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Multifamily Trends - May/June 2008 - Feature

Developers are raising the bar on the amenities they offer to potential purchasers of luxury high-rise apartments.

Over the Top

By Mike Sheridan

Developers are raising the bar on the amenities they offer to potential purchasers of luxury high-rise apartments. A full-time chef will be in residence at the Centerpoint Condominiums in Tempe, Arizona, when the first of the project’s four towers opens in June. Other amenities will include winemaking facilities, a movie theater, a spa, a high-end Italian restaurant, a bakery, and an Italian café and grocery. “We are going to have different events scheduled for five nights a week, usually around food and wine, to create social and energetic environments,” says Ken Losch, a founding principal of Avenue Communities LLC, which is building the 800-unit Centerpoint development. “We want this project to incorporate a powerful sense of community.”

At the Laurel in New York City, which was built by Alexico Group and is scheduled to open later this year, residents are being offered a triathlon training center with two resistance pools, as well as a two-story family recreation space, including a private children’s playroom and a media room. Also, wine cellars and private media rooms are being touted at a number of luxury high-rise condominium developments from Florida to California.

As more American—and global—buyers refine their taste for the finer things in life, builders of upscale condominiums are responding with bigger, better, and more luxurious amenities. After upgrading the interiors of the units with the finest marble, state-of-the-art appliances, and exotic fixtures—and then improving the corridors, garages, and elevators—real estate entrepreneurs are now addressing one of the last bastions of luxury living: five-star amenities.

“Until now, developers have thought of their real estate as only hardware—a place to live,” explains Losch. “At Centerpoint, we are also concentrating on the software—the amenities required by our owners, as well as those needed to make Centerpoint not just a place to live but a true community.”

Developers are definitely raising the bar on the amenities they are offering potential luxury high-rise purchasers, says Kelly Kennedy Mack, president of New York City’s Corcoran Sunshine Marketing Group. “Buyers are much more sophisticated today, and their expectations of what a building will deliver have certainly grown.”

Purchasers of luxury condominium units do not buy a unit merely because of the amenities, but they must be part of the total offering, she says. “The basic amenities for a luxury building have grown from a concierge, a doorman, and a fitness center to exercise pools, wine storage cellars, and private media rooms,” she continues. “We’re seeing an additional level of sophistication in lifestyle programs that are offered in luxury condominium developments.”

Mack dates the start of the luxury amenity craze to 2004 with the Phillip Starck–designed 15 Broad in lower Manhattan. “It was one of the first residential buildings in New York’s financial district,” she explains. “It came to the market at a time when the financial district was not thought of as a place to live. The area then was lacking in neighborhood amenities, so the building provided its own, creating a sense of place for 15 Broad.”

Hassle-Free Living

Today, amenities at luxury residences change dramatically from neighborhood to neighborhood and from building to building. One of the most sought amenities now being offered is five-star hotel services, Mack says. “Time Warner Center [at Columbus Circle in Manhattan] started the trend with the Mandarin Oriental [hotel], which provides full services to condominium owners [at the center],” says Mack. Her firm is now marketing 75 Wall, another Manhattan building that will have the Andaz, a new Hyatt branded hotel, at its base and condominiums above. “It’s being incredibly well received because a hotel creates value for the residences,” she says.

Not to be outdone, hotel impresario and real estate developer Ian Schrager built the Gramercy Park Hotel in New York City in 2006 and later that year added the 23-residence Gramercy Park North condominium development next door, saying he wanted the hotel to act as a private clubhouse and backyard for the owners at Gramercy Park North.

“Providing full-service amenities from a hotel is what separates our developments from everyone else,” says Michael Overington, a partner in the Ian Schrager Company. “Buyers want quality and service and hassle-free living. They received that from the many amenities we offer at the hotel. Not only that, but we provide our condo owners whatever services they require, from painting to walking their pets to personal shopping. It’s almost like estate management for our condo owners.”

Today, few luxury high-rise developers are offering more amenities to their owners than Avenue Communities. Before creating Centerpoint, Losch and fellow company principals David Dewar and Jamie Dawson constructed a number of successful developments in the Phoenix area that emphasized upscale amenities and a wide range of physical and social activities for its residents. Among those projects are the 388-unit Venu at Grayhawk in Scottsdale, Arizona, and its sister property, Edge at Grayhawk, with 447 luxury one-, two-, and three-bedroom residences.

