Welcome to Miami! The sun-drenched mecca of Southern Florida has always been a beloved vacation and retirement destination for New Yorkers fed up with frigid winters. Now more than ever, it has truly become New York City’s second home all year-round.
Driven by a post-World War II construction boom and an influx of Rat Pack star power, Miami emerged as the go-to vacation destination for well-to-do New Yorkers in the 1950s and 1960s. Stunning weather, pristine beaches, fabulous entertainment and beautiful hotels made South Florida a glamorous escape from the hustle and bustle of The Big Apple. Palm trees swayed as Sammy and Frank crooned, and bikini-clad Northeasterners took poolside Mambo lessons.
After a period of decline in the 1970s, Miami-South Beach experienced a renaissance in the 1980s. The city emerged as a fashion powerhouse with a thriving club scene and a long-overdue redevelopment of its famed Art Deco hotels. Miami Vice brought the unique pink-tinged South Florida glitz and glamour to TV sets across the country, while designer Gianni Versace and photographers Herb Ritts and Bruce Weber helped lure supermodels, musicians and other fabulous people to the area’s sandy beaches.
The most recent catalyst to Miami’s current international appeal and influx of the wealthy and fabulous was the arrival of Art Basel in 2002. What started as an offshoot of the original Swiss art fair has grown into a week-long celebration that dominates the social calendars of the in-the-know visitors from around the world. The sophisticated draw of Art Basel has put Miami on the map for a new generation of affluent power brokers and has led to an explosion of high-end real estate development, luring Big Apple bigwigs.
And it’s easy to see why. Just a two-and-a-half-hour flight to West Palm Beach, Fort Lauderdale or Miami International from New York City makes traveling effortless— at least compared to a three-hour, traffic-clogged drive to Montauk. Luxury hotels, premier people-watching, fine-dining, upscale shopping, vibrant nightlife and a spectacular arts and entertainment scene are all appealing to sophisticated New York visitors.
Like millions of New Yorkers before me, I’ve made numerous trips to South Florida most winter seasons, both for business and to enjoy the warm weather, tennis, surf and beaches that have lured travelers for decades. As a veteran commercial real estate finance professional— and now a luxury residential broker—I have watched the Miami development scene cycle through ups and downs. I have been particularly struck by the new wave of well-heeled New York City buyers purchasing second homes, not only in Miami, but also all along South Florida’s east coast, including Fort Lauderdale, Boca Raton and Palm Beach/ West Palm Beach.
This new breed of New York buyer is ultra-affluent and ultra-mobile, with the ability to conduct business from a beach or a boardroom. They are typically financiers, entrepreneurs and creative types seeking a second home in an urban location with both warm weather and beach access. To them, Miami has essentially become “New York South.”
According to Knight Frank’s 2016 The Wealth Report, New York City is home to 5,600 people worth $30 million or more. This substantial number of “ultra-high net worth individuals”—or UHNWIs—is expected to grow by nearly a third in the next decade. Based on that information, one can expect more members of this segment to make second-home purchases in South Florida.
Unlike most other beach destinations, Miami is rich in international diversity and sophisticated amenities. According to Knight Frank, Miami ranks as the 12th most important city in the world for the aforementioned UHNWIs. As Jeffrey Miller of Brown Harris Stevens / Zilbert puts it, “New Yorkers are used to an urban experience and like the vibrancy of Miami with its great restaurants, upscale shopping, sports venues, cultural events and art institutions,” he explains, referring to attractions that include Art Deco Weekend, the South Beach Wine & Food Festival, the Miami Open, the Perez Art Museum, the Adrienne Arsht Center for the Performing Arts and the forthcoming Patricia & Phillip Frost Museum of Science. “Miami is growing up with new distinctive neighborhoods to explore, including Downtown Brickell, Wynwood, Edgewater, Midtown and the Design District.”
Beyond it being a fashionable, influential and internationally minded city, Miami remains very inexpensive relative to other major cities around the world. The kind of luxury listing a buyer can obtain in Miami, for say, $5 million dollars, would cost upwards of $10 to $20 million in Manhattan. Paired with Florida’s lack of state income taxes for residents, this can make the purchase of a second home into a smart long-term investment.
Miami and Beyond
The arrival of well-heeled New York City buyers, in turn, has influenced Miami’s new development stock, which now caters to those seeking large spaces and a luxury lifestyle set in a more intimate living environment. The Miami market tested its first luxury boutique-style condo property with the arrival of the Apogee South Beach. A 22-story, 67-unit luxury condo building situated in the exclusive South of Fifth neighborhood, the Apogee South Beach first arrived in 2007. Its developer, Related Group, offered large floor plans—between 3,150 and 4,225 square feet—with massive private terraces of 1,500 to 2,000 square feet, at prices averaging from $1,100 to $1,200 per square foot. The Apogee redefined luxury condo living, differing from the tower-like buildings that previously prevailed, including the Continuum, the Murano at Portofino and the Setai.
