Amid a South Beach retail slump, Northeast investors bought a Collins Avenue building at a deep discount, with plans for a Michelin-starred chef to open a restaurant at the long-vacant site.
Garfield and Rebecca Spencer bought the two-story building at 624 Collins Avenue in Miami Beach for $6 million, or 75 percent less than the property’s sale price seven years ago, according to the broker and records.
“It’s more indicative of the neighborhood conditions,” broker Drew Kristol said, adding that expensive financing and insurance also are suppressing prices. “South Beach, in general, has suffered because there is a lot more competition from other neighborhoods.”
Kristol and Kirk Olson, both of Marcus & Millichap, handled both sides of the deal.
The Spencers, who are married, are partnering with their friend, British chef Richard Neat, on plans for a high-end global fusion restaurant to open in the entire building, Garfield Spencer told The Real Deal. The couple, whose firm is Rhode Island-based Mayfair Management, has a niche in the Northeast of redeveloping industrial properties into apartments, with a portfolio spanning 700 units and another 118 under construction.
In the 1990s, Neat earned two Michelin stars while in his 20s as head chef at Pied à Terre in London, according to media reports. In subsequent years, he worked in kitchens across the world, until settling in Costa Rica where he leads Park Café in San Jose.
Completed in 1922, the Collins Avenue building spans nearly 8,500 square feet, according to records and real estate database PropertyShark.
In 2016, an affiliate of New York-based restaurant group Riese Organization bought the property, at the time fully leased to clothing store Club Monaco, for roughly $24 million.
After Club Monaco closed its store in 2018 or 2019, the owner ran into financial woes and ended up handing back the keys to the property’s lender last year in a deed-in-lieu of foreclosure. Simultaneous with that deal, distressed real estate investor ArcPE swooped in to buy the deed-in-lieu from the bank for roughly $5 million, according to David Gordon of ArcPE.
The building’s 75 percent drop in valuation is in comparison to the building’s $24 million price tag in 2016. Because ArcPE’s $5 million purchase was a distressed deal in which the lender was trying to offload the building, it does not correctly reflect the building’s value and shouldn’t be used to compare it to the recent sale price, Kristol said. Loans are usually bought at a discount, not at par, he added.
By contrast, for the recent sale, Marcus & Millichap marketed the property for a year and had roughly 20 showings, Kristol said.
South Beach’s heyday as a high-fashion retail hub is long gone, leaving Collins Avenue riddled with vacant storefronts. In January, Shire Realty sold the mostly vacant building at 826 Collins Avenue for $5 million, or a 41 percent discount from the property’s price tag a decade ago. Miami Beach-based ArcPE was the buyer.
The Spencers plan roughly $4 million in interior renovations to 624 Collins Avenue and hope to open in the first quarter, Garfield Spencer said.
“We had been searching for a site in the last 12 months,” he said. “There was a deal we had wanted to do at One Thousand Museum, but that didn’t work out, so we felt this was our next best location.”