In a bold move to sell the leftover units at Brickell Heights and SLS Lux, the Related Group is now offering real estate agents 10 percent commissions — in addition to lowering buyers’ deposit requirements — at both Miami projects.
The commissions at the two nearby Brickell area projects equate to as much as double the standard 5 percent to 6 percent sales fee most condo projects offer, several top real estate brokers and executives told The Real Deal.
It’s the latest incentive as the Miami market slows down and flattens, amid foreign currency devaluations that are hampering spending.
“I think it shows signs of desperation,” said Harvey Daniels, vice president of development sales for ONE Sotheby’s International Realty, which is handling preconstruction sales at such upscale projects as One Thousand Museum, Three Hundred Collins and L’Atelier — all at 5 percent commissions.
Related’s Carlos Rosso, president of Related’s condominium division, declined to comment for this story.
At a Bisnow conference last week, Related Chairman Jorge Perez said that 80 percent of Related’s preconstruction condo sales are to foreign buyers, and he conceded that declining foreign currencies have had the “largest dampening effect” on the local real estate market. A key issue for the future, he said: “How do we get this market to be more local?”
When Related dropped deposit requirements to 30 percent from 50 percent at Brickell Heights 02 in October and at SLS Lux in November, Rosso had said it was so that the projects could be quickly sold out and the sales centers closed to move on to other developments. He disputed the idea that it was a sign that the preconstruction luxury condo boom had reached its peak. During the next few months, Related is expected to launch 444 Brickell, a spokesperson told TRD.
SLS Lux and Brickell Heights, with 10 percent commissions, have secured their financing and have relatively few remaining units. SLS Lux, with 535 units, is now 95 percent sold, according to a Related spokesperson. In September, Related secured $166.1 million in financing for the tower, on South Miami Avenue and Southeast Eighth Street, which is slated for completion in 2017.
Brickell Heights, at 850 Miami Avenue, is planned to have two towers of 50 stories and 47 stories. The combined buildings’ 690 units are now 89 percent sold out, according to a Related spokesperson. In April, Related secured a $160.5 million construction loan for the project.
The higher commissions are touted in email blasts from Fortune International Group, sales and marketing agents for the projects, as a New Year incentive to draw in sales.
Yet other developers do not seem to be following Related’s lead.
In fact, while the standard commission on preconstruction projects is often 5 percent, some ultra-luxury properties are even lower. At Faena House, where a penthouse sold for $60 million last year, commissions are 4 percent, said Alicia Goldstein, who was formerly the executive vice president of Faena Group until she left recently to become HFZ Capital’s senior managing director and president of sales and marketing.
Other luxury Miami projects, like CMC Group’s Brickell Flatiron and Two Roads Development’s Elysee Miami offer agents 6 percent, said Veronica Cervera Goeseke, CEO of Cervera Real Estate, the exclusive sales and marketing firm for both projects. “Realtors take people to projects that they believe in,” she said.
“I have never found that raising commissions drives people into my office,” Cervera Goeseke told TRD. “The only thing that drives people into my office is a quality project that is priced correctly.”