Furniture Retailer RH Proposes $150M Development to Reimagine Nikki Beach Club

Furniture retailer RH has proposed a development that would cost at least $150 million to replace the famed Nikki Beach day club in Miami Beach.

Whereabouts: The property, at 1 Ocean Drive in South Beach's ritzy South of Fifth neighborhood, covers 4.1 acres. The current building on the site is leased by the Penrods, who have operated Nikki Beach there since 1998.

Backstory: The Penrods and Miami Beach officials have been feuding in recent months, with some objections stemming from noise complaints coming from the day club. The city is also trying to rein in Miami Beach's party image.

Earlier this year, the city's commission awarded the 30-year lease to Boucher Brothers and Major Food Group, but the Penrods sued the city, accusing it of executing a "backroom deal." The suit prompted officials to open up the bidding process, and RH is one of four groups that submitted proposals.

The proposal: RH is seeking a 30-year lease term with a starting base rent of $7 million, increasing at a minimum of 3 percent annually. The company estimates that the development will generate $333 million in rent over the term of the agreement.

The project: Under RH's proposal, the company would construct two low-rise buildings, create a public sculpture garden, and replace the surface parking lot with a subterranean parking structure. The development is estimated to cost between $150 million to $170 million.

Previous projects: This is not RH's first attempt at opening a large-scale outpost in the Miami area. The company had signed a lease to operate a collection of buildings near the Miami Design District, but the deal fell through.

RH has also ventured into hospitality and dining, opening high-end restaurants inside its showrooms across the country. The city is expected to make a decision on the lease award in the coming weeks.