Luxury Boutique Condominium Living

Villa Valencia | Coral Gables, FL

By: Fernando de Nuez y Lugones Executive Vice President & Chief Economist

One of the main trends that will emerge in the aftermath of the COVID-19 pandemic is an upsurge in the luxury boutique condominium market. Over the past three months, we have witnessed a strong shift in buyer demand preferences towards less-dense housing options, mainly single-family homes, townhomes, and boutique condominiums. Boutique condominiums have a number of important key differentiators distinguishing it from other market offerings. These include benefits to buyers such as increased amenities offerings and services, less upkeep and maintenance, and more convenience in terms of location and accessibility. Buyers are paying special attention to properties that also offer more secluded and private settings, again, moving away from overly dense condominiums.

Villa Valencia |Private Poolside Cabanas

Boutique condominiums are usually located in established neighborhoods near or within top school districts, where available properties of any kind are scarce. Generally, these boutique properties also offer unique features such as waterfront sites, a marina component, walkability, and proximity to nearby urban settings with access to creative gastronomy, rich arts & culture entertainment, and recognized retail.

One Thousand Museum | Miami, FL

Most commonly, the luxury boutique condo market is composed of residences with:

• 2 bedrooms ranging from 1,500 to 2,200 sq ft
• 3 bedrooms ranging from 1,850 to 3,250 sq ft
• 4 bedrooms ranging from 2,850 to 4,250 sq ft
• Penthouse units up to 10,000 sq ft, usually with exclusive features including private pools, rooftop decks, etc.

Type of Boutique Condominiums:

From a developers point of view, the type of luxury boutique condominium depends primarily on the overall size of the project. This can be measured in terms of number of units, total sellable sq ft, or total sales volume, but all luxury developers share one key motivator - to offer distinctive characteristics which attract a very selective audience.

Royal Palm Residences | Boca Raton, FL

One of the simplest ways to classify different properties is by number of units as shown below.

• From 51 to 100 Units: At the larger end of the development spectrum, properties of this size allow developers to engage world-renowned architecture firms, landscape artists and interior designers. The Southeast Florida residential market has pioneered the concept of showcasing celebrity-level architects. In doing so, developers have completely transformed skylines of multiple cities in the region. Another characteristic of this subsegment has been the use of co-branded or flagship residences linked to well-known luxury brands from hospitality, fashion, and even automobile manufacturers.
• From 26 to 50 Units:Properties of this size range present strong economic advantages to developers which allow them to reach a good balance between amenities offered, HOA fees, privacy and value. In several cases, projects are phased out in several towers allowing a more exclusive feeling for each residence, while also being able to access a significant array of shared amenities.
• Fewer than 25 Units:This property size is ideal to foster privacy and exclusivity, but it can mean there is less economy of scale available for developers to deliver robust amenity and service packages. To counter this scenario, many developments of this size are set in waterfront, ocean front, or other such exclusive locations.

111 First Delray |Delray Beach, FL

Buyers Demographics:

Buyers who acquire luxury boutique residences are most often the end-users, so they strongly prefer to make their purchase towards the end of the construction cycle. This is particularly true for empty nesters selling larger homes or estates in an effort to downsize. Early adopters (buyers who are more comfortable with purchasing towards the beginning of the sales cycle), are usually buying a second home or vacation property, or they are future retirees planning ahead for housing / destination alternatives. Early adopters benefit from initial pricing and acquisition terms, mostly targeting potential capital gains. It is uncommon to have large numbers of investors in this market due to the negative correlation between the size of the units and the rental revenues measured as a percentage of the acquisition price. This can vary from project to project, but rental returns are often higher in smaller units.

Blue at 8050 Ocean |Vero Beach, FL

Main characteristics of Boutique Condominiums:

There is no one-size-fits-all definition of a luxury boutique condominium, but there are several key components that are unique to this market.

