The rich niche: South Florida’s high-end properties in high demand
Adam H. Beasley
The walk-in closets at 3 Indian Creek Island Rd. are the size of a studio apartment. Aspiring American Idols can lay down tracks in the customized recording studio. Need a workout? The place has its own fitness center.
But what sets this palace apart from even its most exclusive peers are the little things, like the glass-enclosed wine chamber protected by a thumb-print security system that’s right out of a spy movie.
The owners originally were asking $60 million, but the price has been slashed to just $52 million — still the most expensive listing ever in South Florida.
While your home may have lost half its value in the past five years, ultra-elite properties like 3 Indian Creek, and Ricky Martin’s sumptuous, 10,000-square-foot North Bay Road estate, which sold two weeks ago for $10.6 million, are in strong demand.
Earlier this year, a Connecticut billionaire dropped $38.5 million on another Indian Creek property — the highest price ever paid to date for a South Florida home.
And even though the foundation won’t be laid until this fall, more than half of the mega-condos at Sunny Isles Beach’s Mansions of Acqualina are spoken for — at prices ranging from $5 million to $50 million.
“More million-dollar homes have gone under contract this year than any time I can remember,” said Riley Smith, an agent with Esslinger-Wooten-Maxwell (EWM) Realtors. “And I don’t think it’s going to slow down anytime soon.”
Paying cash for a third home
Up and down the South Florida shoreline, the super-high end real estate market is on fire, say the developers who build the homes and real estate brokers who sell them. While Wall Street turmoil kept many would-be buyers on the sidelines for years, they’ve since reentered the market with confidence.
Most are out-of-towners, wanting a second, third or even fourth home.
Nearly all pay cash — regardless of how high the price.
And as the latest industry data indicate, they’re willing to pay more than at any point in recent years.
Ron Shuffield, Smith’s boss at EWM, said his firm has sold a million-dollar property every 18 hours so far this year. Four out of five condo deals in that price range have been cash transactions. And with demand spiking and inventory relatively flat, prices have soared.
Last year in Miami-Dade County, where South Florida’s10 biggest-ticket sales since 2010 occurred, there were 170 homes and condos sold for at least $3 million, the point where many say the luxury market begins. That’s about the same volume as in the peak years of 2005 and 2006, and way up from 103 such sales in 2009.
Since late 2010, the sales price of these single-family homes and condos has jumped from about $700 per square feet to more than $900.
These figures come courtesy of Coldwell Banker, whose star agents — Jill Eber and Jill Hertzberg — closed $280 million in real estate transactions in 2011, and have rung up $80 million so far this year.
The Jills, as they are known, are now chasing history. They’ve been tasked with selling 3 Indian Creek, the 10-bedroom, 10-bath, 30,000-square foot fortress situated on two acres of bayfront property. While Eber said she had signed a confidentiality agreement, she did suggest that the property will likely sell in the coming months.
It helps that the market for Indian Creek, the private 86-person village that’s home to Julio Iglesias, Don Shula and Norman Braman, has been set by a flurry of recent sales.
Bad quarter for Sears, not its boss
Most notable was the 17,000-square-foot estate bought by billionaire investor Eddie Lampert, who scrounged up nearly $40 million even as his Sears Holdings lost $2.4 billion in the last three months of 2011. Even vacant lots in the neighborhood run to at least $14 million, and Iglesias recently bought the home adjacent to his estate, merely for the right to tear it down.
“In the last three years, these people stopped making decisions, because of the economic uncertainty,” said Jorge Uribe, the Sotheby’s agent who handled Lampert’s purchase. “They were still very wealthy, but didn’t feel comfortable. They do now.
“The phenomenon we’ve seen in the last year has been, we’d see one transaction, then two, then three,” Uribe added. “Then all of the sudden they say, ‘Oh my god, I have to jump in and get my house before someone else does.’ ”
While factors like a weak dollar and decreased prices are helping to fuel the comeback, Peter Zalewski, owner of Condo Vultures, believes there is something even more primal involved.