At Venu, Avenue Communities refined an amenities-rich format that includes the Great Room, a luxurious lifestyle clubhouse showcasing a pairing of culinary and wine choices with a heavy program of social events and personal services. “At Venu, we incorporated our trademark brand ‘real.life.style’— which includes a multitude of residential amenities that make up a truly vibrant community—into the fabric of the building,” says Losch. “The amenities we offered weren’t just something thrown in. They were very carefully researched and well thought out.”

Before Venu and Edge, Losch says, “no developer had really connected all the dots. They looked at the bricks and sticks—the hardware—of the building. They just threw up four walls instead of creating lifestyles for residents. Builders would open a $100 million development without thinking of the software—sort of like buying a computer, keyboard, and mouse but never considering what you need inside to make it all work,” he explains. “Developers would throw in a gym and a small community room for residents and maybe a little kitchen. But they didn’t give much thought to the sense of community and didn’t include the kind of amenities residents of a luxury property required.”

The Great Room

At Centerpoint, Avenue Communities’ approach is showcased in the 23,000-square-foot seventh floor known as the Great Room. This space has a professional demonstration kitchen with a full-time resident chef; a wine lounge; studios for yoga and Pilates classes; an electronic lounge to showcase popular games such as Xbox, PlayStation, and Game Cube; two private theaters; an in-house spa; a business center; and concierge services.

“The Great Room is what we consider our backyard—a place where people will ‘do’ and socialize,” says Losch. “It is a key component of our drive to create a sense of community at Centerpoint.”

Centerpoint will have a “frontyard” as well. The ground level will have a 23,000-square-foot public plaza and 20,000 square feet of retail space that will include the Trattoria M Italian restaurant and Aroma Market Caffe, both in partnership with local chef Michael DeMaria. Equally important is PûrVine, a wine education and winemaking facility offered in partnership with Signorello Vineyards of Napa Valley, California.

Avenue created the concept after researching the market to determine what works. “We visited 500 communities from Vancouver to Miami in 14 major population centers,” Losch explains. “We were disappointed by how many developers including ourselves just created real estate but didn’t build a community. Residents barely knew the people on their own floors. They’d give nice polite smiles or nods and make small chat in the elevator, but they never had an opportunity to know each other. People want to be with other people. We’re social animals.

“The magic of Centerpoint is that we’ve taken one of the most socially empowering situations—a dinner party at someone’s house—and re-created the effect with our own chef and our own dining area. And, with all dinner parties, wine is served, so we brought in PûrVine. At PûrVine, residents will not only learn about oenology—the science of winemaking—but they can also roll up their sleeves and handcraft their own private-label vintages from some of the best fruit sources available anywhere.”

Other developers considering luxury high-rise residential projects are taking notice of the approach and business success, Losch says. “We’ve been contacted by a landowner in a strong urban market who is looking for something unique like Centerpoint and loves our sense of place making,” he says. “We hope to take our concept to a number of locations.”

Losch advises luxury condominium builders to spend more time studying the market. “Research creates knowledge, which creates confidence, which creates creativity, and creativity plus execution equals success,” he says. “We believe that unless you’ve gone through that formula, your project will just be mundane.”

Reality Check

While the trend to offer more and more exotic amenities at new luxury residential buildings might lead to a can-you-top-this approach to real estate development, Mack cautions that amenities can only sell a project up to a certain point. “The amenity craze is far from over, but a developer putting every possible amenity into an inferior building isn’t going to make the development a successful one,” she says. “A great amenity program cannot make up for a mediocre product.”

At the same time, there is always an economic consideration to the amenity offerings. “Developers have to be careful of loading too many amenities into a building that can’t support them,” she explains. “If you have only 30 units and the building has tons of amenities, that means the common charges will be extremely high. Developers have to look at what kind of buyers they want to attract to this given building, and then deliver lifestyle elements to prospective purchasers that will make sense to them.”

For Avenue Communities, it makes sense to offer more and more amenities. “We have a contemporary urban product where community can meet,” says Losch. “When we build a project like Centerpoint, we earn our profit from the premium we create in our high rise—how we design homes, what we offer, the locations we choose. At Centerpoint, we have created a social premium with our amenities—the front- and backyards, PûrVine, Trattoria M. That sense of community and the amenities we’re providing will benefit our buyers now and in the years to come.”

Mike Sheridan is a past president of the Boca Raton, Florida–based National Association of Real Estate Editors.