Cover story: What’s next in Miami’s luxury home market

by Andrew Morrell

Coming off several back-to-back years of growth, the prevailing question about Miami’s real estate market today concerns the future. That growth can be seen not only in reports from the Miami Association of Realtors and local brokerage firms, but also with the naked eye. Vertical growth has been off the charts in Miami’s condo-centric market, but real estate professionals now are increasingly looking beyond the shoreline where so much of that development has been focused. That is creating a market more dynamic than ever, even within the niche corner of luxury real estate.

Redefining luxury

If all real estate is about location, luxury real estate takes this several steps further. High-end real estate clients want the community surrounding their home to be as attractive as the home itself, replete with dining, entertainment and shopping options in close proximity. The amenities in the building are an almost equally important selling point — a fitness center, spa, lounge and pool deck are considered the bare necessities in any high-end condo building. Other features once considered extravagant — say, an on-site, full-service spa treatment center, or a professional pet grooming service that’s on-call for residents — are becoming increasingly common in high-end listings. Luxury buyers expect the best in terms of building materials and finishes throughout, from floor to ceiling and at every level.

To Sasha Ezquerra, those little details separate the “just OK” properties from the cream of the crop.

“Buyers today are sophisticated, and they are interested in both the building’s amenities as well as the community surrounding the area,” she said. A sales specialist with The Agency Development Group, part of The Agency Collective, Ezquerra brings 25 years of experience to the table in her latest project: Merrick Manor, which upon its recent completion became the largest residential development in Coral Gables. The 10-story building includes 227 residences as well as 20,000 square feet of retail and restaurant space, situated in a city that’s becoming increasingly attractive to buyers from around the Miami metro area.

“We wanted to deliver a project that wasn’t available anywhere else in Miami,” said Henry Torres, president and CEO of The Astor Companies, which developed Merrick Manor. “Older buildings in Coral Gables are very luxurious but they lack the amenities buyers are looking for today. They might have a swimming pool, but there’s nothing else to do.”

Increasingly, developers and real estate agents are marketing the higher-end projects in their portfolios to a more local demographic, distinguishing them from the gleaming high-rises of Brickell and elsewhere downtown where much attention has been focused in the recent past. Ezquerra and Torres said Merrick Manor is for buyers looking for a less-glamorous but still active and exciting lifestyle, and they often come from single-family residences in the suburbs in search of something more. Buyers in Merrick Manor, which was more than 65 percent sold as of April, span a range of demographics — from families with older children to retired couples — who often are looking to downsize without sacrificing the quality of life that luxury clients can afford. In many cases, Ezquerra said, they are already homeowners in Coral Gables itself, or are attracted to the city’s charm but until now have found few properties on the market.

“People who move to Coral Gables don’t want to move out of Coral Gables,” Ezquerra said. “It really feels like a small town where you can walk anywhere.”

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Condos in Merrick Manor still aren’t sold sight-unseen, though. Owing to the sophistication of its typical buyer, Ezquerra said her sales prospects still expect the complete package.

“Buyers who are looking at new development are more discerning because this is not their first rodeo,” she said about the local market in general. “More condo units are coming fully furnished. A couple of years ago, buyers didn’t care about that very much. Now you see faster absorption of units that are move-in ready.”

Merrick Manor’s prices are something of a bargain compared to the rest of Miami’s luxury market. Out of the listings still available in April, a one-bedroom unit starts at around $375,000 while the four-bedroom, 3,400-square-foot options were priced at $2.6 million. Still, its quality and location make it attractive and arguably easier to sell in a market that currently favors rentals over condos, according to Torres.

“As a developer, it’s easier to sell luxury because with mid-priced condos, you will mostly get investors, not people who are serious about living there,” he explained. “Your average ‘middle-of-the-road’ condo ends up getting sucked up by investors and turned into rentals.”

Torres understands that there is a place for high-end condos marketed to investors or buyers who may have shorter-term horizons, like those who increasingly are flocking to South Florida from the Northeast.

“I see a lot of luxury being built along the beach, like Brickell and Sunny Isles,” Torres said. “It’s more for New Yorkers. I don’t think they are happy about the pricing there. People need to be more conscious of what they are calling ‘luxury.’”

