Peter Zalewski is a real estate market consultant, non-practicing licensed real estate broker and columnist for The Real Deal who now answers reader questions about the South Florida real estate market in a new weekly Friday column. Questions and comments can be sent to [email protected] The TRD editors will choose which submissions will be addressed.
Question: What value does developer Gil Dezer add to his condo projects by partnering with internationally known brands such as Porsche and Armani? Will other developers follow suit in incorporating brands into their condo projects in Sunny Isles Beach and South Florida?
Developer Gil Dezer has his preferences when it comes to luxury brands.
The Sunny Isles Beach developer is betting that wealthy investors will share his brand loyalty when purchasing preconstruction condo units in South Florida.
In a first for the South Florida real estate market, Dezer formally announced his plan to name a new condo tower in Sunny Isles Beach after a fashion design firm, Armani, earlier this week.
Dezer’s branding approach differs from most other South Florida developers, who tend to name their condo projects after everything from Mother Nature to their favorite colors, trendy neighborhoods or psychological states of happiness.
For developers, deciding on names for new condo towers can be tricky from a marketing perspective, as a miscalculation could send the wrong message to potential buyers. As a result of that inherent risk, most South Florida condo project names tend to be vague to not turn away buyers.
The introduction of luxury name brands into the condo industry is a strategy that has been slowly evolving for the last decade in South Florida. The most common approach has been to incorporate chic hotel chains into new condo projects.
Dezer – with his father Michael – first incorporated the brand element into the family’s high-rise development business during the previous South Florida condo boom, when the firm constructed six towers bearing the name of New York celebrity developer Donald Trump.
The Trump-named projects got off to a fast start during the last condo boom before running into many of the same challenges that all developers faced when the South Florida real estate market crashed in 2007.
For the latest South Florida preconstruction condo boom, Dezer is moving away from naming his new developments after individual celebrities – whose brands can fluctuate in consumer circles based on positive or negative news reports – in favor of incorporating luxury consumer brands.
At the beginning of this cycle, Dezer launched presales for an innovative new condo tower equipped with a state-of-the-art car elevator system that is appropriately called the Porsche Design Tower in Sunny Isles.
The oceanfront project named after the Germany-based sports car brand has reportedly been well received, with some 90 percent of the units said to be under contract to wealthy individuals, including some of the world’s billionaires.
Wells Fargo Bank likes the branding – and purported sales – enough that it provided $214 million in construction financing, the largest loan for a single condo project to date during this boom, to Dezer to build the Porsche Design Tower.
For a sequel, Dezer announced plans this week to develop, in conjunction with the Related Group, a new 60-story, 260-unit condo tower named after luxury interior design company Armani/Casa. Plans call for construction of the Residences by Aramani/Casa tower to begin during the second quarter of 2015. The project is scheduled to be completed in 2016.
Units in the planned Residences by Armani/Casa are to be developed on the 18975 Collins Avenue site of the former Seashore Club South motel-condominium, which was terminated in August 2013. Prices start at $1.2 million in the new tower.
Dezer’s decision to incorporate the Armani brand into this latest project comes at a time when competition for preconstruction condo buyers is intensifying.
Developers have proposed more than 250 new condo towers totaling nearly 35,000 units on sites located east of I-95 in Miami-Dade, Broward and Palm Beach counties, according to the preconstruction condo projects website CraneSpotters.com.
(For disclosure purposes, my firm operates the website.)
In Sunny Isles, developers have proposed at least 14 new condo towers totaling nearly 2,000 units.
As more and more condo projects are announced, developers are increasingly searching for ways to distinguish their proposed towers from the competition.
For developers, branding initiatives instead of lowering prices, adding more amenities or paying higher commissions are considered the preferred way to sell more preconstruction units.
It is unclear if the increased competition has had any impact on the final plans for the Residences by Armani/Casa project, which originally was announced in marketing materials as a pair of 55-story towers with a combined 500 units back in November 2013.
A spokesperson for the developer issued this statement regarding the final plans for the single-tower Residences by Armani/Casa project: “Any prior information about a two-tower project that may have been communicated in the marketplace was done so without approval of the development team, and was premature. The development team is very excited about the possibility of additional projects, and is exploring those opportunities, but at present, this is a single-tower project.”
Given that condo projects named after existing brands are somewhat unique to the South Florida real estate market, it is difficult to assess the impact of a name brand on unit sales and prices.
Fittingly, the Trump-named projects that Dezer built in Sunny Isles represent the only real example of condo towers with established brands in Miami-Dade County that are not related to hotel franchises.
A quick glance at the current Sunny Isles resale market for oceanfront condo towers shows a typical unit in a Trump-named project sold for an average price of $743 per square foot in the first half of 2014, according to the Southeast Florida MLXchange.
By comparison, the average resale price for a Sunny Isles condo unit in an oceanfront building sold for $646 per square foot between January and June 2014.
The current resale asking price for a unit in a Trump-named project in Northeast Miami-Dade County is $880 per square foot, compared to Sunny Isles’ overall market average asking price of $836 per square foot.
The unanswered question going forward is whether Dezer’s decision to name new projects after his preferred luxury brands will result in stronger presales and price premiums in a South Florida preconstruction condo market where intensifying competition is increasing the need for developers to attract larger pools of buyers.
Thought Of The Week: Condo Developers to gather monthly to discuss South Florida preconstruction market
South Florida’s booming preconstruction condo market is prompting various organizers to produce a series of at least three events in the next four months featuring some of the market’s most recognizable developers.
This month, developers from eight different companies accounting for nearly 50 new proposed towers are scheduled to speak at Wednesday’s “South Florida Real Estate Forum” organized by Forbes LATAM at the Epic Hotel in Greater Downtown Miami.
Next month, entrepreneur Anita Funtek is hosting the first annual Miami New Construction Show from Aug. 29 to 31 at the Miami Beach Convention Center.
(For disclosure purposes, I am involved with the event.)
Lastly, The Real Deal is launching the annual South Florida Forum & Showcase on Oct. 23 at the Moore Building in the Design District.
Peter Zalewski is real estate columnist for The Real Deal who founded Condo Vultures LLC, a consultancy and publishing company, as well as Condo Vultures Realty LLC and CVR Realty brokerages and the Condo Ratings Agency, an analytics firm. The Condo Ratings Agency operates CraneSpotters.com, a preconstruction condo projects website, in conjunction with the Miami Association of Realtors.