This is why your favorite Miami restaurants are closing
for Miami Herald
Mark Scharnitz was sick of doing all the work.
He built a small café, The Corner Muse, that helped breathe new life into Miami’s Edgewater district at a time when drug dealers and street walkers worked openly. But when the neighborhood came up, so did his rent. And at the end of his five-year lease, after he had renovated the space into a thriving restaurant, his landlord tried to nearly triple his rent — and forced him out when he couldn’t pay.
The upscale seafood restaurant Mignonette now stands where Scharnitz’s dream once did.
“You bring people there. You build up the neighborhood. And when your lease is up, they don’t care — you’re out,” Scharnitz said.
Restaurants, like artists, move into depressed neighborhoods where rents are cheap, hoping their fans will follow. And when they do, they are often the first ones priced out.
It’s happening across Miami.
In May, Michelle Bernstein’s signature restaurant in the Mimo neighborhood, CENA by Michy, closed after a 10-year run. So did Mimo’s The Federal, even after a drastic, last-ditch makeover.
A key culprit in both cases? Rising rents.
South Florida’s smoking-hot commercial real estate market is pricing restaurants out. Rents have quadrupled in popular areas such as Brickell, Wynwood and the Upper East Side over the last few years, brokers and developers say. (Renters are feeling the same heat on the residential side, too.)
“It’s almost like New York real estate right now,” said Ivo Tsinev, a broker at Colliers International South Florida who represents both national chains and chef-driven restaurants.
The region’s appetite for restaurants is insatiable, research shows. People are eating out more and shopping at grocery stores less.
To wit: In Miami’s greater downtown, restaurant sales hit nearly $735 million in 2014, according to the Downtown Development Authority. That was up 78 percent over 2013.
And South Florida diners are dropping more cash than ever: Consumer restaurant spending in the region is growing at the second-fastest rate in the country, new statistics from brokerage CBRE say.
Landlords see that success and are asking chefs to pay up — or get out.
The perks of being a landlord
Scharnitz decided it wasn’t going to happen to him again.
Five years ago, he bought a building “for a song” ($280,000 for 3,490 square feet of space) on Northeast 54th Street in the heart of Little Haiti. That was before speculators decided it could be the next Wynwood, when he still had to worry about getting robbed like one of his managers did.
He ran his catering business out of the back. In February, when he thought the neighborhood was ready, he opened Philly Grub, making authentic cheesesteaks with shaved sirloin and housemade cheese “whiz.”
The restaurant is part of Little Haiti’s gentrification, bringing with it adventurous new customers — as well as rapidly rising rents. It’s the same old story — even in neighborhoods that have yet to prove themselves, rising rents push out restaurants that blazed a trail.
“People told me I was crazy,” Scharnitz said. “And the crazier they told me I was, the more I knew I had to do it. If you don’t buy your building, there’s just no way you can do it.”
Bernstein, an international award-winning chef raised in Miami, knows all about the dangers of not owning your own space.
She grew up in Mimo — the Miami Modern district along North Biscayne Boulevard south of 80th Street — and led the neighborhood’s revival by using her name to draw fans to a desolate part of town. She and chef/husband David Martinez even bought a house there. They still live there, but their restaurant is no longer part of the neighborhood it helped build.
“It’s devastating,” Bernstein said at the time. “We totally vested ourselves in that neighborhood.”
The issue? The building was sold before they signed a lease extension and the new owners asked nearly three times the rent, almost $60 a square foot. Bernstein had even renovated the restaurant a year ago, thinking she’d be there long term.
For her fans, it was like Emeril Lagasse being priced out of New Orleans.
“It’s indicative of what’s going on and what is going to continue going on in Miami,” said CENA co-owner Steven Perricone, a former New York restaurateur and developer who bought the property for Italian restaurant and market Perricone’s in 1994, when Brickell was a fine-dining wasteland.
If a chef wants to open up in an already established neighborhood, owning just isn’t realistic, said Andreas Schreiner, who owns the Pubbelly restaurant group, with locations in Sunset Harbor and downtown Miami.
“It’s a nice dream to do it, but the way real estate prices are now, it’s a little prohibitive, especially on the Beach,” Schreiner said. “We’re looking to expand on the mainland, but even in places like Wynwood or the Midtown corridor, prices have really gone up. So to be able to purchase … it’s just too much.”
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