Thousands of pounds of steel abutting the Aventura Mall have sat for months. The ghostly stacked framework represents the promise of a new development called Esplanade at Aventura, which ceased construction in March due to the pandemic. The developer of the planned 215,000-square-foot office and restaurant complex, Seritage Growth Properties, promises that construction will soon restart.
In the last nine months, contractors, suppliers and at least one restaurant chain have filed liens and legal challenges against the developer, claiming nonpayment and breach of contract. But recent weeks have seen many of those legal actions being settled or mitigated, according to court records, and Seritage is “in the process of commencing construction,” said Jason Chudoba, a partner in the New York-based public relations firm ICR, in a Dec. 14 email to the Biscayne Times. No exact date was given.
“We are recommencing construction with the goal to complete our vision of creating a modern mixed-use environment that features international and domestic retail and restaurants, entertainment and office,” declared Mary Rottler, executive vice president of leasing and operations for Seritage, in an email to the Times. “Once complete, we believe Esplanade at Aventura will serve as a must-visit destination for local residents and visitors from around the world.”
Enid Weisman, mayor of the City of Aventura, said Seritage had told her municipal government that the construction freeze was only being done out of an “abundance of caution.”
“[Seritage has] already got crews on site, and they’re starting to work,” she said.
Esplanade at Aventura is being built on a 12.3-acre site where a 192,000-square-foot Sears department store once stood. Prior to its demolition in November 2017, Sears was physically attached to Aventura Mall but owned by Sears’ corporate parent, Sears Holding Company. When the retail chain was facing bankruptcy in 2014, plans were announced to turn the Aventura store into an “open-air village” with restaurants, retail, offices and a hotel. A year later the property was handed over to Seritage Growth Properties, a publicly-traded real estate investment trust (REIT) created by Sears Holding Company with the purpose of redeveloping Sears and Kmart properties.
Rottler stated that the hotel isn’t part of Seritage’s immediate plans for Esplanade at Aventura.
“Our focus right now is completing our first phase of the project,” she explained.
Lawsuits & Liens
In spite of the construction slow down, however, Rottler claimed that Esplanade at Aventura is “more than 50% leased.” Tenants already signed up include Industrious, a shared-office space brand with 70 locations across the U.S., including Brickell; The Loyal, a sequel to Michelin-rated chef John Fraser’s brasserie in New York; Mixtura Market Hall, a food market brand from Colombia; Pinstripes, a 12-lane bowling alley; Jarana, a Peruvian restaurant owned by celebrity chef Gastón Acurio; SU Japanese, a Brazilian-Japanese restaurant; a Johnny Was clothing store; and Joey, a premium-casual restaurant chain headquartered in Vancouver.
“We are in conversations with a number of leading retail, restaurant and entertainment brands about their interest in being part of this transformational project,” Rottler added.
One tenant, Carolo Holdings, a Mexican restaurant company, sued to extricate itself from Esplanade at Aventura, and get its $1.7 million deposit back. In May 2019, Carolo Holdings signed a lease for a 13,114-square-foot space for its Carolo and Blanco Bistro brands. A year later, Carolo filed a complaint, declaring that the freeze in construction activity violated its contract with Seritage, that the REIT refused to resume construction even after the COVID-19 lockdown was lifted and that Seritage attempted to “bully” Carolo when the restaurant chain made known its intention to leave. Seritage responded that construction was paused in response to a national health emergency and to protect the “health and safety” of people working on the project.
As of Nov. 30, Carolo and Seritage were in mediation talks.
“We don’t comment on legal matters. What we can say is that we are excited to have Carolo as part of the project,” Rottler stated.
Following the construction freeze, five subcontractors and suppliers filed liens for nonpayment of outstanding bills. However, as of press time, three of the five cases have been closed, according to the Miami-Dade County Clerk of Courts website. Rottler stated that four of the lawsuits “have been resolved.”
Seritage Growth Properties has been adversely affected by the COVID-19 pandemic. The REIT reported a net-loss of $51.3 million for common shareholders between July and September. Additionally, in December, Seritage’s CEO, Benjamin Schall, announced he was leaving the company by mid-January. In November, Brian Dickman, Seritage’s chief financial officer and senior vice president, resigned.
But Rottler claimed her company has “been able to effectively navigate” the negative impact of the pandemic. Ninety-five percent of Seritage’s existing retail spaces across the nation were full as of Oct. 30, she stated, and the REIT is moving forward with building out new spaces.
“As a company, we are focusing our human and capital resources on our top redevelopment opportunities, like Esplanade at Aventura,” she wrote in her email to the Times.
Luxury Retail Developers Go Head-to-Head
So far, Industrious is not expressing any doubts about moving forward with its plan to open up a 30,000-square-foot shared office space within Esplanade. Industrious still expects to open there within a year, according to an emailed statement from Doug Feinberg, Industrious’ director of real estate.
“Aventura is a live-work-play destination where we expect to be an important resource for local businesses,” Feinberg wrote.
Will a new shared office space work in the post-COVID-19 era? Edward “Ned” Murray, an urban planner and an associate director at Florida International University’s Jorge M. Pérez Metropolitan Center, isn’t so sure. He pointed out that shared office spaces were not doing well even before the COVID-19 pandemic, since it’s more economical for private contractors and freelancers – a major market for shared office spaces – to simply turn their homes into offices. That trend has only accelerated with COVID-19.
“If you can work remotely from home, that’s where you’re going to be working from,” Murray said.
But Achikam Yogev, a senior vice president at Colliers International, said that although office properties in Brickell and the downtown area have taken a hit from COVID-19, they’re still strong in Aventura due to a scarcity of Class A office space.
Rendering courtesy of Seritage Growth Properties
Esplanade at Aventura is being marketed as an open-air village with restaurants, retail and outdoor entertainment.
“Not everyone is going to be working from home forever. We still need offices, especially in a market like Aventura, and [Esplanade at Aventura] is in the best retail market in the state of Florida,” Yogev said.
Nevertheless, Esplanade at Aventura literally touches the largest shopping center in the state – Aventura Mall. Owned by Turnberry Associates and Simon Property Group, the mall still manages to attract tens of thousands of visitors on the weekend in spite of the pandemic (“When the Holidays and Coronavirus Collide,” December 2020). With the completion of its latest 315,000-square-foot expansion two years ago, Aventura Mall swelled to 2.8 million square feet in size.
Seritage sued to stop that expansion in 2016, claiming that Aventura Mall’s enlargement – which included a revamped food hall, an event space and the biggest Apple store in Florida – violated an old operating agreement with Sears. The suit was settled later that year.
Rottler conveyed to the Times that Seritage no longer sees Aventura Mall as competition.
“We have designed and programmed Esplanade at Aventura to be a world-class open-air destination for Aventura and South Florida, and believe it complements Aventura Mall’s offerings,” she stated.
Jackie Soffer, president and CEO of Turnberry Associates, declined to comment about Seritage. When asked by the New York Times in January 2020 about Esplanade, Soffer replied: “I don’t know that we’re going after the same tenants.”