The New Wealthy
By Mark Ellwood, Plum Magazine
Miami Leads The Country In A Return To The Good Life
Itâs undeniable:Â Miami means money.Â It takes deep pockets and a thirst for attention to win the bottle wars in this town: In the South Beach clubs, just one jeroboam of Perrier-Jouetâs Fleur de Champagne Rose can cost $15,250 (the sparklers are thrown in for free).Â Where else but at Prime One Twelve would purists shell out $30 an ounce for a Japanese-bred Kobe steak?Â The Setai stakes its claim as Americaâs most luxurious hotel by offering South Beachâs priciest penthouse suite: $28,000 for one night.Â And even those who have spent just a little time here feel the need to indulge: Chris Bosh powered forward in his new gig with the Miami Heat by dropping $12.5 million on a 12,000-square-foot North Bay Road hideout.
McKinsey & Co.âs Lisa Sun is one of the consulting firmâs most highly regarded luxury gurus, and she says thereâs no better place to understand what five-star living really means than in Miami, a home for old and new money alike, whether from the U.S. or overseas.Â âI describe it as a melting pot of different types of wealth coming together, all of whom have a desire for luxury,â Sun says.Â But though the platinum-plated lifestyle today might be a pricey as ever , there has been a distinct shift in tone since the economic meltdown two years ago: Flash is out, true wealth is in.
âIâd call the mood today one of responsible, rather than conspicuous, consumption,â Sun continues.Â âPeople are thinking, The things I buy must have longevity or a story behind them in the way theyâre made or why â a uniqueness that makes me feel justified in spending.âÂ Translation: Itâs ok to be seen splashing out as long as itâs on the right things and for the right reasons.Â But who are these New Wealthy, and how have they changed in the last two or three years in Miami?
One major, and welcome, shift is the drive towards value at any price point.Â In the Magic City, itâs in real estate where this is most evident.Â The New Wealthy here still wonât blanch at a $20 million price tag: Theyâll just want to know exactly why a penthouse is worth that much.Â âNo one is an emotional buyer in this marketplace.Â Everyone is interested in value,â says Michael Valdes, one of Sothebyâs key players in the real estate market in Miami.Â âThere was a lot of emotion back in the heyday.Â People would come in and fall in love with these houses, but that has completely changed,â agrees EWMâs Nelson Gonzalez.Â A few years ago, he recalls selling a North Bay Road house to Billy Joel on spec.Â âWe canceled the next three appointments, and he bought it then and there,â Gonzalez says.
He points out that such casual splurging is rare now: âEmotion used to be 90 percent of the decision, but now itâs flipped, and itâs probably only 25 percent.Â The rest is numbers, comparables and âWhat did the neighbors sell for?ââÂ In many ways, itâs a welcome change â less hot air or hype and more hard investment.Â But this new, smarter mindset doesnât hinder major transactions.Â Gonzalez was part of the team behind the recent $16 million sale of 88 La Gorce Circle, the highest local purchase since the seismic economic shifts.Â It sold because it adhered to luxuryâs new rules.Â âThere was a lot of value in that purchase,â Gonzalez says.Â âThere was more than 260 feet of waterfront and a 45,000-square-foot lot.â
Like an art collector might research provenance on a must-have piece, home buyers in the new luxury landscape are reading up to become real-estate connoisseurs â and still making compromises in the process.Â âThe oversupply of information has turned people into very, very sophisticated buyers,â notes Michael Valdes, citing a client he worked with recently whose exact specs included a wine cellar.Â âWe had a penthouse on the market for $16 million, and someone came in to do a lease option for $60,000 a month,â he says.Â âWhat was important to them, since they are very avid wine collectors and enthusiasts, was that it had a 5,000 â bottle wine cellar.Â It was the deciding factor, even though it had one less bedroom than they were looking for.â
Of course, in Miami, the other industry where luxuryâs new rules are most evident is hospitality. Â When it comes to good life in 2011, itâs all about flexibility and a more casual approach, rather than a one-size-fits-all, platinum-priced experience.Â Itâs an echo of McKinseyâs emphasis on unique, rather than simply expensive, experiences.Â The recently opened JW Marriott Marquis downtown has a Daniel Boulud-branded in-house restaurant â but itâs the more casual db Bistro Moderne rather than an uptight, time-intensive fine dining spot.Â When iconic restaurateur Shareef Malnik made over The Forge, he tweaked his set-up in a similar way, offering small plates for grazing alongside full means and installing high-tech, self-serve wine-dispensing machines with 80 different varieties, available in as small as one-ounce servings.
