One of South Florida’s biggest spec mansion developers publicly declared two years ago, “I’m not building any new construction.”
But that was short-lived. The developer, Todd Glaser, and his partners spent $105 million to buy a Miami Beach home last year, where they are planning to build a $300 million mansion.
Spec developers are back in the game, as demand for move-in-ready ultra-luxury homes skyrockets across Miami’s high-end enclaves.
“Prices for finished homes have gone up so much, it’s worth it,” said Julian Johnston, an agent with the Corcoran Group, citing per square foot prices ranging from $4,500 to over $6,000.
Investors cashing in on this stellar pricing include insurance attorney Anthony Lopez and his fiancée, former “Real Housewives of Miami” star Dr. Nicole Martin, who flipped a waterfront Coral Gables estate for $55 million, or $4,400 per square foot, which represented a 62 percent gain on their purchase price months earlier.
Spec developer Alex Pirez dropped $35 million, or $4,375 per square foot, on a waterfront estate in Coral Gables in March. “Full House” creator Jeff Franklin finally sold waterfront Venetian Islands property this year after subdividing it to make it more appealing to spec developers.
The price boom driving spec mansion development is partially a product of the city’s demographic of luxury buyers, said Zack Simkins, a managing director at the lender Vaster.
“The Miami buyer is not sensitive to pricing,” he said.
Spec developer Miguel Bubis, the owner of Emuna Construction, just paid $10.3 million for a site in Bay Point, a gated neighborhood he believes will be the city’s next “billionaire bunker.” He also has projects in Miami Beach and Belle Meade, where he is shopping for another site.
Bubis said he is aiming to sell his Bay Point spec project for $4,500 per square foot. All told, the mansion is slated to cost $20.8 million to build and sell for $33.8 million. Those profit margins, coupled with growing demand is making his pipeline appealing to investors, he added.
“Ultra high end luxury homes are an easy place to invest and to work with because of these conditions,” Bubis said.
Billionaires are flocking to the Miami market. In recent months, Mark Zuckerberg, Sergey Brin and Larry Page, some of the richest men in the world, have bought sprawling waterfront estates as they touch down in the Magic City.
Brokers say luxury buyers want move-in ready mansions in prime locations, which has been the case since the pandemic catalyzed a real estate boom. Despite the heightened demand, developers haven’t been building to meet it. Rising costs for land, labor, lending and materials, in addition to global economic uncertainty, made deals difficult to pencil out in the post-boom comedown, when developers like Glaser pulled back from buying sites.
While the tides have shifted, not every project is a homerun.
Success depends on keeping costs in check and the strength of pricing in luxury submarkets, sometimes at heights that have yet to be tested.
Fermín Alvarez, who heads the spec development firm Onvigore, said costs have risen dramatically in recent years, complicating projects.
“A cinderblock, the block that every single home is going to [use], that block used to cost about 80 cents. Now, the exact same block is $2,” he said. And, “There is no cheap land.”
Besides that, if every developer is aiming for ultra-luxury price points, the bigger risk, bigger reward approach still might not pan out. Areas like Coral Gables, Coconut Grove and Miami Beach’s North Bay Road are seeing big deals that insiders say prove that higher pricing can hold in the market, but other luxury pockets like the Venetian Islands and Surfside are untested.
“If you shoot for the moon and you don’t make it, and your costs say you have to be at the moon,” said Simkins of Vaster. “That’s a tough spot to be in.”
