Luxury Institute News

April 22, 2015

In $10 million home sales, Miami Beach a leader

Miami Today
By: Susan Danseyar
April 22, 2015

Miami Beach is in impressive company among the nation’s top cities for luxury home sales, third highest for sales of $10 million and over.

Miami and the Beach have high rankings in The Previews Luxury Market Report for 2015, released by Coldwell Banker on Tuesday, which lists the top 20 US cities’ property listings and sales in three price points: beginning at $1 million, $5 million and over and $10 million.

In 2014, Miami had 967 closed sales for properties $1 million and over, ninth on the list just behind San Diego (976 sales) and above cities including Santa Barbara (673 sales), Newport Beach (611 sales) and Honolulu (591 sales). Miami Beach, number 14 in this category, had 704 sales.

For properties $5 million and over, Miami Beach was fourth with 89 sales compared to New York City (182 sales) at the top of the list and and above San Francisco (64 sales) and Malibu (48 sales).

There were 26 sales in Miami Beach for properties $10 million and over, behind Beverly Hills (35 sales) and New York (56 sales). Miami Beach, third on the list, had more sales in this category than Los Angeles (26), Malibu (14) and San Francisco (7).

North Miami Beach, in zip code 33169, had the third highest number of active home listings for $1 million and over (460), behind New York’s zip code 10022 (465) and Park City’s zip code 84060 (611). Miami Beach’s zip code 33139 was fifth in this category with 355 listings.

For properties $5 million and over, Miami Beach’s zip code 33139 had 115 compared with 143 in Park City’s 84060, top of the list, and above Vail’s 81657 (69) and Beverly Hills’ 90210 (68).

In the highest category of $10 million and over, Miami Beach in zip code 33139 was ninth on the list (44 listings) compared with New York’s zip code 10023 at 84, top of the list, and Malibu’s zip code 90265 at 26, bottom of the list.

According to the report, the demographics are changing in the luxury housing market. “Many wealthy homebuyers have historically looked to leisure-rich spots like Hawaii, Florida and Arizona for second homes, or waited until they were finished working to make a move,” the report states.”That’s changing, with recent trends suggesting that younger homebuyers are not waiting until they retire to put down roots in places where they would love to live.”

Technology and ease of travel are rapidly transforming the workplace for wealthy professionals, the report states, creating flexibility in terms of work locations and the ability to choose where they want to live. “Millennials have come of age in this kind of environment and are accustomed to the idea of striking a work-life balance that meets their personal needs. As they achieve more wealth, their live-anywhere attitudes are likely to become more of a force in luxury real estate.”

According to the Previews Luxury Institute millionaire survey, 73% of those under 35 say that they expect to buy a home in the next 12 months, compared to 49% of 35- to 44-year-olds and 26% of 45- to 64-year-olds. Just 11% of millionaires 65 and over say that they’re planning a purchase.

The report cites homebuyer surveys and the accounts of local realtors, stating they confirm ultra high-net worth individuals are highly mobile and flocking in growing numbers to areas once pegged as resort or second-home markets, as advances in technology, transportation and communication enable a “live anywhere” working-age population.

Florida, the report states, has a favorable tax environment that’s attracting live-anywhere high net-worth homebuyers, particularly those coming from the Northeast.

“The taxes on inheritance and estates are very high in some states, like New Jersey,” said Clark Toole, president of Coldwell Banker Residential Real Estate in Florida. “Florida is one of the most attractive places to live from a tax perspective, so we get quite a few people who decide to live here for at least six months and a day each year. People are saying ‘I want this money to go to my kids instead of to pay taxes.’”


August 27, 2014

In the Loop, At the Half With Betty Liu

Betty Liu
Bloomberg Radio
August 27, 2014

Milton Pedraza’s segment is featured at: 9:35-15:11

October 16, 2013

Top Earners Recover Their Losses, and Then Some

By Annie Lowery
New York Times
October 15, 2013

FOR most Americans, the economy over the last 10 years has felt like a slog interrupted by a punch: the recession came amid years of stagnation. But for America’s top earners, the experience has been more like whiplash: a boom followed by a bust followed by a boom.

