M Development’s lease battles reshape downtown Naples

In the five years since Aspen-based M Development arrived in downtown Naples, with its purchase of the old St. George & the Dragon restaurant property and surrounding parcels, it’s steadily continued to buy prime city real estate and attract new tenants.

Although it sold its interest in that 4.3-acre property, where it intended to develop The Avenue luxury condos, boutiques and restaurants, its presence downtown is now extensive — with 12 buildings along Fifth Avenue South as part of a $186 million October 2023 purchase of 27 buildings owned by the Hoffmann Family of Companies, and other Fifth Avenue South buys.

Real estate broker Rob Carroll, who negotiated the Hoffmann sales, said last year after two more purchases that M Development didn’t plan any tenant changes.

“Their general thesis is to buy the good real estate and either keep existing tenants or, if tenants decide to vacate, replace them,” Carroll explained.

M Development, founded by CEO Mark Hunt, has accumulated dozens of properties in Aspen, Colorado, worth hundreds of millions — and sued that city and tenants, as it did here, where it operates as Naples Ecosystems JV (joint venture), NECO. What occurred in Aspen, where Hunt owns much of downtown, is beginning to play out here, reshaping downtown.

Possibly seeing opportunities for higher rents, other landlords aren’t renewing leases, including Reinco, which owns 350, 494 and 749 Fifth Ave. S. Upscale gift and stationery store Arabesque of Naples, which opened in 2001 at 350 Fifth Ave. S., just learned NECO isn’t renewing its lease.

As it snapped up more buildings, NECO declined to renew leases, terminated others, doubled rents, fought tenants who sued, countersued and filed lawsuits. Some longtime locals couldn’t afford increased rents, including 25-year-old Wind In the Willows, which moved to a smaller Eighth Street South space in the same building.

Fifth Avenue South buys continue

In July 2025, M Development paid $40.25 million for two buildings, 821 Fifth Ave. S. and 800 Fifth Ave. S., across from one another at Eighth Street South and Fifth, culminating acquisition of all corners of a high-profile intersection. That came seven months after paying $29.5 million for 765-799 Fifth Ave. S, the northwest corner. The southwest corner, 780, was part of the 2023 deal.

Its redevelopment of L’Olivo Ristorante at 651 Fifth Ave. S. came to a halt after city officials found problems, and it’s been vacant since April 2025. Jet Agency, whose lease was up for renewal Aug. 31, left 779 Fifth Ave. S., saying customers avoided its office because Anavaya Med Spa, the skincare shop next door, aggressively hawks products to passersby. It’s a shop M Development fought to evict in court.

Joli Visage, another skincare company with a similar history of code enforcement complaints, was hit with a NECO countersuit after subletting from Health & Wealth Co. Joli Visage’s parent company, Georgetown Allure of Washington, D.C., sued NECO 630 Fifth Avenue South Holdings, alleging it had a “productive and amicable” landlord relationship until M Development’s purchase, six months after it sublet Unit 640 to Joli Visage, with the landlord’s consent.

Since then, the lawsuit alleged, tenants have been “under siege” by NECO, which is attempting to “force” tenants to “vacate.”

Rents double or more

Less than two months after the 2023 purchase, NECO alerted Health & Wealth Co. its rent would jump from $3,600 to about $8,000 due to a “large increase in property insurance.” NECO accused it of defaulting on the lease by subletting and demanded Joli Visage vacate, noting the lease ended Sept. 16, 2025, and only Health & Wealth could renew.

“Landlord has engaged in a targeted campaign to empty the building … to relet it on more favorable terms or otherwise develop the property, which is prime real estate in Naples,” the lawsuit alleged, accusing NECO of attempting to “manufacture a default” to reject a five-year lease renewal option.

Georgetown Allure provided proof it adhered to renewal terms, but NECO rejected its proposals, pointing out that in April 2025, Health & Wealth said it wasn’t renewing its lease, which would terminate Joli Visage’s sublease, and asked NECO to find Joli Visage a space.

However, Georgetown Allure pointed out it emailed NECO’s broker and property manager about renewing and Joli Visage refused to vacate and countersued. NECO argued the lease says holdover tenants face 200% base rent, and renewal requests can’t be emailed.

Motions and responses continued, the judge denied eviction attempts and the parties settled Dec. 30 for undisclosed terms; attorneys didn’t respond to requests for comment.

Neighboring art gallery owner Aldo Castillo said Joli Visage’s lease was extended three years, when NECO plans to demolish and renovate after the L’Olivo renovation across the street is complete. Castillo, whose NECO lease isn’t being renewed, said water seeps up through the floors, a problem other first-floor NECO tenants experience. He’s moving to 472 Fifth Ave. S., owned by AG Naples of Miami.

The May 2025 lawsuit is among four Fifth Avenue South lawsuits involving NECO, which creates separate LLCs for properties. The lawsuits contend NECO began strictly enforcing leases, not renewing them and forcing longtime tenants to leave in favor of newer nationally known tenants. Some left after hefty rent increases, while others alleged NECO didn’t adhere to lease terms.

