Condo-Hotels Are Taking Over Fort Lauderdale Beach
The W Hotel & Residences Fort Lauderdale has everything you would expect from the brand: nine-foot floor-to-ceiling windows, nautical-inspired interiors featuring cool blue carpets and bright white couches, steak and sushi restaurants, a pool for seeing and being seen, a lounge with trendy cocktails and a beach just across the street.
Condo-hotels like this one are increasingly dotting Fort Lauderdale, as owners love the lifestyle they afford and their steady increases in value.
The condo-hotel model has done well for decades and will always be attractive for a specific buyer profile, Related ISG principal Craig Studnicky said. Related ISG has been contracted to sell residential units at the W, which was built in 2009 and bought by the Related Group and Related Cos. in 2014.
"Condo-hotels work brilliantly for the out-of-town buyer who likes a particular place on the planet," Studnicky said. "People from all around the world like to vacation here. [Regular visitors] have two options: They can spend money on a hotel room or they can buy a condo."
Buying a unit in a condo-hotel can be wonderful in some regards — housekeeping and room service are just outside the door, and most alluringly, the unit can be rented out when the owner is not using it. But condo-hotels can also have complications.
In Fort Lauderdale, buyers of a proposed Trump project sued when his name was pulled from the building. In Miami, a Canyon Ranch project likewise lost its branding and now operates as the Carillion. In North Beach, condo owners at the Sixty Sixty Resort on Indian Creek Drive are fighting with the property's hotel operator over $9.4M in assessments.
Despite the occasional conflicts, Studnicky said the condo is an investment whose value will surely rise over time.
While owners hold the property, they can rent out their units to offset costs or even make profits. Starwood, which operates the W, can rent their units for them, often to people looking for vacation suites for a long weekend or week, or owners can find tenants themselves. They can even list the units on Airbnb or get long-term tenants.
The Fort Lauderdale market is extremely healthy, Studnicky said, with hotels running at 80% occupancy.
The W is not alone in promoting the condo-hotel model on Fort Lauderdale Beach, where in just the past decade or so, big brands have built condo-hotels over several oceanfront blocks. Just south of the W is a Ritz-Carlton with residences. Next door to the north is a Hilton, and beyond that, the former Trump property that became a Conrad, Hilton's upscale line. A Four Seasons, also with residences, is being built in between those two. A unit at the Ritz recently listed for $11M.
Studnicky said he is happy to have the competition because quality brands bring prestige to the beach. While units at the Four Seasons run from $900K to $3.1M, units at the W are in the easier-to-sell range of $900K to $1.4M.
The W, which has 355 hotel rooms in the east tower and 171 condos in the west tower, just completed a $60M renovation designed by Meyer Davis. Studnicky says that 45 one-bedroom units sold out, and 80 two-bedroom units remain. He expects to sell out by the end of 2018.
Studnicky said the W is under contract to operate the property for 10 years. He predicts the brand will stay in place even beyond that. It has been a selling point for buyers from as far away as Brazil and China, because W has a presence worldwide, but most buyers come from the northeast U.S.
He suggests that buyers considering condo-hotels look at three criteria: the track record of the developer, the brand of the hotel and who is running it.
Five years ago, foreign buyers were looking mainly at Miami, from South Beach to Sunny Isles. "But in the last three years, Fort Lauderdale caught fire," Studnicky said. It is less congested and prices are about a third less than in Miami. He said foreigners also like the more American feel in Fort Lauderdale.
Though condo sales have slowed with the high cost of the dollar, Studnicky is confident the market will absorb excess inventory, because 250 people a day move to South Florida. As the market slows, developers always begin to offer incentives.
"Mother Nature takes care of it," he said, referring to the sales cycle. "The developers see the slowdown in demand and start offering incentives."
He said prices now are 10% to 20% cheaper than last year.