Following the success of the Apogee South Beach, a new era of luxury was ushered into the Miami market with boutique properties including Faena House, the Edition, One Ocean, Glass Miami Beach, Eighty Seven Park, the Surf Club Four Seasons Residences and Monad Terrace following suit. Prior to 2013, few luxury properties sold above $15 million. However, at Faena House, the penthouse—an eight-bedroom, 12,516 square foot unit featuring 9,900 square feet of exterior space and a 70- foot long rooftop pool—sold in September 2015 at $60 million to Ken Griffen, the CEO of Citadel. It marked a record for condominium sales, beating a $27.5 million sale at the Continuum and a combined penthouse at the Miami Beach Edition for $34 million. Faena House, an ultra-luxury development with hotel-style amenities, is located on Collins Avenue and 32nd Street and is situated directly on the beach. Buyers have paid an average of $3,130 per square foot, or about $8 to $12 million per unit. The last sponsor unit was sold in May of this year and the building had a total sellout of $407 million. Other financial titans— including Apollo Global Management founder Leon Black, Goldman Sachs CEO & Chairman Lloyd Blankfein, and Scoggin Capital Management co-founder Craig Effron—are also among the building’s new residents. In these new premium luxury boutique-style properties with cutting-edge modern architecture, developers are simultaneously offering five-star amenities and services, and the privacy and exclusivity that wealthy New York City buyers covet.
Some notable trends prevail among New York buyers making a second-home purchase in South Florida, as many buyers are embracing a downtown urban experience while searching for a luxury boutique condo lifestyle. They favor locations they can walk to—including shopping, restaurants, and cultural attractions – while still being in very close proximity to the beach. Developers are seeing many prospective New York buyers bypass a purchase in a country club-style gated community for a downtown location. In turn, some developers have begun offering a new boutique condo product in which the purchaser can replicate an expansive single-family home residence; this would include a private full-floor home with the family’s own entry, as located inside a full service building with all of the amenities of a luxury high rise like a full-time doorman and concierge, fitness facilities and indoor valet parking. This urbanization trend is having a major impact on the renaissance taking place in Downtown Boca Raton. Group P6 is developing 327 Royal Palm, a 25-unit luxury boutique condo property, currently under construction with delivery expected in the second quarter of 2017. Units average 3,800 square feet with a price tag of about $2 million. “About one-third of our buyers are coming from the New York City area, looking to purchase a second home and spend up to six months out of the year living in Boca Raton,” explained the Co-Operating Manager of Group P6, Ignacio Diaz. “Approximately 50 percent of the buyers are relocating from large homes in the area and want the convenience of a condo lifestyle in an urban-type setting in short walking distance to all.”
The Mandarin Hotel & Residences, with 160 luxury condominium units, is also coming to Downtown Boca Raton, with delivery expected in 2018. Former New York City residents, Judith and David, purchased a 5,000-square-foot residence at 327 Royal Palm with three expansive outdoor terraces. Per Judith, “We wanted the space of a large home in the setting of a full-service luxury boutique-style condo property within a more urban type setting in close proximity to the beach, but where we could walk to shopping, fine-dining, Trader Joe’s, Mizner Park, Royal Palm Place and the local Boca Raton Museum. We wanted the convenience of a downtown lifestyle.”
New York buyers are also discovering the transformation, and great value in Fort Lauderdale, once known solely as a rowdy spring break destination. Newgard is developing The Gale, a mixed-use hotel/ luxury condominium project, consisting of 96 hotel rooms and an adjacent 12-story building with 128 luxury condominium residences. According to Newgard CEO Harvey Hernandez: “Approximately 70 percent of our buyers are domestic and about 30 percent are from the New York City area. These are largely second-homebuyers who are all looking for a turnkey luxury full-service building with all amenities.” Buyers are affluent and in their late 50s and 60s, and they view Fort Lauderdale as a value opportunity. They want to get in before prices rise. Other new luxury condo projects in the immediate vicinity include Auberge Beach Residences & Spa, where units start at $1.5 million. A 5,800 square foot residence with 3,700 square feet of private outdoor space recently sold for $8.9 million. A Four Seasons Hotel & Private Residences is also in development with a completion date expected in 2018. A two-bedroom, 2,000 square foot residence is priced at $3.5 million or $1,750 per square foot.
Further up the South Florida coast, Palm Beach and West Palm Beach are also seeing new boutique luxury condo properties coming to market. New York and San Francisco-based developer DDG is behind 3550 South Ocean, a six-story, 30-unit condo project with units ranging from 2,800 to 3,400 square feet. The building will include a fitness center, a swimming pool (facing the Atlantic Ocean) and private beach access with units priced between $2.3 million and $5.0 million. The Bristol of West Palm Beach, a 25-story luxury condo building with 69 units, will have units priced between $5 million and $22 million. Both developments are currently under construction. 3550 South Ocean will be the first luxury building built on Palm Beach’s barrier island in over a decade.
With ultra-luxury Manhattan real estate set to reach as high as $9,000 per square foot for new Central Park South towers, it’s no wonder that South Florida prices seem like a downright bargain for the wealthy New Yorkers. The emergence of luxury boutique buildings and vibrant, walkable downtown areas, not to mention the glossy international reputation bestowed by Art Basel, have solidified that area’s appeal.
While overall appeal and real estate values are cyclical for many cities, South Florida has long been established as a preferred destination because of its gorgeous scenery, warm weather and coveted beaches. Now with its sophisticated urban lifestyle, international draw and upscale amenities, New Yorkers can flock to Miami without feeling they’ve left anything behind.
North Beach-Surfside-Bal Harbour-Bay Harbor
Due to the lack of land and oceanfront sites remaining in prime South Beach, there has been a wave of new development taking place in the North Beach, Surfside, Bal Harbour and Bay Harbor enclaves.
Bay Harbor was rezoned two years ago and is experiencing a major renaissance, capitalizing on its location within walking distance to the beach, restaurants and shopping in neighboring Bal Harbour; the latter is home to Bal Harbour Shoppes, one of the premier luxury high-end retail shopping centers in the country.