• Unit Mix:Buyers for these properties are looking for exclusivity and privacy. Seasoned developers understand these customers, and therefore define their projects from the beginning stages to eliminate low price of entry and diminish turnover associated with rental units. This allows developers to offer potential buyers the added sense of comfort that comes with a homogenous socioeconomic profile within the building or community.
• Amenities:Because the square footage devoted to luxury boutique condominiums is already significantly larger per unit than the typical condominium, the amenity offering is perhaps one of the most important components that sets this market apart. Where most South Florida condos offer a basic amenity package that includes a pool and gym, Luxury Boutique Condos go the extra mile and then some to offer unique value propositions to buyers such as wellness centers (or full-servce spas), party rooms with chef/catering kitchens for hosting private events, theater screening rooms, kids play rooms, golf and auto driving simulators, marinas, helipads, beach clubs, security vaults, private cabanas, wine storage, and much more.
• Unit Features:The quality of finishes expected for this unit size and price point is well above that of typical condos. Kitchen and bathroom cabinets, countertop material selection, appliance brands and packages, flooring options, quality of doors and hardware, lighting elements, and unit automation features, are all carefully curated to achieve an unparalleled product that stands out from the competition.These buyers are very brand-aware, have an appreciation for finishes and fixtures, and they are uncompromising with the overall level of quality they expect. This brings up an important issue: the sales gallery. Showrooms are key elements in the sales cycle experience since buyers want to touch and feel the product they will be buying. Quality in this environment not only extends to samples and model areas, but also the comfort and safety of potential buyers during their visits. At present, most developers are transitioning away from cooling towers which can facilitate the spread of viruses/bacteria, and are instead now using individual AC units.
• Concierge Services:These discerning buyers appreciate the many ways in which concierge services can enhance and streamline their lives. Though the specific offering for each property varies widely depending on the area and the property itself, in most cases luxury boutique condominiums will offer reservations for restaurants and entertainment, travel support, car services, yacht and private plane bookings, and masseuse services, among others. The larger the building or community, the more likely it is to offer extended concierge services.
• Private Foyers & Elevators:Most boutique condos shy away from foyers shared by multiple units. In most cases, buyers prefer to access to a private foyer or have the elevator open up directly into the unit. Access control is carefully programed via key fobs or biometric access. Another distinctive factor is the higher number of elevators available per number of units in comparison to regular condominiums. This provides a safer environment due to lower usage density and faster ingress/egress for residents with fewer shared elevator rides.
• Gym Equipment:Besides the typical gym equipment, developers are going the extra mile to provide buyers with unique experiences. Most recently, this has reflected some of the hottest trends in the fitness market such as Peloton branded equipment or mirrors with integrated video screens. This gives buyers more access to gym classes, instructors, and activities without increasing the number of persons present in the gym or requiring a minimum number of participants for a class. The location of the gym is also becoming an increasingly important feature, with outdoor access, rooftops, waterfront or skyline views are all considered more desirable than dark, closed-off workout rooms.
• Wellness Component:Some visionary developers have been incorporating wellness components not only in the gym or spa, but also throughout building common areas, in the residential units, or both. This trend is likely to continue in future developments in light of the COVID-19 pandemic, which has brought health and wellness to the forefront of buyers minds. Most buildings have previously offered wellness packages only as upgrades. In the future, this may become a more standard offering, creating a safer and more conscious environment for buyers. Wellness packages usually include several components such as hypoallergenic AC filters, water enhanced with vitamins or electrolytes, probiotic auto sprayers, lighting features that facilitate sleep and/or improve productivity, and even access to nutritionists or health advisors. The options are seemingly endless for what any wellness package may include, but it is poised to become an expected offering by buyers in both the short-term and the long-term.
• Parking:In most cases at least two parking spaces are offered as part of the purchase of a luxury boutique condominium unit as opposed to the single space or right to purchase a space at additional cost with typical condos. Some developers have even targeted car enthusiasts by offering enclosed, climate-controlled garages and an increased number of electric car-charging stations available in the building. Valet parking is fairly common for these types of buildings, but it is less common in building with fewer units due to economies of scale.
• Storage:Understanding that space is an essential luxury in any condominium, this market frequently offers buyers a desirable accommodation in the form of dedicated storage space, bike storage, paddle board/kayak storage for waterfront projects, and other storage solutions besides each units own square footage. Due to the large number of empty nesters in this particular segment, storage space is in high demand.
• Tenant Restrictions:Most condo boutique buildings only accept long-term leases to avoid excessive tenant turn over. In most cases a minimum lease term of 6-months is established by the condo board or HOA bylaws. More restrictive policies may also apply during the application process depending on the property and may include age, number of persons residing in each unit, pet policies and more.
• HOA Fees:Because there are fewer units in luxury boutique condominiums compared to high-density condo buildings and towers and because common spaces are typically larger, and there are more amenities and services included, HOA fees are usually higher as well. The typical range varies from $0.75 to $1.10 per sq ft per month (in the case of co-branded or flagship residences this amount can be higher). Buyers looking for a more exclusive lifestyle are often more than willing to pay a little extra in HOA fees in exchange for all the advantages mentioned above.

Giralda Place | Coral Gables, FL

Never before in history have there been more underlying factors to support the development of luxury boutique condominiums.

From the supply point of view, the retraction of the world economy in the first two quarters of 2020 has negatively impacted the local currencies on a global scale. Due to the current relative strength of the dollar, key feeder markets for US properties are struggling against an affordability ratio that was previously favorable to foreign nationals acquiring US properties, but now has significantly declined or has ceased to exist. Furthermore, travel restrictions have generated more challenges for reaching out to international buyers who have been so critical for large condo projects. Local and domestic demand tends to favor buying properties towards the end of the construction cycle; while demand among foreign nationals leans more towards the early adopter end of the scale. Without the volume to achieve the sales velocity necessary to meet pre-sale and development financing thresholds, especially in the early stages of the project, larger towers and high-density projects could have trouble getting off the ground or meeting sales goals.

ADAGIO Fort Lauderdale | Fort Lauderdale Beach, FL

From the demand point of view, the COVID-19 pandemic has changed the perception of buyers towards large condominiums. Consumer preferences have shifted towards less-dense housing options. Additionally, this pandemic has reinforced the decision of domestic buyers to migrate to Florida, not only to benefit more from pleasant outdoor weather year round and the availability of less-dense urban living alternatives; but also, to benefit from a more favorable tax environment and lower cost of living in a moment where everyone is suffering economically due to the pandemic impact on the income and employment.

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