Dov Stark, CEO of Prestige Homes is the most innovative designer, builder and real estate developer in South Florida.
The luxury real estate construction market in South Florida is one of the most vibrant and continuously expanding markets in the United States. The region consistently attracts more ultra-wealthy people than any other state.
As a result, South Florida has naturally seen an increase in real estate developers flocking to the coastal cities to try and get a piece of the action.
Even though the construction industry in South Florida, both in general and in the main coastal cities, is highly controlled and regulated, I don’t see the build quality as always there. It’s actually quite common to notice big differences, both in quality of materials used and of the construction itself, between two similarly priced properties within the same neighborhood.
I believe that overcoming build quality issues and other challenges will be vital going forward in the spec luxury real estate market.
Challenges In The Market
Discrepancy Between Quality
Affluent buyers usually have an eye for quality and design, often being able to distinguish between a well-crafted, quality building and a cheaper version of it; but not everyone can. The discrepancy between the quality of similarly priced real estate, as well as the increasing emergence of these cheaply built expensive buildings in the market, has been a hurdle for some of the top luxury builders active in South Florida. However, I see these properties as just the tip of the iceberg.
Increasing Economic Risks
Even seasoned real estate developers and experienced builders are facing rising challenges in 2023. Businesses must navigate an increasingly competitive market and face strong headwinds such as rising costs, labor shortages, increasing insurance premiums and market uncertainty.
In the spec house segment, many developers are taking increasing risks in the face of a potential economic slowdown as well as more completed projects hitting the market.
Supply Chain Issues
Over the past two years, we have been faced with disruptions of the supply chain and volatile material costs which have separated the industry leaders from the rest of the pack. Those who have been able to adapt, create new business models and lead their company through these troubled waters have come out with a competitive edge. The best in the business also know that the only way to retain skilled workers in a tight labor market has been to raise wages and expand benefits—something that I think many builders have failed to realize.
Push For Sustainable Development
The leading developers and builders have also felt the moral push (as well as a push from clients) to develop more sustainably and reduce the carbon footprint of every build—all as a part of an ever-increasing focal shift toward combatting climate change. Developers, especially those building in coastal cities (and even more specifically, waterfront properties) have been forced to address and combat the effects of climate change, both future and present, and do their part in improving and reshaping the city and neighborhood they work and often live in.
When all these hurdles are taken into account, it is no surprise that the price of new construction has been quickly rising and that South Florida’s once affordable real estate is becoming exceptionally more expensive. This is exacerbated in the ultra-luxury market where unique, rare and original materials—exotic finishes, custom products and aesthetically ambitious designs—are used to satisfy clients’ needs for individuality and emotionally resonant luxury.
The Spec Market
The spec market can be a wonderful path to success, but it can, and has been, the downfall of many. The gambling aspect of it relies not only on the end product but making sure it will appeal to discerning buyers and keep up with trends (or even create new trends).
But it is also a gamble in regards to timing with the fastest project taking a minimum of two years from the very start of finding a suitable lot to even five years for less experienced developers/builders. In a constantly changing economic and sociopolitical landscape, timing is a critical factor.
Developing in South Florida, as monetarily enticing as it may be, comes with its fair share of growing challenges. Those looking to build here must be ready to learn, adapt and face a slew of obstacles. I believe that maintaining your professional integrity in terms of the quality of your builds as well as your management of your employees and unexpected challenges will determine your vitality in this lucrative, punishing, beautiful industry.
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