F1 Miami Race Launches 10-Year Run Of Generating ‘Huge Demand’ For Real Estate
Hundreds of thousands of visitors will descend upon South Florida this weekend for a sporting event that some expect to have a greater economic impact than the Super Bowl: the Formula 1 Miami Grand Prix.
Formula 1's popularity in the U.S. has skyrocketed to all-time highs in recent years, driven in part by a viral Netflix series that goes behind the scenes of the sport. This attention is now translating into more American races that draw wealthy visitors from around the world and spur millions of dollars in spending that could boost the real estate market in three already hot U.S. cities: Austin, Miami and Las Vegas.
For the last decade, the country's only Formula 1 race has been the United States Grand Prix in Austin, Texas. In October, the race drew 400,000 people, setting a global record for Formula 1 race attendance, and generating more spending and hotel demand for the city than popular conference and festival South by Southwest.
This weekend marks an inflection point where the Formula 1 gold rush will begin to spread from the Texas capital. For Miami, the race will bring a much greater long-term benefit than the one-time boost of a Super Bowl: The city reached a deal to host an F1 Grand Prix every year for the next decade.
"F1 already has this amazing international fan base, so to have it coming here for 10 years is like having a Super Bowl every year," said developer Kevin Venger, who has built multiple high-end condo towers in South Florida. "It’s going to spark the hotels, the restaurants. Everything is booked."
The 10-year contract was signed in April 2021 with Stephen Ross — founder and chairman of real estate giant the Related Cos. and owner of the Miami Dolphins — to host the race at a new circuit outside of the football team's Hard Rock Stadium.
The event has already boosted hotel demand, is expected to draw millions in spending for retail and restaurants, and brokers even think it will boost condo sales.
"Everything in our city has to be bursting at the seams with the influx of extremely affluent people," said Cervera Real Estate's Alicia Cervera Lamadrid, who manages sales for the high-end Aston Martin Residences condo tower. Aston Martin's F1 team is partnering with the building on events throughout the inaugural weekend.
"It's going to bring in a bunch of people that have never been in Miami because they've never had a proper reason," she added. "Yeah, it's been on their radar, 'maybe someday I'll go,' and this gives them reason to come. F1 gives the racing world a reason to come to Miami."
Not only has Formula 1's rising popularity brought a decade-long economic engine to Miami, but just last month, the global racing league dropped a pot of gold on another U.S. city: Las Vegas.
Sin City is scheduled to host a Formula 1 Grand Prix in November 2023, the league announced last month. This will make the United States the only country with three F1 races next year, and it is only the third time in F1's 70-year history that a country has hosted three races (the Las Vegas race has only been scheduled for next year, not as part of a long-term contract like Miami and Austin).
Before Formula 1 even revealed on which November weekend the race will take place, the announcement has already ignited an unprecedented spark of demand for some Las Vegas hotels. In the 24 hours after the announcement, the Wynn Las Vegas and Encore hotels saw more requests for hotel room reservations than any single day in either hotel's history, the Nevada Independent reported.
“F1 has over 500 million fans globally, so it wasn’t a surprise,” Brian Gullbrants, president of the Wynn and Encore properties, told the Independent. “Having F1 is as good as it gets for global exposure and marketing for both the destination and for Wynn Las Vegas.”
The sport's U.S. popularity appears to be hitting the straightaway, but its acceleration can be traced back to three key turning points: the January 2017 sale of the F1 Series to U.S.-based Liberty Media; the October 2017 deal with ESPN to broadcast all of the series' races, qualifying sessions and practices; and the March 2019 launch of the Netflix series Formula 1: Drive to Survive.
The Netflix series took off during the pandemic — its third season was the most-watched show on Netflix in March 2021, according to media tracking firm Audiense. Last year was the most-watched Formula 1 season ever in the U.S., with an average TV audience of 946,000 per race.
This year's season appears poised to overtake that record. The first race of the year, the Saudi Arabian Grand Prix, drew 1.4 million U.S. television viewers, leading all of U.S. cable among multiple key audience demographics, Sports Illustrated reported.
Last year's United States Grand Prix, a three-day event in Austin the weekend of Oct. 24, drew 400,000 attendees, setting an all-time attendance record for any F1 race in the world, The Drive reported.
On television, 110 million people around the world watched the United States Grand Prix, compared to 96.4 million for last year's Super Bowl, Austonia reported.
This meteoric rise in U.S. popularity has translated to the local economies of the host cities. Formula 1 estimated that last year's Grand Prix generated $391M in economic activity for Austin. By comparison, the 2019 Austin City Limits Music Festival generated $291M in economic activity, and SXSW estimated that its 2019 event generated $356M.
