Condo Developers Add Clubs, Restaurants to Attract Buyers

As demand for condominiums cools, some developers in places like New York, Miami and Las Vegas are signing big-name chefs and opening trendy bars on their properties.
By: Cheryl Lu-Lien Tan: The Wall Street Journal Online
When Ten Museum Park is completed next year in Miami, it will feature a high-end restaurant and an exclusive lounge designed by Michael Capponi, a nightlife impresario best known for celebrity-studded parties he throws at local hotspots like Glass and Mansion.

The building isn't a hotel or resort - it's a condominium development aimed at second-home buyers that will feature 200 units priced from $400,000 to $4 million.

As the condo market cools - year-over-year sales of existing condos and co-ops were down 2% in March - some developers are trying a new tactic to entice buyers. Taking a cue from the boom in hotel condos, where developers combine residential units with hotel rooms, they are signing on big-name restaurants and chefs, opening trendy bars and building clubs on the property.

Celebrity chef Todd English says he is negotiating with developers to open his first Miami restaurant - an upscale chophouse, he says - next year at Paramount Bay, a condo project with 346 units that cost between $600,000 to $5 million.

The success of New York City's Time Warner Center, a condo project that has drawn star chefs such as Thomas Keller, has inspired its developer, Related Cos., to plan a similar development in downtown Los Angeles. The project, named Grand Avenue, is slated to have seven restaurants and a large bar or nightclub. Ken Himmel, executive vice president of Related, says he's talked to "every major restaurateur from Los Angeles, San Francisco and Las Vegas" about opening there.

In Las Vegas, Fifield Realty is adding an upscale steakhouse to its Allure Las Vegas project and planning to offer room-service-like delivery to residents. And although Vegas 888 won't open until 2008, its developers are touting its 35th-floor nightclub, where owners and those who pay a hefty membership fee can sip cocktails while sitting in a pool and checking out sweeping views of the Strip.


Condos at Vegas 888 will come with membership in its 35th-floor private club.

"It's meant to be as exclusive as the building is," says Matt Brimhall, spokesman for Del American, which is building Vegas 888. "It'll have fire pits, outdoor rain showers - you can take guests there to have a drink and check it out."

Developers say they're turning to restaurants and nightlife to set themselves apart from competitors in an increasingly crowded high-end condo market. In Las Vegas, developers of three luxury condo projects - including one that had sold some units - recently scrapped their plans, citing concern that there wasn't enough demand. In Miami, says Daniel Kodsi, chief executive of Royal Palm Communities, which is developing Paramount Bay, "There are about 4,000 units that are built or currently under construction within a few blocks" of the project. "We wanted to offer something different."

Meanwhile hotel condos are continuing to push the envelope. The W Hotel condo project in Miami just signed up Mr. Chow, a New York City restaurant popular with celebrities, to open on its premises. And Hard Rock Hotels' condo hotel, scheduled to open next year in San Diego, will feature the city's first Nobu.

Developers say restaurants, bars and other hotel-like amenities appeal to second-home shoppers, who are increasingly picking condos over single-family houses. Rogelio Garcia, a retired property manager who lives in Laguna Hills, Calif., but regularly visits Las Vegas, says Allure Las Vegas's restaurant and high-end concierge service were "giant factors" in his decision to buy a $655,000 two-bedroom condo there. "Having all those things at your fingertips is important," he says.

Opening restaurants in condominiums hasn't always appealed to big-name chefs. Mr. Himmel, who worked for the company that built Water Tower Place in Chicago in 1976, recalls that it was hard to lure prominent restaurateurs. (California Pizza Kitchen eventually set up shop.) But the demographics of luxury condo buyers can be persuasive. Given the condo prices at Paramount Bay, says Mr. English, "the clientele would be a worldly, good clientele. And we would have that built-in business."

Putting nightclubs and restaurants in condos could have some drawbacks. Diners and clubgoers won't be able to access the residential floors, but crowds and rowdy drinkers could get in the way of a good night's sleep. At Mint, a Miami condo slated for completion in 2008, the restaurant is adjacent to the lobby. Inigo Ardid, vice president of developer Key International, says he plans to install a soundproof glass wall between the restaurant and the lobby and ban music in the restaurant after 10 p.m.

Ownership doesn't always have its privileges. Vegas 888 plans to offer residents full access to its clubs, but some properties are reserving the right to enforce a tight velvet rope. Kevin Venger, co-owner of Ten Museum Park, says he picked Mr. Capponi - whose South Beach parties draw A-listers like Jennifer Lopez - because he wanted it to attract a similar crowd. Condo owners may pay $4 million, but letting them all into the club could hurt the rep. "We have disclaimers saying there's no guarantee that you're going to be able to get in," he says.