a real finished space, but it’s a perfect gallery space,” Gillman says. “I’ll put some sculpture where those bars [on a gate covering the gallery’s facade] are. We may also put a projection show on the wall.”

Gillman laughingly describes herself as “the last holdout” among art gallery owners in South Florida who ultimately opted to open locations in Wynwood. She was happy with her previous location on Northeast Miami Court in the Design District, but lost her lease there due to a new planned use for the building.

“They sold my building right out from under me,” Gillman says. “I was in the Miami Design District, but I didn’t own the space, I just leased it. … [The new owners] decided to build a loft workspace there instead.”

Gillman admits that the relative emptiness of Wynwood is a challenge. “I didn’t really want to walk out there. But I think it’s much better than it was,” she says. She knows she must work to draw customers in to her new gallery, and is thinking about adding a coffee bar as a pedestrian draw.

Promoting the growth of homegrown talent is the main mission of one of the oldest art institutions in Wynwood: the Bakehouse Art Complex, a not-for-profit operation that provides 70 work-space loft units for artists, rented out at monthly rates starting under $200, to applicants who are selected by a special committee.

Located on the western fringe of Wynwood, near the epicenter of the 1990 riot, the Bakehouse is a former bakery converted in 1986. It currently operates with an annual budget of about $250,000 and makes ends meet with a mix of rental income, government grants and private donations.

“It’s still a little bit on the edge, particularly on the west end, where we are,” says Doris Meltzer, executive director of Bakehouse. But that has not stopped a stream of futile bids from real estate investors and agents who would like to own the Bakehouse property, a 33,000-square-foot building occupying half of a city block. Nor has the edgy environment kept artists from leasing space there.

“Our occupancy rate for the last year has run from 95 to 100 percent and is at 100 percent right now, with a waiting list,” Meltzer says.

That waiting list may get longer if intense real estate price appreciation on the east side of Wynwood, in the vicinity of Midtown Miami, begins to migrate westward, driving up commercial rents and forcing artists and art gallery owners alike to shop around for cheaper locations. - By Mike Seemunth

[ISG]

Hatter:

Very interesting article.... I wonder what Roark's POV is on the vision these folks have of the new Wynwood.

[Roark]

Originally Posted by ISG

Hatter:Very interesting article.... I wonder what Roark's POV is on the vision these folks have of the new Wynwood.

Well I'm all for it! This vision has been around for the last 15 years, touted most notably by Craig Robbins. I'm glad to see the South Beach old timers are actually breaking some ground over there now (my first job on South Beach was with Tony Goldman).
One thing is for sure...$400+ a square foot is a pretty big number to pay for a place that is so far away from high paying jobs. Most jobs in the Wynwood neighborhood are service related...typically, the kinds that won't cover the those new construction mortgages.
The high paying jobs are in the Central Business District and the Financial District. As it stands now...those people with 6 figure incomes with the high paying jobs are living (some in the Brickell area) but mostly outside the CBD because there are no choices near the office buildings.
They battle traffic north on Biscayne/I-95 or south on US 1 for an hour in the morning and an hour in the evening. If they had housing options to eliminate the commute, they most likely would...2 hours a day = 40 hours per month. That is one full weeks worth of work/play time spent in a car.
Once the housing options are available in the Central Business district, I believe most people will chose to live there and not drive everyday if they can.
As I type this...it would take you 50 minutes to get out of downtown and make it it Midtown Miami...and that is before any new construction is completed on the Biscayne Cooridor.
Smart money will live in the CBD/River, downsize to one car per houshold...take the existing MetroMover to and from work daily and when you need some picture frames, you can drive up to the Target in Midtown (that is if you don't want to walk to the Macy's or Ross or Marshall's or Bayside that already exist in the CBD).
Brickell on the River will be ready for occupancy in December, a great apartment sold today for $385 per square foot on the 37th floor with unobstructed bay views. From BotR, you can walk to Mary Brickell Village, Capital Grille, Mandarin Oriental, Tobacco Road, River Oyster House, Baja Fresh, Pizza Rustica, Novecento, Four Seasons, Espirito Santo, Kinko's, etc. etc. Not to mention every other proposed project still underconstruction.
If priced the even close to the same...it just doesn't make sense to live in Midtown -v- CBD value wise.
If values to continue to increase at this same rate, then great...Midtown investors will be fine, if supply starts to catch up with demand...watch out Midtown...in massive development like that, it takes a lot of time, people will have to be real patient.
The South Beach rennaisance started at about 1987...and the first real movie theater opened about a dozen years later.

[The Mad Hatter!!]

Originally Posted by Roark

As I type this...it would take you 50 minutes to get out of downtown and make it it Midtown Miami...and that is before any new construction is completed on the Biscayne Cooridor.
.

most of what you said is correct the high paying jobs certainly aren't in wynwood,lived there for 5 years and everything was very bleek and poor.but as to your point about it taking 50minutes to get from cdb to midtown is wrong,

because the other day when i met miaballinboi i went from coral gables to brickell(four seasons) all the way to midtown taking pictures the whole way through and did it in 5 hours only taking the metromover around cbd and the metrorail from gables to brickell then i walked the whole way through and even has an ice cream cone at margret pace park..

[The Mad Hatter!!]

as to the future of midtown in my opinion it will probably become sort of like north miami which has several high paying jobs and many varies middle class families but also has its poverty. but it can also help it self if it trys to become what brickell did by attracting banks and law firms,we'll just have to wait and see. midtown and edgewater have a big advantage over places like kendall,or gables which is its proximity to cbd and the coast.but road improvements need to be done especially on bayshore drive.

[Roark]

Originally Posted by The Mad Hatter!!

most of what you said is correct the high paying jobs certainly aren't in wynwood,lived there for 5 years and everything was very bleek and poor.but as to your point about it taking 50minutes to get from cdb to midtown is wrong,

That ice cream cone sounds like a good idea....but I'll tell you 5:30pm on a weekday afternoon is no time to leave downtown and head north on Biscayne Blvd. It takes 15 minutes from Flagler to NE 15th Street on Biscayne.

[Bobdreamz]

Wynwood is the heart of our Puerto Rican community which would be sad to lose but it does apppear that gentrification is on the horizon for this area.

[Dale]

It's okay. All the Puerto Ricans are moving up here.