New Branded Developments Elevate Miami’s Luxury Residential Sector
Branding has long been a driver of sales, so it comes as no surprise that attaching a brand to a product typically means higher prices. Many brand loyalists are willing to pay these premiums for the confidence that they can depend on the brand to provide a specific level and type of quality. Meanwhile, others are willing to invest in some brands’ products for the prestige and sense of belonging that comes from being part of what is essentially a high-class consumer tribe. This is true for a wide range of goods, from t-shirts, phones, and food to cars and jewelry.
More recently, it also applies to residential developments, particularly in highly desirable locations such as Miami.
What is branded real estate?
The first branded residential building is widely considered to have been the Sherry Netherland on Fifth Avenue in New York City, which bore the brand of the popular local restaurant Sherry’s. While branded residences are less important in places like New York, where the location or address of a building already serves as a de facto “brand” (think Park Avenue, Fifth Avenue, Bleeker, etc.), they have become a global phenomenon in the nearly 100 years since Sherry Netherland opened. There are an estimated 700 branded residences around the world and another 700 scheduled for development by 2030.
Fashion-focused cities such as Dubai are world leaders when it comes to branded residences, but Miami, Florida, isn’t far behind. One of the most in-demand real estate markets on the East Coast, Miami is in the midst of a residential boom, and branded developments are a big-dollar part of that growth.
Hotel brands and more
Branded residences tend to attract higher purchase prices, with units at hotel-branded developments such as Aman, Four Seasons, and the Ritz Carlton often earning 30 percent more than comparable non-branded residences. This is a boon to the developer, while also providing the brand with licensing fees, a portion of sales, and free publicity. Meanwhile, residents know exactly what type of service and quality to expect when they move into a residence presented by their luxury hotel of preference.
Interestingly, residential branding has grown beyond hotels to include restaurants, car brands, haute fashion, restaurants, and even media empires. Miami is now (or will soon be) home to residential developments branded by Porsche, Mercedes, Bentley, Aston Martin, Dolce & Gabana, Armani, Fendi, Missoni, Elle, and Cipriani, in addition to the more traditional hotel/residential brands Baccarat, St. Regis, Waldorf Astoria, Aman, Four Seasons, Ritz Carlton, and Auberge Resorts.
Benefits and drawbacks for residents and brands
While hotel-branded developments come with established reputations for the quality and services residents can expect, it is still a bit uncertain what benefits come with a car-or fashion-branded residence, aside from those enjoyed by people who value prestige and brand loyalty. For instance, while the Porsche Tower has a built-in car elevator that allows residents to park right outside of their high-rise residence, with nothing separating them from their vehicle but a glass looking window, it’s not as if Porsche, Mercedes, Bentley, or Aston Martin have developed reputations for creating quality residences. While this is likely to change as more branded residences provide proof of concept, in many instances there is little intrinsic value that a car, fashion, or jewelry brand can offer a residence, aside from leather seats, high-class linens, or shimmering chandeliers, respectively.
Branded residences can also come with downsides. As an example, one broker quoted in an article on Curbed suggested that the Fendi residence sold well not because of its brand, but in spite of it. The development’s location in Surfside meant that it caters mostly to American home owners, who saw the branding of the residence as tacky and cheesy.
Meanwhile, brand loyalty might limit the number of prospective purchasers attracted to a particular development—for instance, a Ferrari guy might be unwilling to live in a residence branded by Porsche. Finally, some residences may damage the reputations of the brands attached to them, when the developments weren’t up to par with the level of quality that loyalists expect. A prime example is the Armani project in Sunny Isles, which attracted more of a transient, tourist population rather than the classy fashionistas that were expected.
Despite these risks, it is clear that branded residences are a growing trend, and that the upsides outweigh the potential downsides. Young, affluent residents, in particular, are likely to identify with specific brands—if not for their products, then for their general high-end vibe. Many development projects are selling out units before they are built—and sometimes before model units are even available as examples. Top-notch service, wellness facilities, and experiential amenities tend to go without saying at high-end branded residences, and are top priorities for the type of consumers that are buying into these developments, who are willing to pay top dollar. And with price premiums on branded residences as high as 50 percent in some emerging markets, the continued growth of this niche real estate trend is inevitable. The only question is how high these branded towers will go.
