Build it and they will come: Resi agents join the South Florida spec home development craze
Some agents have made more money during the pandemic than in their entire careers
David Solomon wants to be his clients’ one-stop shop: realtor, builder and seller.
The Miami Beach native, who just closed on his first spec home project site, is one of a growing number of brokers who are getting into luxury home development and renovation flips, in what’s become a record-setting market.
Sales volume and pricing are reaching new highs across many neighborhoods and cities in South Florida. Last year, luxury single-family home sales, defined as $1 million and up, rose by 193 percent to 3,084 sales, compared to the pre-pandemic 2019, according to MLS data provided by Analytics Miami.
Solomon, a realtor with Berkshire Hathaway HomeServices EWM Realty, paid close to $7 million for a waterfront lot on the Venetian Islands, and plans to build a $24 million estate designed by Touzet Studio. (A Touzet-designed home previously owned by retired Miami Heat player Chris Bosh, asking $42 million, is in contract to sell for nearly $40 million. Bosh sold it a year ago for just $14.4 million.)
Solomon acquired the 10,833-square-foot property at 415 East Rivo Alto Drive and will build a two-story, 5,349-square-foot home with five bedrooms, six full bathrooms and two half-baths, in addition to staff quarters, a 500-square-foot garage, an outdoor pool deck, new sea wall, boat lift and dock.
The Venetian Islands have increasingly attracted big money. Next door to Solomon’s property is a large multi-parcel estate owned by Rialto Capital Management founder and CEO Jeff Krasnoff. Billionaire Peter Thiel, co-founder of PayPal, paid $18 million in 2020 for two adjacent waterfront mansions on the other side of Kranoff’s estate.
Solomon, who has financial backers he declined to name, worked under spec homebuilder Todd Michael Glaser for 15 years. This will mark his second solo ground-up project after building his personal home, he said. He plans to go before the Miami Beach Design Review Board for approvals in early February, and break ground on the new house in May. It could be completed by September 2023.
Solomon said he is considering putting it on the market before it’s built.
The all-time record for a single-family home in Miami-Dade County was set in late December when billionaire hedge fund manager Ken Griffin paid $75 million for a teardown on Miami Beach’s Star Island.
“In this market, anything is possible,” Solomon said.
Some agents have made more money during the pandemic than in their entire careers, and as a result, they are now the buyers of multimillion-dollar homes. In some cases, they are buying their forever homes. In other cases, they are investing their commissions and more into renovations or ground-up construction. Even brokerages, like One Sotheby’s International Realty, are getting into the renovation business.
“We have good intel. The market has a bit of runway,” said Douglas Elliman agent Brett Harris. “The top realtors who made a lot of money can jump in and invest it. Ride the wave.”
In November, Harris and KMB Realty broker Kevin Brill bought former Miami Beach commissioner Jerry Libbin’s house in Normandy Shores for about $5.5 million, with plans to build a 9,000-square-foot, six-bedroom estate. They plan to break ground on the house by the end of the year and list it for about $25 million, Harris said. It’s also available for $11.5 million as land with approved plans.
Harris said he’s about to acquire the house at 288 South Ocean Boulevard in Golden Beach that is nearly completed for $3.9 million, then “finish, furnish, rent and sell it by the end of the year.” It’s across the street from the ocean. Prices for non-waterfront homes have also skyrocketed on the barrier island from Miami Beach heading north.
In August, an oceanfront Golden Beach home sold for its full asking price of $8.2 million, nearly 45 percent more than its previous sale the year before.
“There is just no inventory,” Harris added.
Another Elliman agent, Oliver Lloyd, hired Glaser to build a waterfront mansion at 2700 Sunset Drive on Miami Beach’s Sunset Islands, after acquiring the property last year for $11.2 million.
Some agents have been flipping homes for years, but are now gaining attention because of the elevated price range and the demand for new product. Alejandro Diaz Bazan, an agent with Coldwell Banker’s The Jills Zeder Group, is a 50-50 partner in Andian Group with developer Andres Isaias. Together they’ve renovated or redeveloped roughly 85 homes since 2010, Diaz Bazan said.
At the beginning, they focused on buying homes in foreclosure and flipping them. Andian completed its first ground-up construction project in 2018. Last year, the firm sold a waterfront Pine Tree Drive mansion for $28.1 million, nearly 50 percent more than the $19 million it paid for the house months earlier.
More recently, Andian paid close to $14 million for a waterfront home on the Sunset Islands that it plans to renovate and re-list for a price in the high $20 million range.
The rate at which prices are growing will slow — eventually, experts say.
“I don’t see [prices] dropping, because the supply and demand fundamentals are so clear,” said Ana Bozovic, founder of Analytics Miami. “Will that same rate of acceleration go on? No, because it can’t go on to the moon.”
In a market with such little inventory of waterfront homes, brokers have a competitive advantage. Active listings of houses priced at $1 million and up dropped by 44 percent to 986 listings in December 2021, compared with 1,767 listings in December 2019, according to Analytics Miami.
Solomon, who is building the Venetian Islands home, said bidding on the property was “super competitive.” He hopes to acquire many more sites to build additional spec houses.
“This was an off-market deal. Something I had been working on for years,” Solomon said. “Knocking on this door basically made the deal four years ago.”