Chase Burritt, national partner, Hospitality Services, Ernst & Young, in Miami, says Florida is ahead of the curve nationally in terms of condo-branding by hotel companies. In recent years, some developers had tried to extend the appeal of a resort hotel to nearby residential property, such as Breaker's Row north of the Breakers in Palm Beach or John Temple's Presidential development adjacent to the Boca Raton Resort & Club. But now the major chains, led by Ritz-Carlton, are entering the full-ownership residential market with both condominium hotels, where the owner purchases a hotel suite for occasional use, and residential condominiums with a hotel's full-service amenities.
"This whole concept of hotels taking on more responsibility for the sale of real estate -- condominium interval or whole units -- is just a natural extension of their customer base," says Burritt. "Four Seasons and Ritz-Carlton, the leaders in this area, really have a phenomenal database of customers that any residential sales office would like to have."
For buyers -- most are second or even third-home buyers -- the hotel's brand offers an additional level of confidence and security. "Some luxury condos have rental programs and purchasing services and a concierge, but it's not the same as having an internationally known hotel being responsible for requests," says Burritt.
Hotel chains are using branded condos to leverage their competencies and systems into a new line of business. They also strengthen a chain's relationships with condo-buyers who may then choose to stay in the firm's hotels while traveling elsewhere, adds Bob Phillips, vice president of business development, Ritz-Carlton Club, the Atlanta-based chain's fractional ownership affiliate. "Typically, hospitality is a transient relationship. Now, the purchase of real estate offers a tremendous extension of the brand."
For developers, teaming up with a hotel chain to offer a combination of residential condos and hotel rooms makes it easier to finance the project. "We see a trend in developers jointly building and financing hotels and residential condominiums as a mixed-use project," says Phil Keb, vice president of development at Ritz-Carlton Hotel Co.
The residents' use of the hotel's services brings in incremental revenue and profit, Keb says. "But the real factor that makes the financing easier to do is that profit margins from the residential component can offset some of the hotel development costs, which makes the hotel a more attractive investment."
The next step? Extending hotel brands to primary homes in exclusive single-family communities, which is likely to occur in the next few years. As Phillips says, "There's an opportunity in gated communities and other residential products in expanding Ritz-Carlton's presence in Florida."
Hotel-Condo Projects
SOUTH FLORIDA
Ritz-Carlton, Key Biscayne: 188 condominium hotel units and 300 regular hotel rooms, expected to be completed next March.
Ritz-Carlton, Coconut Grove: 175 condominiums and 115 rooms, also scheduled to open in the spring.
Four Seasons Tower, Miami: 65-story mixed-use project on Brickell Avenue with a residential condominium component, scheduled to be completed in 2002.
Mutiny Park, Coconut Grove, and Ocean Grande, Sunny Isles Beach: Sonesta International Hotels has partnered with south Florida developers.
Aqualina Ocean Residences Resort, Sunny Isles Beach: One of the most luxurious projects: a 51-story tower planned by the Trump Group, which built Williams Island in Aventura. Rosewood, a five-star hotel company, is affiliated with the project, whose condo units will be priced from the $800,000s to more than $8 million.
SOUTHWEST FLORIDA
Residences at Ritz-Carlton Sarasota: All 50 units on top of the Ritz-Carlton Sarasota have been sold, and the project is now under construction.
CENTRAL FLORIDA
Ritz-Carlton, Orlando: Ritz-Carlton plans a large-scale Orlando project that includes a 585-room Ritz-Carlton, a 1,000-room JW Marriott, golf course and health spa. "There may be some residential product within that project, but currently none is planned," says Phil Keb, vice president of development at Ritz-Carlton Hotel Co.
Luxury Housing: An Explosion at the High End
Branded condominium units aren't the only segment of Florida's luxury residential market enjoying success. Demand is booming for high-rise waterfront condominiums, golf-oriented country club communities and custom-built estate homes costing $5 million or more. One of the state's strongest selling points is the ability to enjoy a luxury resort lifestyle in an urban setting.