Finding room to grow

Luxury home developers and brokers have seen stellar business growth in the last few years, although sales began to stall in the first quarter of 2019. According to a quarterly report from The Keyes Company, condo sales of at least $1 million were down 10.7 percent across the Miami metro area in Q1 2019, compared to the same period last year. Single-family sales in this same price range were down even more — by nearly 15 percent. On the bright side, prices for both property types grew on a year-over-year basis. The median condo sale above the $1 million threshold closed for $1.6 million, an 8.1 percent gain from the prior year, made all the more impressive in a general climate of slower price growth.

“The major gains in luxury condo prices across the region reflect the intense demand for that product from local, out-of-town and international buyers,” according to Kevin Leonard, vice president of luxury at the Keyes Company.

Looking ahead, though, that demand is increasingly focused on areas of South Florida that hadn’t seen as much attention from high-end buyers and developers. That is changing now that most of Miami’s prime purchase opportunities along the water — whether for developable land or a new luxury home — have dried up.

Development throughout Coral Gables may indeed be redefining luxury living in Miami, not to mention boosting boosting the small city’s status among the Greater Miami area. Coral Gables is in the midst of a full-fledged infrastructure revamp — the city recently completed a pedestrian-only square between downtown thoroughfares Ponce de Leon Blvd. and Galiano Street, nicknamed Giralda Plaza. Along with another in-progress project nearby, Plaza Coral Gables, the city’s downtown is expected to see dozens of new businesses open up shop or expand. These investments to transform Coral Gables into an even more walkable, livable community are only attracting more interest from residential developers.

“I always am sure to point out that we are bringing a condo to Coral Gables, not Miami,” said Rishi Kapoor, whose development firm Location Ventures launched sales on a new 13-story luxury condo property in the Gables, Villa Valencia, earlier this year. Kapoor stresses to buyers and business partners that while Villa Valencia and much of Location Ventures’ portfolio is in Coral Gables or Coconut Grove, not far from the most glamorous parts of the city that are generally associated with Miami, the Gables is a community all its own. That often resonates with buyers, Kapoor said, who are increasingly gravitating toward markets away from the shore and downtown.

“The Gables and Coconut Grove bring a different buyer than other dense condo environments of Miami,” Kapoor said. “It’s catering to people who want to simplify their life in a large-format condo environment. They don’t want a dense high-rise environment, but they don’t want to compromise on size.”

Like Merrick Manor, Kapoor said Villa Valencia is attracting buyers who are empty-nesters or plan to downsize. Although, in reality, the tower’s 39 units are hardly modest in size or scope: they range from 2,616 to 3,276 square feet for a three- or four-bed listing, all the way up to a 6,263 square-foot penthouse (not counting the included 4,646-square-foot private terrace and pool). Prices start at $1.65 million for the smallest listings and climb as high as $10.5 million for the penthouse.

“We offer large-format condo living, synonymous with the type of lifestyle you can get in New York,” Kapoor said, discussing Villa Valencia’s popularity with East Coast buyers who have been moving to South Florida in droves lately, in part to save on taxes. Foreign buyers, particularly from Latin America, make up another sizeable portion of prospects.

“They are buying the Coral Gables story,” Kapoor said. “The city has gone through an impressive rejuvenation. Fifteen years ago, the streets downtown would be empty at night. Today, in the evening it’s a whole new energy.”

The luxury experience

More buyers are finding opportunities in previously overlooked parts of Miami. But they also need to find an agent who understands the market and has the business acumen to handle the large sums of wealth that are at stake. Real estate agents who want to specialize in luxury have to do more than simply win high-priced listings, Ezquerra explained.

“I try to keep myself educated on the market, so that I know what’s a good value in Coral Gables versus Sunny Isles, for example,” she said. She believes those skills and insights are “something everyone needs to have” in order to succeed in luxury real estate.

“Overall it takes a lot of passion,” she said. “You need passion in this industry.”

She finds that energy within herself by shifting her perspective and always keeping her client’s best interests in mind.

“Sometimes I even have to say to my clients, ‘this isn’t the one to buy,'” Ezquerra said. “I make sure I approach my clients and each sale as if I were spending my own money. Most clients I’ve worked with stay in touch later and even become good friends, because I put their best interests first.”

Just as the details separate the average luxury home from the true gems, Ezquerra said it’s the personality an agent brings to the table that ultimately decides their success in this industry.

“Be determined, be passionate and always love what you do,” she said. “This is such a gratifying profession, but you need to have a goal in mind and stay consistent. That will set you apart.”

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