A little more than a decade ago, few condo developers in Miami would consider investing more than necessary in architecture, preferring to pack in more units at a lower price. Following the crash of 2008, as the city firmly established itself as an international art and design destination and developers needed to justify higher pre-construction deposits to avert another real estate bubble, that all changed.
Big names like Zaha Hadid, Bjarke Ingels, Herzog & de Meuron, and Foster + Partners were splashed across glamorous new projects, with prices to match. And they sold well. The era of the starchitect had begun, with Miami as its epicenter.
In the last few years, the Miami real estate market has slowed significantly. But in this new environment of cost-conscious buyers, does investing in design still bring the return that it used to?
“Absolutely,” said developer Edgardo Defortuna, president and CEO of Fortune International Group. Its development projects include Jade Signature, a luxury project in Sunny Isles Beach by the Swiss architecture firm Herzog & de Meuron completed two years ago. His company’s portfolio also includes sales of other luxury buildings.
“The projects that associate great development and great architecture and very well-known designers are the ones that do better in the short term and the long term,” Defortuna said. “They hold their value better and they’re more recognized. They have better resale values than the project next door that didn’t have [a pedigree.]”
Defortuna believes both eye-catching design and name recognition are important elements of success. “The name of the designer in many cases resonates with the buyer and attracts the buyers,” he said.
That may be especially true in Miami-Dade, where evocative art, architecture and design have become integral to the city’s identity. The skyline is punctuated by the work of Herzog & de Meuron (Perez Art Museum Miami), Zaha Hadid (One Thousand Museum condo tower), Frank Gehry (Miami Beach’s New World Symphony), countless projects by Arquitectonica and the Buena Vista retail area aptly named Miami Design District.
For luxury condos, it’s practically de rigueur to employ a well-regarded architect. “I think of the performance impact of ‘starchitects,’ designers and groundbreaking design as the barrier to entry for the top of the market,” said Jonathan Miller of Miller Samuel, a real estate appraiser and consultant. “This is more about achieving a premium price than selling faster since the purpose of this amenity is to create or enhance the perception of value.”
Defortuna cites a different reason. “If not a premium in price, there is a premium in absorption and stability of the project,” he said.
But at least one design-driven project being marketed by Defortuna’s realty division does seem to be commanding a price premium. “We’re getting significantly higher prices on a per-square-foot basis than the competition in the same corridor,” he said of Missoni Baia, being developed by OKO Group, led by Russian-born mogul Vladislav Doronin. It was designed by New York-based firm Asymptote Architecture, with input from the Missoni fashion house. Although the project has not disclosed any sales figures, it is offering 249 residences priced from $590,000 to over $1 million, at an average of $792 per square foot.
The Ritz-Carlton Residences Miami Beach, by Italian interior designer Piero Lissoni and award-winning architecture firm Stantec, received its Temporary Certificate of Occupancy in August after a lengthy construction period and is now 70% sold out, at an average of $1,200 a square foot, according to developer Lionheart Capital. Allison Greenfield, a Lionheart partner, said the project, where units are priced from $2 million to $40 million, “didn’t experience a sales correction… Our prices have not wavered since we opened.” Earlier this fall, Mike Piazza, the former baseball All-Star, put down $5.6 million for a three-bedroom unit at the property.
On South Beach’s West Avenue, Monad Terrace, designed by famed french architect Jean Nouvel, is setting records. A penthouse there is under contract for $7.6 million, exceeding the all-time highest sale price for any condo that has ever sold in the tony West Avenue neighborhood by a staggering 40%, said the developer, JDS Development Group. And the building has achieved an average sale price per square foot 2.85 times the average of the area over the last year. Douglas Elliman is handling sales for the building.
At One Thousand Museum in Downtown Miami, designed by late superstar architect and part-time Miami resident Zaha Hadid, the architecture is integral to the structure. The undulating tower features a structural exoskeleton that holds up the floor plates. Construction of the interior is not quite complete, including the penthouse level aquatic center and rooftop helipad, and the rooftop helipad, but residents are already moving in.
With only 84 units in the entire 62-story tower, half-floor units cost $5.85 million, and massive, 10,000-square-foot full-floor units are selling for $20 million and up. The project has closed on more than $300 million worth of units, with sales representatives reporting a noticeable increase in traffic and several new sales made since the building received its Temporary Certificate of Occupancy in June, according to its developers.
“The last year was a slower year than the year prior in terms of velocity,” said Louis Birdman, who is developing the building with partner Greg Covin. “But we’re now seeing it start to move the other direction. We had a very busy summer.” The building has achieved average sales of over $1,400 a square foot, said Birdman.
Although One Thousand Museum was arguably the highest profile projects of the last real estate cycle, going forward, Birdman sees “more of a push toward smaller, less expensive product, whether it be for rent or for sale. As a result of that you’ll have situations where developers for cost considerations may not bring in the caliber of architects that we brought in during the last cycle.”
And yet, as Greenfield said, “Good design isn’t just the bastion of the rich.” Both DeFortuna and Greenfield pointed out that in the current real estate market, design also is coming to projects at a lower price point.
“Even though the design is still a very important factor, we all need to really recognize that the price points we were getting two years ago might not be the price point we get today,” said DeFortuna. “The units are smaller, the amenities are more efficient, but the component of good design is prevalent.”
On the lower end of the price scale, design-oriented and tech-savvy Yotel hotels is building a mixed-use condo offering, Yotelpad, to downtown Miami, in partnership with Aria Development Group. Designed by Stantec, the project sold all of its 231 residential units, with prices ranging from $300,000 - $499,000, in a speedy 15 months. Units were sold at an average of about $655 per square foot. Currently under construction, the building is slated for completion in 2021.
Meanwhile, Natiivo, which is offering few rental restrictions as a marquee amenity to condo buyers, is planned for a site directly behind Miami’s Freedom Tower. With Arquitectonica as the architect and Urban Robot Associates as interior designer, Newgard Development Group launched sales for the project in June. Both designers are local firms, the first a world-famous powerhouse; the latter is quickly proving itself with provocative design work. Units start in the $300,000s and are being sold fully furnished at an average price of about $700 per square foot.
The strongest sign that developers are still counting on big-name architects for projects with accessible price points might be the planned Miami Produce Center in Allapattah. It is being designed by one of the hottest names in world architecture, Bjarke Ingels —perhaps best known in Miami as the architect of Grove at Grand Bay, two boldly twisting condo towers in Coconut Grove. The developer is Robert Wennett, known for the Herzog & de Meuron-designed 1111 parking garage that revitalized a stagnant end of Lincoln Road.
When it’s built — a timeline has not been announced — the huge mixed-use development will have both offices and a whopping 1,200 residential units, many planned as co-living space or workforce housing, dramatically suspended on tall stilts over open green spaces. Retail, restaurants, a trade school, and possibly even an urban farm are planned for the lower levels. A public street bisecting the project, and a nearby Metrorail station will encourage walkability and use of public transit.
Don’t expect the focus on design to end there. Defortuna sayss “two or three” projects by high-profile designers in the pipeline, he said. And while Lionheart, too, isn’t ready to release details, Greenfield says design will be part of its future projects.
“We think design has a very small premium,” she said. “Design is about leaving something behind that is better than what you found.”