LUXE FLORIDA MALLS SETTLE SUIT
Byline: David Moin
NEW YORK — Two south Florida luxury centers, battling for better tenants, have settled their legal differences, enabling designer brands to operate in both locations without penalty.
The Village of Merrick Park, opening in Coral Gables, Fla., on Sept. 27, has settled its lawsuit against Bal Harbour Shops challenging Bal Harbour leases restricting tenants from opening additional shops within a certain radius, depending on the tenant.
The settlement, a victory for The Rouse Co., developer of Merrick Park, requires Bal Harbour Shops to tell tenants they are free to open in Merrick Park.
Also, for 20 years, Bal Harbour Shops can not enter into any new or renewal lease prohibiting or penalizing a tenant for opening a location at the Village of Merrick Park. Rouse also agreed not to restrict tenants from opening at Bal Harbour for 20 years.
Rouse sued Bal Harbour Shops, contending the lease restrictions violated fair trade.
“The interest expressed by tenants with respect to Merrick Park was significant. That was the reason we pursued the lawsuit,” said Jerome D. Smalley, executive vice president and director of development of Rouse. “The idea that one location serves all of south Florida was unreasonable.”
Bal Harbour Shops issued a statement saying it was pleased with the terms of the settlement and that it would have no impact on business, and that it preserves its right to be selective about tenants. The developers did not say whether the settlement pertains to other Bal Harbour lease provisions, restricting expansion by tenants elsewhere in Dade and Broward Counties.
To be anchored by Neiman Marcus and Miami’s first Nordstrom, the Village of Merrick Park will include 435,000 square feet of retailing and restaurants. Loro Piana, Burberry, Faconnable, Hugo Boss and Sonia Rykiel are among the others that have signed leases.
Smalley said the settlement could immediately impact 30,000 to 40,000 square feet of luxury space that the center wants to lease and have occupied for the opening with four to six retailers, but also will affect the tenant roster after the opening. There is a total of 80,000 square feet for specialty luxury tenants.
“This has a lot more to do with the project going forward than just the opening date,” Smalley said. The center is currently 65 percent leased and is shooting for 80 percent by the opening.
Neiman’s already operates in Bal Harbour Shops, located at 9700 Collins Avenue in Bal Harbour on Miami Beach.
Bal Harbour Shops, considered among the nation’s premiere centers, focuses on luxury goods with such tenants as Bulgari, Cartier, Chanel, Escada, Gucci, Hermes, Charles Jourdan, Prada, Pratesi, Tiffany, Bottega Veneta, Gianni Versace, Louis Vuitton, Ferragamo and Saks Fifth Avenue.
Bal Harbour did about $1,342 in sales per square foot in 2000, and this year has beefed up the roster, adding Yves Saint Laurent Rive Gauche, Ferre, Lalique and Valentino, and expanding Louis Vuitton, Charles Jourdan. Hermes is also planning an expansion and D&G will open soon. St. John, Fendi and Wolford relocated in the center with new looks.
Asked if designer shops in both centers would cannibalize their own stores, Smalley replied, “Not at all. Retailers consider it two distinct markets.”
In its court papers, Rouse said: “A radius restriction clause for in-line tenants covering as much as a two-county highly urban area is patently unreasonable and unenforceable, and therefore such clauses are virtually unheard of in the shopping center industry. On the other hand, reasonable radius restriction clauses of between 5 and 10 miles are not uncommon in shopping center leases, particularly for leases in more suburban areas, with such clauses generally becoming more limited in scope in urban or densely populated areas.”
Merrick Park is about a 30-mile drive south from Bal Harbour, but travel between locations is often slow, taking 45 to 75 minutes in heavy traffic.