Miami Beach has long been sought out by both domestic and international tourists looking to enjoy the sun, sand and natural (and in some cases, surgically enhanced) beauty that Miami Beach is famous for around the globe. Increasingly, those tourists are looking to stay in luxury hotels, and according to a recent article in USA Today, Miami now ranks as the #1 city in terms of the percentage of hotel rooms categorized as luxury.
The top 10 markets in which luxury rooms comprise the highest percentage of hotel rooms are (according to the USA Today article):
1. Miami 19.8%
2. New York 18%
3. West Palm Beach, Fla. 17.9%
4. New Orleans 13.7%
5. Phoenix 13.6%
6. San Francisco 13.3%
7. San Diego 12.8% & Orlando 12.8% (tie)
8. Tucson 11.5%
9. Los Angeles 11.4%
10. Tampa-St. Petersburg 10.8%
The hot Miami luxury hotel market, and the Collins Avenue corridor in Miami Beach in particular, is drawing increased interest from both domestic and international investors and has become a very active hotel investment market, as evidenced by the recent luxury hotel acquisitions and openings in Miami Beach and the placement of a South Beach icon on the market.
Hot Hotel Acquisitions in Miami Beach
In February 2012, the Gansevoort Miami Beach, located at 2377 Collins Avenue, was purchased by a consortium of Starwood Capital Group, the LeFrak Organization and Invesco Ltd. The hotel is currently known as The Perry South Beach and the new owners plan to invest $100 million for renovations of the property.
In June, 2012, Miami Beach welcomed the new luxury SLS Hotel in South Beach, located at 1701 Collins Avenue. Owner Sam Nazzarian estimated the cost of the project was between $80-$85 million in a recent Miami Herald article. The hotel includes the original 1939 building by architect L. Murray Dixon as well as an additional building in the back, which houses 10 villas, a lounge and six bungalows. The SLS also houses the hot new restaurants Katsuya and The Bazaar by Jose Andres.
In October, 2012, the James Royal Palm will open at the site of the old Royal Palm Hotel at 1545 Collins Avenue. The property was purchased by private equity firm KSL Capital Partners for $130 million in April, 2011 and it has been estimated that approximately $42 million in renovations are being done to produce what Forbes magazine calls one of the “top 10 most anticipated openings of 2012“.
Hot on the Market
Morgans Hotel Group Co., which operates boutique hotels throughout the country, recently placed the iconic Delano Hotel, located on 1685 Collins Avenue, on the market. Bloomberg Business Week, citing Real Estate Alert, stated that the property has an estimated value of $200 million, or about $1 million a room, without citing a source for the figure. The Delano, which was developed by Ian Schrager, is often considered the luxury hotel that started it all in South Beach, and this world famous hotel has been a constant hotspot for the rich and famous since its most recent incarnation in the 1990’s.