Last December, Sushi-Thai sued NECO 898 Fifth Avenue South, alleging it signed a 2011 Hoffmann lease for $140,484 yearly, plus $24,432 rent. It was amended to $245,358.36 in 2020, with increases to $276,152.99 in 2024-25. After the 2023 sale, an amended NECO lease jumped to $732,960 in April 2025, increasing to $824,952 by 2029-30.

Sushi-Thai assured of reopening

Around Oct. 9, 2024, the restaurant’s lawsuit alleges, the building suffered water and damage after Hurricane Milton. It discussed repairing the building without disrupting the restaurant, and the first contractor told NECO work could begin immediately without “substantial interference.” NECO chose a contractor who required it to close seven weeks. Sushi-Thai agreed, if work began in summer 2025, but it didn’t begin until Sept. 7, 2025.

Restoration was required under the lease, or Sushi-Thai could terminate. Final lease negotiations assured restoration by Dec. 31, 2025, months of rent credits and deferrals, and NECO sharing rent-loss insurance claims.

But on Dec. 9, NECO said it was terminating the lease, claiming Sushi-Thai refused access, which it denied. “The notice … amid ongoing repairs and negotiations, is a transparent attempt to evade the landlord’s restoration obligations,” the lawsuit alleged, noting completion was required within 180 days, and NECO was violating state laws.

Attorneys notified the judge on Sept. 14, 2026, they’d settled and the judge closed the case, reserving the right to reopen and enforce the settlement.

This May, Soaps & Beauty, Vitalitea and On Beauty, which operate cosmetics shops on Fifth Avenue South, sued NECO 765 5th Avenue South, NECO 630 5th Avenue South, M Development and 643-63 Fifth Avenue South Holdings, a Hoffmann entity, alleging defendants were “fully aware” they intended to expand their cosmetics stores on Fifth Avenue South.

In February 2025, the lawsuit alleged, it began negotiating for 630 Fifth Ave. S. — Joli Visage’s space — and was told it was being vacated, so Vitalitea executed a three-year lease as Medicaglow Spa starting Aug. 1, 2025. Its lease was to end in May 2025 and it began preparing for the move, but it never happened.

“Plaintiffs were left with no physical business location from August through November 2025, during which time historically plaintiffs earned approximately $400,000,” the lawsuit alleged, adding it moved to 765 Fifth Ave. S. on Nov. 1, 2025, under a lease that would end May 31, 2026, which it believed was to allow the move to Joli Visage’s space.

But that space was under litigation and even if it moved in, occupancy “would not last” through the lease date due to “purported demolition” of 630. This spring, NECO told them demolition wouldn’t start for at least 18 months. The lawsuit alleges NECO is trying to terminate its 765 lease after failing to deliver 630.

NECO asked a judge to separate the two disputes, noting that from early June until July 16, 2026, the cosmetics company ceased operations and was holding the space “hostage.” In September, they settled, agreeing the 765 lease for Suite 775, Anavaya Med Spa, will expire May 31, 2027. Attorneys didn’t respond to requests for comment.

On Oct. 12, Michigan-based State & Liberty Clothing Co. opened in Suite 785.

Elevator never repaired

In August, NECO 898 Fifth Avenue South sued Project Glammers, a medical aesthetics and longevity practice, alleging it defaulted on a lease that was to end Sept. 30, 2027, abandoned its two spaces on June 30, and owes accelerated and past-due rent of $210,627.62. Its Hoffmann lease was $4,516.67 monthly but it was increased to $28,350 for added space, gradually escalating to $31,908.17 over five years.

Project Glammer claims NECO agreed to terminate its lease June 30 and took over its spaces a day later, so it owes nothing. It contends NECO breached the lease by not maintaining the building’s elevator after tenants began complaining in August 2023 that it didn’t work. The case is pending.

Growth, charm, business mix are key

Some Naples store owners hope what occurred in Aspen, about 15 years ago, doesn’t happen here. Aspen residents, City Council and chamber were upset M Development’s renovations were stalled, so buildings were boarded up, according to the Aspen Daily News, but Hunt, the M Development CEO, blamed Aspen’s slow permitting process.

Meanwhile, Fifth Avenue South Business Improvement District Executive Director Meg Stepanian said the avenue has “never been static” and its “ability to evolve has been part of its life cycle for decades.

“Investment in the district and the arrival of new retailers can bring tremendous energy and opportunity, and we welcome businesses and property owners who recognize the value of being part of this very special place,” Stepanian said. “At the same time, we’re mindful that increasing property values and rents can create challenges for longtime merchants who have helped build the character of the avenue.”

The BID’s goal is to support a “vibrant, economically healthy district” while protecting the qualities that make it distinctly Naples, she said, adding, “Growth is important, but so are authenticity, local character and the mix of businesses that our residents and visitors have come to value. The best evolution of Fifth Avenue will respect both.”