Malnikâs casual approach wasnât about turning tables fast, but rather emphasizing how accessible his restaurant really is.Â âOur table dining times have increased, because we want people to feel comfortable,â Malnik says.Â âLetâs not get the last dollar today, but create demand that will last a long time.âÂ Malnik even believes that one symptom of the less bling-driven market is that his restaurant is buzzier throughout the week.Â âThe New Wealthy donât need to be there on the weekend,â he continues.Â âTheyâre preferring the nights that arenât so spectacular and conspicuous.â
Prime One Twelveâs Myles Chefetz agrees; his business has boomed despite the downturn.Â âThe rich are more cautious with real estate, but thereâs no devaluation in good,â Chefetz explains.Â âThey may have lost some money on the stock market, but they still eat out.âÂ Nonetheless, he has seen how splurge-like excess has been reined-in.Â âPeople donât act as flamboyantly as they used to, and thatâs good,â Chefetz stresses.Â âTwo or three years ago, I had two guys come in for lunch and spend $20,000, including three $5,000 of wine.Â But this year, the same guys came in and bought one bottle.â
And in South Beachâs signature industry, nightlife, luxury has shifted too.Â It has returned to its service-driven roots, again emphasizing a good experience over a grand bar tab.Â Velvet-rope burn is just so, well, 2000s.Â âWeâre in the business of trying to satisfy the customer,â says nightlife veteran Eric Milon.Â âAnd weâre appreciative of the fact that they do come out and are willing to spend money on the table.Â We would not enforce certain rules that we had before, for example.â
Dave Grutman of LIV agrees.Â He welcomes the higher expectations he sees from the more sophisticated, wealthy customers who are now a mainstay.Â âClubs have to be upping their game when clients are spending money again,â he says.Â âYou canât open your doors and put some local bumpkin DJ on, and your service had better be right up to par.Â All these people have gone to Vegas or Saint-Tropez and gotten great service, so the operation here canât be like the old days.â Â Itâs the same sense of in-the-know connoisseurship thatâs ribboned through the real-estate market today.
The new mood among the New Wealthy is due to not only the global economic shift but also the arrival of some fresh figureheads whoâve shown Miamians a new way of thinking â specifically Bosh and LeBron James.Â Both are regularly cites as icons by the luxury industry here.Â âChris Bosh is such a down-to-earth, intelligent, wise decision maker.Â Heâs a great role model for the New Wealthy,â Malnik says.Â The basketball star, whose home on North Bay Road is a few doors away from the lot where Alex Rodriguez plans to build a manse, was reportedly a low-key, well-informed buyer, like so many of Miamiâs New Wealthy.
The cityâs obsession with professional sports is part of the reason its luxury landscape has been reshaped.Â âWhat insulates this area from the recession is the concentration here of professional celebrity athletes,â Chefetz adds.Â âTheyâre not feeling a recession in the NFL or the NBA.Â They have contracts worth $150 million and make $4 to $10 million a year.âÂ And nowhere is a better symbol of how sports now steers the luxury market than Club LIV at Sun Life Stadium, home of the Dolphins, which includes an 800-person strong VIP section, complete with club banquettes and bucket seats.
But itâs Malnik who best sums up the mood of the New Wealthy in Miami: generous but smart with money, keen to enjoy themselves on their own terms, and looking for products or experiences that are customized and unique.Â âIn my industry, people used to dictate to the consumer what their experience was going to be and much it was going to cost,â he says.Â âIt was the tail wagging the dog.Â Now the dog will wag the tail.Â In the 1990s, it was about excess â now itâs all about access.â Â Lessons From The Front Lines Of Luxury (click to watch the video)