“I think today’s buyer is acting on ego,” he said. “My biggest concern is that there is so much bravado back on the street. This is sort of like ‘Back to the Future.’ The environment today is not too different than during the boom.”
In Miami-Dade, the hot spots are well known: South Beach; Gables Estates; Star Island; Key Biscayne. Prices are mostly still off their all-time highs, motivating the shrewd and affluent to pounce on good deals before they vanish.
Audrey Ross is a real estate agent whose focus is Miami’s luxury market. Since January, Ross has facilitated two deals of at least $15 million, including a 2 1/2-acre property in Gables Estates hugged on two sides by Biscayne Bay.
Over in Miami Beach, the condo crash’s dog days have given way to a bull market. Mandarin-themed MEI, a 134-unit property at 58th and Collins, saw most of its original buyers surrender substantial deposits and simply walk away, said Philip Spiegelman of International Sales Group. Four years and a significant market correction later, Spiegelman’s firm recently put the final empty unit under contract. The building has an average sales price of $1.3 million.
At first, MEI’s buyers — as with most similarly distressed buildings — were South Americans who dealt in cash. But slowly, affluent deal seekers from the New York area got courageous. They’re now roughly a third of all of the building’s owners.
“They had believed the media, who were saying that Miami was the most overbuilt city in the country,” Spiegelman said. “That wasn’t the truth, but perception became reality.”
Fifty blocks south, Ocean House South Beach has experienced a similar boomlet. The South of Fifth project was under construction when the market crashed, freezing the work until developer iStar Financial decided to target the super-rich. With just 18 apartments in the entire beachfront complex, the units range in price between $3 million and $7 million and have been selling rapidly, said real estate agent Alicia Cervera.
Yet the county’s true value is across the bay, say Cervera and others. Miami’s Brickell neighborhood was ground zero for the mortgage meltdown, with sparkling new high-rises abandoned by underwater buyers as quickly as the towers were built. In 2007, more than two-thirds of the 23,000 condos built during the boom were vacant. Today, 93 percent of those units are occupied, and some developers are feeling frisky enough to begin building again.
In March, the Related Group unveiled plans for Millecento, a 42-story high-rise to be built in Mary Brickell Village. Whereas comparable buildings in South Beach begin at $1,000 a square foot, Millecento set its price point at less than half that — with a dynamic response. As of last month, roughly three-quarters of the 383 units had been reserved, said Carlos Russo, the Related Group’s condo division president.
When demand exceeds the supply
Three blocks west, construction will begin this summer on BrickellHouse, another sky-scraping condo project that is already more than 70 percent sold, said developer Harvey Hernandez. Vizcayne, an 849-unit twin-tower project on Biscayne Bay, had about 660 available units this time last year, said director of sales Nick Grossi. That figure is now under 300.
“In the next year, we’re going to exceed the levels of 2005 and 2006, because the demand has exceeded the supply,” Grossi said. “It’s been a total reversal.”
In terms of pure opulence, nothing can match the Mansions at Acqualina, which is set to open next to its sister property, the Acqualina Resort and Spa, in 2015. The lavish, 79-unit high-rise will feature crocodile-leather closets (valued at $100,000), slick marble floors and — if you’re really loaded — a swimming pool built into your balcony.
Michael Goldstein, the Mansions’ director of sales, said his boss Jules Trump (no relation to The Donald) had a modest vision: To build the finest building on the planet, competing with London’s One Hyde Park and 15 Central Park West in New York — only two of the most exclusive properties in existence.
Warren Estis, a New York-based real estate attorney who owns dozens of properties both here and up north, was one of the first to sign on for a Mansion — but he’s going to use it as a vacation home, and not as an investment opportunity.
“Starting in December of 2010, I started seeing the prices creeping up in the better buildings — and then there were tremendous increases in 2011,” Estis said. “The high-end market has turned around, and the perception is that it’s going to keep going up.”
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