"The event benefits the entire Austin market, not just downtown or the location by the airport, it benefits the entire area," said Steve Genovesi, executive vice president of tourism agency Visit Austin. "The visitors coming into town, it's a high-end spend. They go shopping, they eat at restaurants, so the overall economic impact is very high."
On the Saturday night before October's Grand Prix, Austin hotels reached 96.2% occupancy and an average daily rate of $369.33, according to Visit Austin data. Genovisi said an average non-event weekend in 2019 drew an ADR of $167.85, and he said the Austin City Limits and SXSW events in 2019 generated daily room rates of $204.32 and $309.48, respectively.
Austin has hosted the U.S. Grand Prix at its Circuit of the Americas track since 2012, and in February it reached a deal to extend its contract with Formula 1 through at least 2026, meaning the U.S. will have at least two races for each of the next five years.
With the inaugural Miami Grand Prix occurring this weekend — the three-day event features a practice session Friday, a qualifying round Saturday and the race itself on Sunday — the city is expecting a surge of visitors and spending.
Local officials expect 300,000 people to visit Miami this weekend, and officials of Broward County, which sits north of Miami-Dade where the race will be held and includes Fort Lauderdale, expect $50M in spending, CBS Miami reported.
“It’s the hottest ticket I’ve ever seen in South Florida,” Mike Sophia, vice president of sports & entertainment with Visit Lauderdale, told CBS Miami. "People who don’t have tickets are going to come just to be a part of the experience."
Event organizers expect the race to generate an extra 35,000 hotel bookings for the weekend, the New York Post reported. The Post highlighted seven hotels that have suites going for more than $10K this weekend, with the most expensive being the penthouse suite at the Faena Hotel Miami Beach.
Faena Hotel Miami Beach Vice President of Sales & Marketing Dilip Mukundan told Bisnow in a phone call that the penthouse suite is going for $170K this weekend. The suite, which can host 12 guests across its six bedrooms, hadn't been booked as of Monday, but he said he was in talks with an interested party.
Overall room rates at the Faena Hotel are about 35% higher than a typical weekend in May, Mukundan said.
The hotel drove much of its demand through an exclusive partnership with Red Bull, which has a Formula 1 racing team that has been among the top teams for more than a decade and won the driver's championship last year. The hotel reserved 88% of its inventory for the Red Bull team's guests, and for the remaining suites it is offering a Red Bull-branded package that gives guests access to events at the hotel throughout the weekend, an escort to the track, a track-side suite and other perks.
"This is a huge demand-generator for us," Mukundan said.
Mukundan previously worked at hotels in Bahrain and Abu Dhabi, which both have their own Formula 1 races, and he said he oversaw the Grand Prix weekend experience for those hotels, giving him a preview of what is to come in Miami.
"Just based on that experience, the international audience for this and for future years will be tremendous, especially as it builds momentum," Mukundan said. "Everyone knows Miami is an international hub, and it will increase Miami’s opportunity to capture an international audience."
Beyond the impacts this weekend of spending on hotels and restaurants, real estate experts believe the large crowd of affluent international guests will boost sales for Miami's high-end condo market.
The city has several luxury car-branded residential offerings likely to appeal to racing fans. In addition to the Aston Martin Residences, developed by G&G Business Developments, Miami condo specialist Dezer Development partnered with high-end car companies for its Porsche Design Tower and the Bentley residences.
Cervera Lamadrid, the Aston Martin Residences sales manager, said she has fewer than 20 units left to sell in the 391-unit building, which is still under construction with a scheduled Q1 2023 move-in. Her main focus this weekend is selling the building's 20K SF penthouse unit, which has views across Miami from atop the 66-story building, and comes with an option for a private helipad.
"I think our buyer is going to be there on race day, so I hope we find each other," she said.
Venger, the Miami condo developer, said the first weekend of May is a perfect time to provide a boost to Miami's real estate market, as the visitors and seasonal residents who flock to South Florida in the winter have recently left.
"Usually you have a transition of after Easter most of our buyers, a lot of people go back, they leave town," he said. "And you have this wave of South Americans ... they migrate up in June and July. May has always been a transitional month."
He thinks the hospitality industry will benefit more than the condo market, but it won't hurt for brokers selling high-end homes to have an influx of international guests.
"It's a major event, hundreds of thousands of people coming from all over the world to stay in hotels, to eat in restaurants," Venger said. "What happens when these events occur is it's not just great for hotels and restaurants, it brings people to want to be here more, and that tourist goes from being a tourist to being a local, and it all helps with sales of condos and houses."