Now is the time for condo owners to monetize their properties with short-term rentals similar to Airbnb, according to Harvey Hernandez.
The flexible living developments that Mr. Hernandez helped develop in Austin, Texas, and Miami, called Natiivo, sold out of their hundreds of units before breaking ground in 2020. A more luxurious flexible real estate offering, Lofty, is set to open in Miami in 2024.
Investors are confident that the new wave of remote workers will appreciate the nomadic lifestyle and rent properties short-term. Owners can also use their spaces as a pied-à-terre. Buyers and renters can expect a wealth of amenities at properties like Natiivo, from pools and Peloton studios to coworking lounges and meeting rooms.
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Mr. Hernandez leads Newgard Development and specializes in flexible real estate developments. He oversees the rights, development, sales, marketing, design and construction of buildings that capitalize on the sharing economy. He lives and works in Miami, where a Natiivo building will open later this year.
Mansion Global caught up with Mr. Hernandez as he completed development of Natiivo in Austin, which will open this month.
MG: What is the demographic of flexible real estate clients?
HH: We have two [types of] clients. We have the client buying the property. Once this client closes and we start working, we have the guest client. We manage on behalf of our buyers, who are the type of people who want to be part of this new movement to monetize every asset – the customers who want to have their cake and eat it too. This client wants to be able to own real estate anywhere, and wants to be able to use it, but at the same time wants that asset to be depreciated. They tend to be a bit younger. I mean the average age is around 35-40. From the guest’s point of view, this is the type of guest who would like to have more space and stay longer in certain places. They want to travel with friends and they want to have a more meaningful accommodation experience. It’s hard to get when you’re confined to a hotel room.
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MG: Who is your competition in Miami and Austin?
HH: Everyone tries to enter this space. We have been in this space for four years now. The first property is now open in Austin. We don’t see anyone having the advantage that we have, in understanding the market and the customer. So far, we still have the advantage in the development of colocation.
MG: Do you know of any other condominiums with hotel licenses in Miami that might be competing for the same customers?
HH: I know of timeshare hotels, but that’s not what we are. Condo hotels have a ton of restrictions. The actual unit is almost like a glorified hotel room, as opposed to a tiny house.
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MG: Natiivo Miami’s units are as small as studios. How do these units differ from hotel suites?
HH: That’s an excellent question. All our studios are different because they have a full kitchen and space for dining and working. They can be as small as 450 square feet, but they’re so much more comfortable than a hotel room.
MG: Is the demand for flexible real estate opportunities out of the ordinary due to the new remote workforce? What’s next on your horizon?
HH: There was huge demand even before the pandemic. Now it has become so much more popular to hang out in different cities because more people can work from anywhere. We are looking to open more Natiivo locations in Dallas, Nashville and another in Miami for a different market. We launched a new brand, called Lofty. It offers the same opportunity for owners to monetize their assets, but the quality is so much higher. The locations are more premium and more central than Natiivo. They have a great design and a bit more services and amenities.
MG: What amenities do people expect from a higher flexible real estate brand?
HH: At Lofty, we will have a private members-only club. The idea is that there will be events and experiences, and depending on the time of year, activities and so on. As for services, each Lofty will have cars with drivers where you can take your guests around the city. There will be daily cleaning as opposed to pre-arrival cleaning. It works more like an upscale hotel experience for the guest as well as the owner.
MG: As we approach 2022, how do you see the evolution of luxury residential spaces compared to previous years?
HH: We pay great attention to ensuring that our spaces are conducive to work. In all of our Lofty and Natiivo spaces, you will see an office space or a den, which is extremely necessary these days… In the luxury space, they want hotel-level quality of services. When someone stays in an Airbnb product, they never know what they will get, even in the luxury category. If we are able, together with Lofty, to deliver a consistent product in terms of quality, services and experiences, that is a win for our customers.
MG: How do you define luxury?
HH: Luxury starts with location. Then the design, services and components you just don’t see. For example, we pay great attention to fragrances, marketing and the quality associated with furniture, accessories and technology.
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