Being the world's second-largest branded condo market comes with both perks and headaches.

Developers are starting to have concerns and frustrations over the lengths to which they must go to work with brands on condo projects in a crowded market, citing their fading exclusivity and the cost to bring them on, they said at Bisnow's Condoverse Reloaded: Branded Residences event on Wednesday.

"The big issue right now is just finding a brand that creates more value than what you pay them and the difficulties they create in development," Key International co-President Inigo Ardid said onstage at Jungle Island. "Because one, the agreements are huge and it's a big effort. Two, you're coordinating the development with them basically the whole time you're designing."

Ardid added that working in a room with "big egos," including brands and big-name architects, is a challenge to navigate.

"If you get stuck with a brand that the people that you're working with aren't easy, they can make your life impossible because a lot of these people are bureaucracies," he added. "And we, as developers, we have to move fast."

The number of branded condos rising in Miami has exploded as more and more developers pile into the market.

There are 31 completed branded condo projects in Miami, with 42 under construction and another 73 projects that are planned — 50% of which are nonhotel brands, according to a September Knight Frank report.

The volume of branded towers going up in Miami is second only to Dubai, and high-end fashion and car brands like Armani, Fendi, Bugatti and Bentley are household names that draw interest from buyers who associate them with luxury and quality.

"Those brands can last forever if they don't overbuild," said Ricardo Dunin, founding partner of North Development and CEO of Oak Capital. "But it's just like, every minute, you see a new brand."

Some developers plotting new condos are deliberately staying independent amid the deluge.

Key International and 13th Floor Investment's 75-story, 296-unit project with Nobu and Foster + Partners is named 619 Brickell — an intentional move so as not to pull power away from either the architect or the sushi hospitality chain's brand, Ardid said.

"We thought it was better in such a heavily contested or competitive market," he said.

Brands are often credited with attracting a loyal customer base and providing a sense of comfort in what the project will look like once it is completed. Even in a congested market, BH Group CEO Isaac Toledano said that concept still holds as he prepares to launch a new branded residential project. He declined to disclose the name of the brand onstage, but he's already developing the Ritz-Carlton Residences, West Palm Beach and the W Pompano Beach Hotel & Residences with Related Group.

He said the unnamed project, which has a marketing team but hasn't officially launched, already received an inquiry for a $110M penthouse from a client who lives in the penthouse of another one of the brand's locations in a different state.

"He says, 'Because I live in this building now, I live in the penthouse now, it's an amazing brand, I love the services, I love the concept, and I want to have a place in Miami with this brand,'" Toledano said of the potential buyer.

"So sometimes, this brand gives the buyers such a great experience. It's like you go to a restaurant and you love the food," Toledano said. “You want to go there again."

While the brand's name can allow developers to charge up to a 30% premium on units, the partnership also comes with its own set of requirements, which can become quite costly.

Satisfying brand design and construction standards can account for up to 20% of a project's cost, panelists said.

Brands can rack up a bill by requiring developers to maintain above-and-beyond building codes for things like ventilation and HVAC systems, Power Design Senior Director of Engineering Tom Morgenthau said.

Developers are also spending millions on building out their sales galleries to draw buyers and supersizing amenity spaces, which have grown 100% since 2020, according to condo marketing firm ISG World.

Dunin recalled how difficult it was to develop The Ritz-Carlton Residences in Miami Beach before the pandemic when the brand had more requirements than the municipality, which is already notorious for strict standards.

"It's not only the cost that you pay the brand, it's the cost of satisfying the brand's standards," Dunin said.

"The brand doesn't put in any money, so the brand wants you to put as much money as possible into their brand, and it may or not be in your best interest," he added. "At the end of the day, if you cannot get close to 20% more in pricing to use a brand, you shouldn't use the brand."

As the competitive edge branded condos provide starts to thin, developers are seriously considering what sites would actually benefit from the addition of a brand versus jumping on a trend for the sake of it.

"On existing stock, there were no brands, so that was an easy way to differentiate ourselves from that," Ardid said. "Then, now, how do you do it? How would you differentiate yourself from other condo sales? The next time around, there'll be a lot of existing stock with brands."

"So, we'll have to think of something else."