Miami-based developer Terra Group is building one of Miami's new signature residential projects, the Grove at Coconut Bay designed by fast-rising architect Bjarke Ingels. The group focuses on South Florida, with projects under development in Sunny Isles, Coconut Grove and the city of Doral. Next month Terra Group will start construction on an ultra-high-end, 18-story residential project called Glass in South Beach's South of Fifth neighborhood.
In an interview with WPC News, co-founder David Martin discussed the company's development and marketing strategy, as well as the current market trends. Edited excerpts:
What is driving the market right now?
In Coconut Grove, 50 to 60 percent of our buyers are actually local. In addition [to locals] we attracted with this [Grove at Grand Bay] project about 15 different nationalities. In Miami Beach, our buyers there are coming strictly from the Northeast; New York, Boston and also London. There we saw more [buyers] of a second, third, four or fifth home but someone who is really going to use that home and spend three or four months out of the year. In Doral we're building over 1,800 homes. We have six different projects there. We found a very strong Venezuelan, Colombian, Brazilian market and we've also found a lot of move-ups, people that live in town homes that want to live in single-families. With mortgage rates as low as they've been, a lot of people are taking advantage of that. Today I see a trend where buyers want to buy something special but buy something they can keep as an asset for their family's future generations.
What impact do you think having a famous architect has on a project?
It's not so much the name but what is created. You can have an amazing architect that has no understanding of the neighborhood and what the right product should be and not have a successful project. A lot of it has to do with that visioning and programming process up front of what types of units and amenities and what differentiates and makes the building special. Having an international architect along with other stakeholders involved in that process is what makes an amazing project. I think people are attracted and are curious because of a name [of an architect] but the product has to stand for itself.
How is your approach to development different to pre-crash?
Pre-crash we really tried to maximize the development opportunities and we were not as careful in choosing the neighborhoods we wanted to develop. Today we've adopted a "less is more" approach. We've also adopted a strong analysis of neighborhoods. We want to learn of the concept of dilution -- if there are 20 development sites just like yours, that's a little more risky to build new construction than if you have the only site that's left in a neighborhood to build. Now in the next five years there's really not going to be anymore development for horizontal, single-family, master plan community [in Doral]. There may be a trend toward urban infill but that for us was not the right fit for Doral. In Miami Beach we have the last high-rise that is ever going to be built south of 5th. We adopted a philosophy of "why not invest in a neighborhood that has the last building permit available to build something special."
Buyers are looking to more intellectual luxury. Your marketing has to be more educational and academic rather than gimmicky, shallow or superficial. In Coconut Grove, our campaign has quotes from Alexander Graham Bell, Tennessee Williams, Robert Frost. Today people want to buy, they don't want to be sold to. It's a different philosophy when they're buying to use for themselves. You want to touch their needs or wants; you have to deliver on what you say and what you do. I am meeting more with our buyers today than I did pre-crisis. It's all about a transparency approach.
What do you think about another bubble forming?
What we learned in the pre-crisis era was the difference between a weak buyer and a strong buyer, from a standpoint of wealth and liquidity. Today you find buyers that are buying only if they have the liquidity in cash to close because if not, they're not going to put their deposits at risk. I wouldn't use the word 'bubble,' I think each neighborhood is going through its own evolution. One of the interesting things is the depth of demand for Miami. When you look at the rest of the country, there's a certain respect that Miami has gotten because it was identified with a bubble and it did recover in such a strong resilient way. There will also be bumps in the road. Our view is we are long-term players, we appreciate the credit crisis that existed. Today a lot is being built all cash, you don't have the credit dependence that we had in the pre-crisis.
What types of projects will the company be focusing on?
We're not going to stick to high rise developments that won't be successful or won't fit. We build our own homes and buildings; we're doing a very strong grocery-anchored retail center in Doral right now. We like the diversity, but we like to focus in South Florida; we're not developing in South America or other parts of the [U.S.]. We have a view that there's great opportunity in Miami Dade County and Broward. There's a certain niche that we can create, a certain name and brand that is going to be successful but at the same time we don't want to stretch ourselves, either. We're trying to do less projects, better quality rather than trying to do thousands [of projects].