Examining the practice of property branding
By Steven E. Scheinberg
What do you do if you’re Jorge Perez, and your condos are not selling? Re-brand them as “Trump West Palm Beach.” And why not? Branding is a proven way to communicate luxury, quality and exclusivity, all of which are essential elements of marketing high-end condominiums.
Simply put, branding real estate projects has become popular with developers because it creates media excitement and consumer awareness that drives traffic. And, given the current challenges of the market, more developers are willing to work with someone they believe can give their property cachet and a marketing edge. By renaming the Icon as Trump West Palm Beach, Perez knew that, going forward, any serious upscale buyer would have to visit his property.
But in reality, Perez wasn’t really doing anything new. Celebrity buildings have been a part of the Miami since 1915, when F. Burell Hoffman designed the baroque mansion at Vizcaya for James Deering. That project helped to kick off the Deco Movement of the 1920s and 1930s, which still defines and influences the character of architecture in Miami. Then, with the construction of I. M. Pei’s Centrust Office Tower in 1987, architecture in Miami entered a modern period that utilizes unique shapes and extensive use of glass and height to create panoramic views. Over time, this trend dramatically accelerated due to the growth of the hospitality, fashion and entertainment industries on South Beach, where a new level of design consciousness has emerged. The result is that, today, Miami is home to an array of branded projects that feature celebrity ?architects, entertainers, athletes and even restaurants.
Starting on Biscayne Boulevard, Cesar Pelli just built the groundbreaking Performing Arts Center, while Frank Gehry designed the New World Symphony Building. Michael Graves designed 1500 Ocean Drive, a high-end residential project and on Collins; and Rich Meier created Beach House, a nationally regarded glass design that features natural light and open floor plans. West, on Lincoln Road, are projects by Enrique Norten, Jacques Herog and Pierre de Meuron, all of whom are considered world-class architects. Collectively, these projects have redefined Miami’s skyline to reflect a new urbanism where each building is considered a potential work of art.
Developers have also turned to celebrity fashion designers, entertainers and athletes to brand their projects. Today, buyers can find projects designed by Versace, Roberto Cavalli and even Martha Stewart. Dan Marino took up residence in, and became the spokesman for, Las Olas River House in Fort Lauderdale, while Shaquille O’Neal teamed up with the MDM Developer Group to launch Metropolitan Miami, an 1,100-unit residential mix-use project. Emeril Lagasse opened an Emeril’s in the St. Moritz Hotel; Ian Schrager opened Nobu, the ultimate celebrity sushi restaurant from New York, in the Delano and at the Sagamore Hotel; Michelle Bernstein from TV’s “Top Chef” opened Social Miami to rave reviews. And, for the jet set crowd, Nicky Hilton’s Nicky O’s South Beach Hotel is taking reservations, and Romero Britto’s statues and murals adorn buildings throughout South Beach and Miami.
But the real question is whether a branded building offers any additional value to the buyer. The answer for real estate is the same as for other consumer products: It depends on the brand and the product. A building designed by a world-class architect, designer or developer like Trump, certainly adds value by making each unit more exclusive and desirable. But whether Dan Marino, Shaquille O’Neal or Nicky Hilton really adds value beyond marketing attention remains doubtful.
One obvious example that celebrity branding doesn’t always payoff can be seen in Las Vegas, where a $2 billion development that featured George Clooney and Brad Pitt as partners and spokesmen was canceled due to a lack of interest. And, just across town, the same was true for Ivana Trump’s proposed residential tower, proving that not all Trumps are equal in real estate. Perhaps the most revealing celebrity real estate branding failure came in February in Chicago, when Robert Falor filed a lawsuit against Nicky Hilton claiming that she misrepresented herself and her associates as having experience in hotel design and, thereby, proving that not all celebrity branding is good for business.
Steven E. Scheinberg spent 12 years on Wall Street, where he managed two research departments and specialized in providing corporate and real estate investment banking services to institutions and high net worth individuals. Now in private practice in Miami, Scheinberg works with real estate investors.