Schrager Says Miami Condo Demand Surging on Record Deal

March 8th, 2013

Ian Schrager said domestic and international buyers are driving unprecedented demand for luxury property in the Miami area, where two penthouses at one of his developments are under contract for a record $34 million.

“It’s a new Miami,” Schrager, the pioneer of the boutique-hotel concept, said in an interview on Bloomberg Television’s “In the Loop” withBetty Liu. “It’s no longer just a beach resort and seasonal. Apartments fly out the door.”

An undisclosed U.S. buyer earlier this week agreed to pay $34 million for the two unfinished penthouses at the Edition in Miami Beach, the luxury lodging-and-residential project Schrager is developing with Marriott International Inc. (MAR) If the deal is completed, it would be the biggest south Florida condo sale on record, said Peter Zalewski, principal at Condo Vultures LLC, a brokerage and consulting firm based in Bal Harbour.

Half of the Miami Beach development’s 26 condominiums are under contract, according toWilliam Pierce, the Coldwell Banker sales associate who represented the buyer of the two adjacent penthouses.

The Edition’s condos, which start at $2.4 million for a one-bedroom, have been selling at about $3,000 per square foot, triple the area’s average market price, Schrager said in the interview. Demand is coming mostly from U.S. buyers, with interest from South America and Europe likely to pick up in the warmer months, he said.

Rooftop Pools

Together, the two triplex penthouses have eight bedrooms and 11 bathrooms and total 16,200 square feet (1,505 square meters), including more than 6,000 square feet of outdoor space, Pierce said. Each has a rooftop swimming pool and views of Miami and the Atlantic Ocean.

The buyer made a 40 percent deposit this week with the intention of paying the balance in March 2014, after the completion of the project, according to Pierce.

Because it was a pre-construction commitment, the deal may not be completed at the agreed-upon price, according to Zalewski of Condo Vultures.

“Right now, it’s essentially a reservation until the units are finished,” he said. “In the past few years, despite a pre- determined price, we have seen many units being discounted by the actual sale’s day.”

If the sale is completed at $34 million, it would top the record $27 million deal January for a penthouse at the Setai in Miami Beach, according to Condo Vultures.

Marriott, the largest publicly traded hotel chain, is investing about $900 million within five years to jump-start the Edition brand, the Bethesda, Maryland-based company said during its fourth-quarter earnings call last month. An Edition hotel will open in London in mid-2013, according to the company. Marriott also plans to open an Edition property in New York.

Schrager, through his Ian Schrager Co., is also expanding his Public-branded chain of less expensive hotels with high-end amenities in major cities. He opened his first Public hotel inChicago in 2011.

To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net