The project's price tag is approaching $500 million as developers strike a balance between creating a luxurious property and set a realistic room rate.
A little more than a year ago, owners of the former Gansevoort-turned-Perry hotel in Miami Beach announced they would turn the property into a high-end earthy new brand by pouring more than $100 million into the project.
Months after closing the hotel and buying out condo owners, they’re still pouring. The cost of project, set to open this fall as 1 Hotel & Homes South Beach, is now approaching $500 million, including the 2012 purchase price of $230 million.
“In order to put a product in the market that was commensurate with the prices, we went into a major upscale of the investment,” said Richard LeFrak, president of LeFrak, a privately held group of real estate companies. LeFrak owns the hotel with Starwood Capital Group.
The final product, at Collins Avenue between 23rd and 24th streets, will have 161 condo residences and 406 hotel rooms, as well as four swimming pools, 22,000 square feet of meeting space and a restaurant from celebrity chef Tom Colicchio.
A frequent Florida Keys fisherman, Colicchio said his plan is to serve fresh, simply prepared seafood with a focus on natural ingredients. While further details about the restaurant have not been hammered out, it will be the first flag for the Top Chef judge in Miami. Coinciding (though unaffiliated) with the South Beach Wine and Food Festival, Colicchio and his team will prepare the food at an invitation-only party for brokers and VIPs Saturday.
Colicchio said he’s considered other projects in Miami over the years, but none worked out. The 1 Hotel & Homes concept appealed to him because of is emphasis on nature and sustainability.
“The ethos of the 1 brand was completely in line with some of the things that we were already doing,” he said. “It was a very, very easy sell.”
On Saturday, the developers plan to show off model condo units designed by Brazilian interior designer and architect Debora Aguiar. Sales officially launched during Art Basel, LeFrak said, and prices range roughly from about $1,300 per square foot to $3,000 a square foot.
“Miami has been recognized now as a global city and people are anxious to have beachfront property and prices have to reflect that great attribute,” he said. “And, of course, if you ask people to pay thousands of dollars a square foot for condos, the finishes and the expectations have to be met.”
LeFrak said the goal is to have the condo portion opened by July, with the hotel following in the fall.
The massive building’s entire air conditioning system and elevators have been replaced, as have the windows and about half the balconies, LeFrak said.
Steve Hankin, managing director at Starwood Capital, said the project will emphasize the nature of Miami Beach through its use of materials and design. Other hotels in the brand — one set to open Sept. 1 near New York’s Central Park and one slated for mid-2015 at Brooklyn Bridge Park — will also embrace nature as a theme.
Hankin said in addition to the design, the Miami Beach hotel will also stand out for its large rooms, meeting space and spacious beachfront. He would not say what kind of rates he expects the hotel to command; in its previous life as the Perry, peak rates were listed at $599 a night.
“It’s a huge project and I think it has amazing potential,” Hankin said. “And I think people are very excited to see someone really come in and transform this building to its full potential.”
Mark Lunt, partner in charge of Ernst & Young’s hospitality practice, said developers in Miami Beach have long ended up paying more for projects than they originally intended. He said the investment can pay off if executed well.
“If they deliver a product that’s new and interesting and meets the needs of today’s consumer and wows them, people are willing to pay,” he said.
But, he warned, the work has to be done right.
“There’s obviously a tipping point at which you can overspend and not see that return,” he said. “There’s a balance.”
(c)2014 The Miami Herald. Distributed by MCT Information Services.
Photo credit: A rendering of what the new 1 Hotel & Homes South Beach. 1 Hotels