Miami Developer Discusses Project on South Florida's Last Private Island

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A new luxury condominium project called Privé is set to break ground this summer. The project is located in the center of the city of Aventura, about 13 miles north of Downtown Miami. During a time when the area's condo market is booming, Privé has a unique feature: it is located on the last private island in South Florida.

The eight-acre private island project is a joint venture between developers BH3 -- led by principals Gregory Freedman, Charles Phelan, and Daniel Lebensohn -- and Gary Cohen, developer of Island Estates, the 21-mansion community south of the island, and part of Aventura's founding families. 

Privé is accessible through the gated enclaves of Williams Island and Island Estates.  The project's design calls for two mirror-image 16-story buildings, each featuring 80 units, a 10,000-square-foot gym and spa, as well as wine and cigar rooms, and social and business rooms. Amenities on the luxury property include two pools, a private beach, tennis court and jogging trail. With an expected delivery date of mid-2016, unit sizes will range from 2,585 square feet to more than 9,000 square feet. Prices start at $1.8 million to more than $10 million for penthouses.  

BH3's Gregory Freedman sat down with WPC News at the new Privé sales center to discuss the project, industry trends and plans for the company. Edited excerpts:

How have pre-sales been since launch? 

We started pre-sales in September/October last year as a whisper campaign because the sales center wasn't yet done. We went out to different brokers which we've worked with before. It was a wild success, beyond our expectations where we reserved about more than half or close to two-thirds of the South tower during that whisper campaign. We've had people come to the sales center over the past few weeks, the reception has only been overwhelmingly positive. We've done about 15 deals in the past two weeks, so currently we're about 75 percent reserved in the south tower and we started releasing units in the North tower and they've been getting gobbled up. The only reason we've opened up any inventory in the north tower is because certain lines and floor plans, like the C unit for example, [were] all sold out in the south tower.  

How much are buyers putting down? 

At reservation, instead of a five percent or ten percent, we go with a flat dollar amount. So the two-bedrooms are $125,000, the three and four bedrooms are $150,000 and the penthouses are $250,000. At contract it's a 30 percent total including the reservation fee, and then there are stage deposits of an additional 10 percent at foundation complete and another 10 percent at topping off, for 50 percent total. The last 50 percent is at closing. We're more than comfortable with 30 percent at the time of contract. We feel that purchasers are showing a sign of good faith by putting up 30 percent of the purchase price upfront.

The norm today is that 50 percent deposit, it's a great model for not only the developer but also the community. A speculator is not putting 50 percent down, it may be a long-term investor that sees value here that wants to buy to hold it for their family or sell it down the road. By taking [speculators] out of the equation it allows companies like ourselves and other developers that are active in the community to have a better pulse on what the actual demand really is. When we look at overall demand, downtown is not part of our equation because those are typically smaller units for younger professionals where everything on the beach is super high-end, larger units for families and generations of families.

In terms of buyer profile, who are you going after?

Before we started our whisper campaign we said 'who do we think our buyers will be?' and we said obviously locals and baby boomers looking to trade up and that's always the greatest indication for us, the local buyers. Brazilians obviously and we actually thought that this product would appeal to Mexicans. Mexicans not only love Aventura, but they love exclusivity and privacy and most importantly security. What we've seen is we've had a lot of local buyers, which is great, the Brazilians and the Mexicans have really embraced the product and we've had buyers from 15 countries already that we never fathomed. We've had buyers from Belgium, Italy and Russia; Argentinians, Canadians, we had a Chinese buyer. What we realized is that what we're offering is what no one else is offering. Our brand is that we have an island, that's something that no one else has and I think that's what has been embraced by a global audience where I don't think it matters where you are from, if you want to be in this area and you are seeking exclusivity and privacy and security and to be on a private eight-acre island, there is nowhere else to go. 

Can you build higher? How did you settle on the number of units?

We're actually allowed to go 290 feet high and we could do something like 388 units which is basically a mirror image of what Peninsula is across the way. We shared the idea that this is something so special, so unique and so exclusive we won't do justice to it by just taking what is already over there and smacking the same thing over here. We said its gotta be something that leaves a lasting landmark within the city and we wanted to leave our imprint. Most other developers would come in and say, 'lets do maximum density.' We were also mindful of the fact that in all of our prior projects we've built a reputation as a company and 400 units would really be burdensome in terms of ingress and egress throughout not only Williams Island but also the south island. 

What is the theme that as developers you take from project to project?

We're a company that intends on being here for the long-term and the way that we practice our business is doing the right thing. As far as the projects themselves, every project is different. [Privé] in a lot of ways is similar to Trump Hollywood in terms of the exclusivity, the number of units, the amenities space and the service level. And that's what this product deserves and calls for. If we were doing a project in Coral Gables it would be something different. It's understanding where your project is, how that fits into your offering and here we have 70,000 square feet of interior amenity space...that does not exist anywhere in any other project down here period. So for us it's providing what we believe to be an incredible value to the purchasers and if there is one congruent theme between all the projects we've done is that we're always the value proposition. 

How important is it to have name-brand architects? 

From the architecture side, you see a lot of buildings hiring what we call the 'Swiss cheese' architects, the fancy swiss architects that have done an arena or stadium somewhere that was really cool and they're bringing them [more] for marketing power than anything. We actually spent a lot of time considering that for this project and what we found was that those architects are not familiar with South Florida condominium laws and buildings codes, how things actually get built, and OSHA requirements for hurricanes, and you need a local architect that does know all that stuff. The 'starchitect' theory in my opinion is where they're lending their name and they're giving their vision for what the building is and it's left for other people to implement it. What we opted to do was to retain Sieger Suarez, which in our opinion is the local starchitect. [Regarding] art within the building, it's a delicate topic because it's really important to have really good art and sculptures and well known and up-and-coming artists. However, art is very subjective, so in selecting that art it has to be a delicate approach where it's not offensive to anyone.  

Where does the company stand right now and where does it want to go?  

BH3 came together in the middle of 2009, in the middle of the downturn. We started as a purely opportunistic group with a focus on luxury residential real estate east, on the beach or on the water, as well as buying distressed situations in New York. That continues to be our main focus although the world today is not at a level of distress it was in 2009. Our first project as a company was Terra Beachside 6000 Collins, where it was about 60 percent completed and we came in and bought the mortgage and took over the property, actually finished construction, sold out the property and went on to the next project. We then did [Fontainebleau] Sorrento which was a bulk purchase, which we exited relatively quickly there afterwards successfully. Then we did Trump Hollywood which was the biggest transaction prior to Privé as a company, which was a $160 million deal that we bought through the debt. We then did 1805 Ponce, which we bought from Ocean Bank in December 2012. Actually as of [last week] we're done with deal, we had our final closing. We continue to look at opportunities where we feel we can create value. There's got to be some avenue of creating value in the transaction for us, whether it's fixing it up, repositioning, rebranding, doing something different to make us stand out from everyone else. We saw a lot of value in [Privé] because it's really irreplaceable real estate. We own some other real estate in South Florida, for example a parcel in Miami Beach that we're gonna be developing, that we'll announce later this year, but we continue to look for opportunities that fit in that mold.  

What was the price cost at Privé? 

At the end of the day we have a lot of space and its expensive to build it even though we're only going 16 stories because its two buildings and the footprint is really wide. It's almost like taking a 30-story building and putting it on its side. Our costs are comparable to anyone else building a high-rise condominium in this environment. The total forecast sellout is half a billion dollars between 160 units.