Eccentric developer Frank McKinney, has been building luxury oceanfront homes since 1992, creating 41 estates on speculation. (handout)
The next big thing in luxury real estate is pretty small — at least according to eccentric developer Frank McKinney, who’s betting the ultra-rich will soon prefer micro-mansions over the sprawling variety.
McKinney, a long-haired, bandana-wearing developer who works from an oceanfront treehouse office with a swinging bridge in Delray Beach, is no stranger to risk. He’s been building luxury oceanfront homes since 1992, creating 41 estates on speculation, with no set buyer and price tags of $2.2 million to $50 million.
But his latest project might be his biggest gamble.
“If I’m right, then obviously we can produce more than one,” he said. “If I’m wrong, then I’ve got another place to live.”
A fraction of the size of its predecessors, twice as labor-intensive and more expensive per square foot, McKinney’s new venture is a 4,042-square-foot beachfront house with three pools, antique flooring made from wood recovered from a 16th-century sunken Spanish galleon, a shower open to the outside and countertops made of sea glass.
“People are now paying $3,000 to $5,000 a square foot for condos in Miami. That’s like living in a toolbox,” he said. “Why are they doing it? They want the convenience of living in a reduced size.”
His target market is buyers with net worth north of $50 million and real estate holdings in Paris, Manhattan, Malibu, Hawaii, Milan, Los Angeles and other expensive markets.
“The ultra-wealthy have multiple homes in multiple cities. They want a more compact lifestyle, easier to maintain, easier to close up,” said Jeff Morr, a luxury real estate broker not affiliated with McKinney’s project. “There are a lot of very big homes being built right now, but I don’t think they’re in such high demand. They tend to be very impersonal, and nobody wants to live like that. A really nice home — 5,000 to 7,000 square feet — that’s ultra-luxurious is often more than enough.”
But McKinney’s micro-mansion is even smaller.
“I’ve built bedrooms bigger than this house,” he said.
One of his riskiest ventures — a 32,000-square-foot spec mansion in Manalapan that fetched $30 million in 2006 — had a master suite of more than 4,000 square feet.
Inspired by the tiny-house fad in the U.S., McKinney believes even the wealthiest home buyers want convenience and luxury over sprawling estates.
And he’s betting they’re willing to pay top dollar.
He hasn’t settled on a price for the spec house but is toying with an ask of $4 million to $10 million. On the low end, the price would work out to about $990 per square foot and about $2,474 on the high side.
A house that size should take a little more than six months to build when McKinney’s typical projects move at a rate of 1,000 square feet every six weeks. Contractors set a 10-month timeline for the property rising on a quarter-acre lot about 345 feet from the beach in Palm Beach County’s Ocean Ridge community.
McKinney pegs construction costs at 25 percent to 30 percent higher per square foot than earlier projects to provide high-end amenities for buyers willing to downsize but not compromise on the extras.
“It takes a lot longer to build a watch than a clock,” he said. “I know it’s going to cost more to build concentrated square feet than cubic feet. Cubic feet is air. It will be furnished down to the toothbrush in the bathroom, linens on the bed and food in the refrigerator. That’s why people are paying $4,000 per square foot in Miami — for that turnkey convenience.”