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Inside South Florida’s ultra luxury resi market

 

“I anticipate this season trending later this year,” said Premier Estate Properties agent Margit Brandt. “There’ll be a lot of closings in June and July.”

 

Sitting on the couch in the staged living room of the Tarpon Island estate in Palm Beach, Todd Michael Glaser seemed befuddled.

“I don’t know why Tarpon hasn’t sold yet,” the spec developer said in February, shaking his head as he mused about the market between calls.

Tarpon is a 21,400-square-foot renovated megamansion, with 11 bedrooms, 15 full bathrooms, two kitchens, a home office, tennis court, gym, salon and spa, two pools, a hot tub and cold plunge, sitting on a 2.3-acre private island. It has room to fit staff, in-laws, a catering team and more. It should check all the boxes for the typical ultra-rich homebuyer.

In 2021, Glaser and his partners, Jim Randall, Scott Robins and Jonathan Fryd, bought the private island for $85 million. A year later they listed it for $218 million, with grandiose visions.  “This is a house for Jeff Bezos, Bill Gates, Mark Zuckerberg,” Glaser told The Real Deal at the time. After an unsuccessful first season, it returned to the market at the reduced price of $187.5 million.

Glaser’s luck changed about a month ago, when Tarpon went into contract. The sale is expected to close soon, and it will mark one of the priciest ever in Florida.

It also signifies the true start of the region’s busiest season. After a string of record years during the pandemic that were followed by a dropoff in sales, South Florida agents say this season is delayed and inconsistent, but definitely still better than other top luxury markets. Price cuts are spurring sales, as buyers are expected to jump into the market as summer approaches.

“We got a late start is really what it comes down to,” said Dana Koch, an agent with the Corcoran Group in Palm Beach. “There’s definitely been some momentum, but it ebbs and flows very oddly.”

As price reductions have become more common, the pricing gap between buyers and sellers of ultra-luxury homes in South Florida has narrowed, resulting in a boost in activity at the very high end over the last two-plus months. Each deal creates momentum for the next. But inventory is still wonky, agents say.

Housing analyst Jonathan Miller said the luxury market is in a “slow grind.” Pricing has fallen, but it’s still up, compared to pre-pandemic. High interest rates and elevated pricing are keeping sales below pandemic highs. And the upcoming election and slow summer season suggest the boost in activity could be short-lived.

In Miami Beach and other barrier island markets including Bal Harbour and Indian Creek, 10 luxury single-family home sales closed in the first quarter, up 25 percent from eight sales during the same period of last year, according to the Miller-authored Douglas Elliman reports. Still, the median price for luxury homes fell 28 percent to just over $13 million. The reports define luxury as the top 10 percent of deals. Inventory and months of supply also rose.

In Palm Beach, the overall number of single-family home sales and their median price each rose in the same time period. Isolating the top 10 percent of the market, luxury home and condo sales fell 10 percent to nine closings; and the median price fell 18 percent to $14 million.

“Part of this decline is attributable to a shift in the mix, in terms of what’s selling. Even though the median price is down, it’s still … higher than pre-pandemic,” Miller said. “The numbers are still elevated, but choppy.”

Market movers 

South Florida’s major luxury deals were concentrated in Palm Beach and Miami Beach this season, though a handful of sales scattered across South Florida’s waterways are still setting records.

Even sales of vacant lots have picked up. Those deals are often more challenging because of the cost and time associated with building. Dora Puig, top broker and owner of Luxe Living Realty, said teardowns and land sales are being “really negotiated.”

In April, billionaire Barry Diller paid $45 million for the 1.5-acre waterfront lot at 5930 North Bay Road, a record for the waterfront Miami Beach street. Nearby, an assemblage of waterfront land at 18 La Gorce Circle, asking $132 million, is in contract to two buyers after the price was reduced twice from the original $170 million asking price. Both of those deals include homes that the buyers are expected to tear down and replace with new mansions.

Buyers are looking at the usual areas: the Sunset and Venetian islands, North Bay Road, La Gorce, Star Island and Indian Creek, said top Douglas Elliman agent Dina Goldentayer.

Diller’s buy and billionaire Teddy Sagi’s pending $24 million purchase of a teardown at 4521 Pine Tree Drive show that buyers are willing to spend big money on vacant lots again.

“Two big sales is enough for everyone to be excited,” Goldentayer said.

In another private island deal, billionaire Jeff Bezos dropped $90 million on a third waterfront Indian Creek Village estate in March. The Amazon founder had been in the market for a home he could live in while he has a mansion built on a double lot on the island that he assembled last year for nearly $150 million.

The activity has spilled over to condos, too. In Surfside, a penthouse at the Four Seasons Residences at the Surf Club sold for $44 million, a record $6,000 per square foot.

Goldentayer sees consistent demand for properties priced at $20 million and up.

“The demand continues [for] uber-wealthy new residents re-domiciling, and they want something special,” she said.

Brokers say they’re seeing multiple buyers expressing interest, especially following a price cut, but not necessarily pulling the trigger.

“In each of those markets, there seems to be a good number of buyers,” said Danny Hertzberg, of the Jills Zeder Group at Coldwell Banker, who is representing the seller in the pending La Gorce deal. “That doesn’t mean they’ll overpay.”