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New Yorkers Invade Miami Real Estate

New Yorkers Invade Miami

Empires of the Sun

When it comes to buying second homes, shoppers often flock together. Here is why Chicagoans are crossing Lake Michigan, California tech execs are hitting the beach in Tahoe and New Yorkers are heading south.

Sillicon Valley execs flock to Lake Tahoe, New Yorkers head south to Miami in droves, and Harbor Country, Mich., becomes the Hamptons of the Midwest. A look into why these three communities are seeing a second-home boom. Photo: Fortune International.

New Yorkers Invade Miami

After a series of sluggish years, Miami's luxury condo market is reviving, thanks in part to help from an unexpected source: New Yorkers.

Where They're Buying

Single-Tooth Productions/Getty Images

The lakefront towns in and around New Buffalo, Mich., are the preferred destination for second home buyers in Chicago. Last year, 25 beachfront properties sold, five times the amount in an average year, brokers say.

Although buyers from Latin America and Europe have been lauded for helping to revive the city's property prices, developers and real-estate agents now say it's a new crop of Americans, mostly second-home buyers from New York, that has pushed luxury prices in Miami to a new level—and stirred a buying frenzy.

"A lot of them are buying now because Miami has really changed over the last couple of years, with a ton of New York restaurants and hotels opening up, with new development, and that has really made New Yorkers more comfortable with purchasing," says Vanessa Grout, chief executive of Douglas Elliman's Florida brokerage. She estimates that about 60% of her firm's luxury buyers are from New York, about double the percentage of a year ago. Edgardo Defortuna, president and founder of Fortune International, a Miami development firm, says New Yorkers now make up about 25% of all luxury buyers, compared with around 10% a year ago.

At Faena House, a condominium development with 10�-foot-tall ceilings and wraparound terraces, an 18,253-square-foot five-bedroom penthouse was just listed for $50 million. Over 25% of the project's 47 units are already under contract; 80% of those buyers are New Yorkers. "Miami Beach has never before seen prices like these, but New Yorkers have," says Oren Alexander of Douglas Elliman, who is handling sales for Faena House.

New Yorkers have long targeted Miami, but brokers say today's buyers aren't snowbirds looking for a place to retire, but often younger people who partied in Miami Beach in their 20s and now want a vacation home for their families.

And now that the stock market has recovered, titans of Wall Street are buying again. Financier Randy Frankel, who is a part-owner of the Tampa Bay Rays, splits his time between several homes including ones in Miami and New York. He owns a three-bedroom penthouse at the W South Beach and just signed a $6.4 million contract for a 3,500-square-foot five-bedroom penthouse at One Ocean, an eight-story luxury condo development being built by billionaire developer Jorge P�rez in Miami Beach's South-of-Fifth neighborhood. "When I'm at the pool at the W, there are so many New Yorkers around it feels like there's a hedge-fund conference going on," says Mr. Frankel. "It's like the Who's Who of Wall Street."

The new presence, brokers say, is having a radical effect on the high-end market, which until recently had been struggling owing to the global financial crisis and an overabundance of inventory. The average cost of a luxury condo in Miami increased by 32.6% in the fourth quarter of 2012 compared with the previous year, according to real-estate appraiser Jonathan Miller.


At the Residences at the St. Regis Bal Harbour, which opened in 2006 with condos priced from $2 million to $11 million, sales slowed with the economy. "Sales were completely stalled there until December," says Bryan Sereny, a broker with Miami-based Zilbert International Realty who has sold several apartments there. Jim Cohen, vice president of sales for the St. Regis Bal Harbour, says activity began picking up in 2011 and has continued to increase, with 77 units selling in 2012 and 38 units selling in the first three months of 2013. Meanwhile, pricing on some units has increased by as much as 30%.

In January, hedge-fund manager Ken Griffin paid $27 million for a 7,100-square-foot condo in the Setai on Miami Beach—the highest price ever paid for a condo in Southeast Florida. That record was broken a little over a month later when a pair of penthouses at Ian Schrager's new condo project, the Residences at the Miami Beach Edition, went into contract together for $34 million. People familiar with the latter transaction say that the buyer of those penthouses, also an American, edged out Cantor Fitzgerald Chief Executive Howard Lutnick in the sale by making a quick all-cash offer. Mr. Lutnick declined to comment.

"The market in Miami Beach is just out of control," says Ian Bruce Eichner, the prominent New York-based real-estate developer, who has recently listed his own penthouse at his Miami Beach building, the Continuum, for $39 million. "Ten years ago, if you said a penthouse on Miami Beach would sell for $10 million, people would tell you that you were out of your mind."

Mr. Schrager, who will unveil the Edition next year, says that seven weeks after opening the sales office in January, he sold out more than half of the project's 26 units—mostly to domestic buyers, for an average of more than $3,000 a foot. "It was a real risk to open with prices that were 200% higher than the market," says Mr. Schrager.


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