Both new luxury homes and resales -- with starting prices from $450,000 to $750,000 depending on local market -- are selling at a record pace. The super-luxury market -- $1 million and up -- may be at its strongest level in history, drawing wealthy first- and second-home buyers from within Florida, snowbirds from the Midwest and Northeast and international buyers from Latin America and Europe.
One indicator: Statewide, Arvida Realty Services reports about 160 sales of $1 million or more in the January-September period for a total volume of $317 million -- an average price of almost $2 million. During the first nine months of 1999, the number of sales was about the same, but the total volume was only $287 million. "Even with the stock market turmoil of the past few months, we have not seen a slowdown in this market," says Richard Cope, CEO, Arvida Realty Services in Clearwater. "The most expensive homes are not going to retirees. These are active entrepreneurial types who own companies or have made fortunes on their stock options."
Another indicator: "We're seeing a clear increase in interest this year from the past two years," says Mike Curtin, senior vice president of sales and marketing for WCI Communities, which has projects ranging from high-rise condos in Naples to mid-rise condos in Coral Gables and Jupiter to residential golf and resort communities in Fort Myers, Bradenton and Naples. "We also believe that the aging Baby Boomer trend will bring more people into the market."
Curtin, like other luxury residential developers, says water and golf remain the two primary attractions for buyers in Florida. Other key elements are fitness centers and spas and "soft amenities" such as social activities and educational courses. "Most of our communities are located close to a metropolitan area," Curtin says. "The cultural and other attractions of a city play a big part in attracting this market."
Many of the luxury home buyers are Floridians looking for a hassle-free lifestyle who often buy condos in the 3,000- to 4,000-sq.-ft. range, with at least two extra bedrooms. "There is a demand for the larger condo units from folks with an unlimited budget who are moving out of a large single-family home in Florida," says Mason Simpson, president, Carlton Development Co. in Vero Beach, which has been building small-scale luxury condo projects since 1992, including Claridge, Cliveden and Carlyle on Jupiter Island, where prices range from $1 million to $3 million, he says. "These are buyers who feel more comfortable with room for their kids and grandkids."
Trends
For luxury golf course communities, Naples through Bonita Springs will remain dominant. For luxury condo markets: Naples and Miami-Dade and Broward on the east coast.
Prices: ever-rising. In Naples, a prime, gulf-front lot can cost from $3.5 million to $7 million, while new single-family custom homes may be priced from $8 million to $15 million, according to Arvida sales figures. In Palm Beach, resales of residences at Breakers Two are $5 million and up, and one single-family estate commanded a county record of $19.2 million.
Availability of waterfront land: It's shrinking. More luxury housing -- from individual custom homes to high-rise condominium projects will consist of second-cycle development. Buyers looking for new homes in prime locations will find it increasingly necessary to tear down an existing building and construct something new on that site. About the only area in the state that still has room for waterfront residential development is the Panhandle. St. Joe Co., parent to Arvida, is already developing several large-scale communities, such as WaterColor in Walton County, where typical gulf-front lots are priced at $1.2 million to $1.4 million.
The Luxury Market
Features in demand:Recreational facilities such as a tournament-level golf course, boating or tennis -- or a full-service condominium.
Panoramic views, floor-to-ceiling windows, large terraces and spacious living/dining rooms for social gatherings.
Home offices, equipped with high-speed telecommunications wiring, are necessities for executives and entrepreneurs.
For super-luxury homes -- which can cost $5 million or even $10 million -- an entire lot can be reconfigured with a "natural" lake or large-scale "theme" pool that becomes the centerpiece for outdoor entertaining.
Amenities such as roof tiles, stone flooring or marble countertops imported from all over the world and computer technology allowing owners to control lighting, A/C, security and stereo systems from anywhere in the home with the push of a button.
Lewis M. Goodkin is president of Goodkin Consulting, a real estate consulting firm in Miami.