RH wants a slice of Miami Beach’s lucrative restaurant and entertainment scene, proposing to invest $150 million to $170 million to redevelop Nikki Beach Club, a city-owned restaurant and entertainment venue.
Corte Madera, California-based RH, formerly called Restoration Hardware, a high-end home furnishings retailer that has expanded to hospitality development, is among four teams bidding to take over management of the Nikki Beach Club site at 1 Ocean Drive in Miami Beach. The winner will get a new 30-year lease to operate the city-owned restaurant and entertainment venue after the agreement with the current operators, Jack and Lucia Penrod, expires in 2026.
The four proposals are exempt from Florida’s public records law for a period of 30 days, Miami Beach spokeswoman Melissa Berthier told The Real Deal. But on Wednesday, publicly-traded RH unveiled its plan via a press release.
The other bidders are Boucher Brothers, a company that has a city contract to provide beach concessions; Akerman and The Group US Management LLC; and Tao Group Hospitality and One Ocean Hospitality LLC, according to an online agenda for a Miami Beach committee meeting to evaluate the proposals.
City officials blocked the Penrods from submitting a proposal to retain control of 1 Ocean Drive by claiming the couple’s entity, Penrod Brothers, missed the deadline to file its bid by 15 minutes. On Tuesday, Penrod Brothers filed a petition in Miami-Dade Circuit Court seeking a court order to reverse the city’s decision.
RH, led by CEO Gary Friedman, is offering the city a starting base rent of $7 million that would increase by a minimum of 3 percent annually, or $333 million over the life of the lease, the release states. The project would be called RH Beach House at One Ocean Drive.
The company is proposing a pair of low-rise buildings that would cover 16 percent of the 180,000-square-foot site, two landscaped beach promenades, a 94,000-square-foot public park on top of an underground parking structure and a 17,000-square-foot public sculpture garden on an elevated podium, the release states. To appease nearby condominium residents who have concerns about late-night noise and traffic, RH is proposing limited hours of operation.
RH’s capital investment would include $50 million in public benefits. The firm’s proposal also offers the city a $5 million upfront payment to cover lost rent and taxes during a two-year construction period, as well as a $1 million “cultural contribution,” the release states. The new project would also generate about $100 million in property, hotel and food and beverage taxes during the life of the lease, RH claims.
The proposed building at RH House would include a beach club, a bathhouse and spa, three food and beverage venues, a design studio, a library and art galleries, the release states.
After decades of operating 1 Ocean Drive, the Penrods began to lose their grip on the city-owned property in late April. At the time, Miami Beach commissioners authorized City Manager Alina Hudak to enter into negotiations for a no-bid, non-binding term sheet with Boucher Brothers to manage the site when Nikki Beach Club’s lease expires in 2026.
A month later, following a public outcry that city officials appeared to be favoring Boucher Brothers, Miami Beach commissioners rescinded their decision, and put a new lease up for competitive bidding.