In recent months, there has been a lot of discussion about the oversupply of luxury condos in Miami-Dade County, triggering developers to put some projects on hold. The strong dollar and struggling economies abroad, particularly in Latin America, have caused foreign buyers and investors to tighten their purse strings.
As a general contractor who started SPACiO Design Build during the last recession, I have learned to look ahead — past current trends — and adapt my business model to not only mitigate the impact of a market correction but also to take advantage of Miami’s fast-changing real estate market. This is a challenge that most businesses in the real estate industry — and in many other sectors — have to wrestle with.
We started our business at the time when unsold condos in the Brickell area in the last cycle were being converted to rental units, as buyers had exited the market. When many people were seeing doom and gloom, we looked for opportunities amid a paralyzed real estate market. While we were able to grow the company with that business model, we knew we had to keep our eyes open looking for the next trends as the housing market was rapidly recovering. We began to see starchitects, high-end fashion designers, and exclusive brands — unlike in past cycles — descend upon Miami to stand behind some of the region’s most ultra-luxury condo developments.
Starchitects like Bjarke Ingles, Herzog & de Meuron and luxury brands such as Armani, Fendi, and Porsche have entered the South Florida market to design and develop grandiose projects, attracting some of the world’s wealthiest people to buy a home in Miami. So, we decided to develop a niche in the marketplace, building out complex projects that required a high level of craftsmanship to match the new level of sophistication that the Miami architecture was beginning to experience.
In this cycle, building and unit designs became more elaborate and complex, transforming the way space is built out. The introduction of imported design-driven materials required SPACiO to invest in artisans that could turn the visions of these renowned designers and architects into reality. So, when the residential market was active, we focused on building out highly sophisticated projects like the Residences at Armani Casa sales center in Sunny Isles Beach and decorator-ready condos in newly built towers such as the Grove at Grand Bay, Oceana Bal Harbor and SLS Brickell.
But what the recession taught us the most was not to put all our eggs in one basket. We learned to diversify our operations to include high-end commercial spaces, from hotels to restaurants and luxury retail stores.
Part of the process was transferring skills we had developed in the residential market but, part of it required teaching our staff new skills. The goal was to prepare our company to stay busy when the condo construction market slowed down. A significant part of our jobs comes from individual condo buyers who buy decorator-ready condos in recently completed luxury high-rises. As we started diversifying our portfolio to include commercial properties, we’ve turned our attention to building out hotels and restaurants, such as Nobu Restaurant, Nobu Hotel, Marriott Stanton South Beach and others.
Business owners who focus on cyclical industries, like the condo market, have to find the time to boost their networking efforts at the first signs of a market slowdown.It is important not only to develop new relationships but more importantly, to leverage the past and current connections. As times get harder, most likely, it will be your connections that will help you with referrals and new business. A majority of our clients have become my friends, and it was them who helped me launch my businesses at the height of the last recession. Investing time to grow your relationships now will pay dividends when the market loses steam. Staying top-of-mind with your clients starts now, not in six months or a year, when the market has turned.
People always say that change is the one thing that you can count on.
That statement couldn’t be, and that statement couldn’t be more true to describe Miami’s real estate market and many other cyclical sectors such as tourism and hospitality. It’s up to the small business owner to seek out and capitalize on the opportunities that arise in each stage of the cycle.