Call it the 1 percent boomerang. The country’s top earners lost huge sums during the recession, as housing values plummeted and the stock market crashed. But the recovery has restored those fortunes — and then some, for some people — and created tremendous new ones.

The trend starts with the merely quite well-off, households earning more than about $150,000 a year. And the sums become more exaggerated higher up the income scale.

Click the link to read the entire article which includes multiple quotes from Milton Pedraza, CEO of Luxury Institute:


February 18, 2013

Chris Burch Becomes a Billionaire as Fashion Stock Surge

By Seth Lubove
February 15, 2013

J. Christopher Burch, the former husband of designer Tory Burch, has become a billionaire amid a bull market for fashion companies.

Burch, 59, controls a portfolio of fashion and technology companies through investment firm Burch Creative Capital. His biggest asset is a 15 percent stake in Tory Burch LLC, the New York-based retailer that sells high-end women’s clothing and accessories, including popular ballet flats adorned with the company’s double-T logo.

His stake in Tory Burch is valued at $530 million, according to the Bloomberg Billionaires Index, giving him a net worth of more than $1.2 billion. He is at least $200 million wealthier than his ex-wife.

“There’s a sense of optimism out there,” said Milton Pedraza, chief executive officer of Luxury Institute LLC, a New York-based research and consulting firm, in a phone interview yesterday. “All these companies have a very robust market to draw from.”

Fashion stocks have surged in the past year. Italy’s Prada SpA (1913) is up 67 percent and New York-based Michael Kors Holdings Ltd (KORS). shares have risen 47 percent. Germany’s Hugo Boss AG (BOSS) is up 23 percent.

Burch declined to comment on his net worth, said Devon Spurgeon, a spokeswoman for him at H&K Strategies in New York. Frances Pennington, a spokeswoman for Tory Burch LLC, didn’t return an e-mail message seeking comment.

Disputes, Divorce
Burch also owns stakes in Poppin, an online office supplies retailer; Powermat Technologies Ltd., a maker of wireless chargers for electronic devices; and Jawbone, which makes Bluetooth headsets, wireless music speakers, and wristbands that track its wearer’s physical activities.

His first success came with Eagle’s Eye, a designer sweater company he started with his brother Bob in 1976, with a $2,000 investment. The brothers sold the company in 1998, at a value of $60 million, according to the Burch Creative Capital website. He reinvested the proceeds into more than 50 startup companies.

The couple opened the first Tory Burch retail store in New York in February 2004. They divorced two years later. Burch sold about half of his stake in Tory Burch on Dec. 31, settling a three-month legal dispute between the couple.

In the suit, Burch alleged his ex-wife impeded the success of C. Wonder, a fashion retailer he started in 2011 that sells blouses, blazers and shoes at 10 retail stores and four pop-up shops in the U.S. Burch accused her of sending staffers to interrogate C. Wonder employees. She responded in a counter- claim that C. Wonder produced a “cheapened, lower quality” knockoff.

‘Strategic Asset’
Women’s Wear Daily reported on Feb. 5 that Burch sold 10 percent of C. Wonder to FMR LLC, the parent of Fidelity Investments, for $35 million, valuing the company at $350 million. Sophie Launay, a Fidelity spokeswoman, declined to comment.

Burch also owns homes in New York, Southampton on Long Island, Nantucket, and on the Indonesian island of Sumba.

Omar Saad, an analyst with International Strategy & Investment Group LLC, says Tory Burch could sell shares in an initial public offering in the future. He wrote in a January research report that the retailer could also be “a highly prized strategic asset” to a buyer such as Coach Inc.

“Look at the economic power of women,” Pedraza said. “Accessories, even more than clothes these days, make the statement of who you are. They help define you.”

February 14, 2013

What Recession? Americans Regain a Craving for Luxury

By Nadya Masidlover and Christina Passariello
Wall Street Journal
February 13, 2013

PARIS—While all eyes have been focused on luxury-goods growth in China, another market has quietly been bolstering the business of high-end goods purveyors: the U.S.

French silk-scarf maker Hermès International RMS.FR -0.36%SCA said Tuesday that fourth-quarter sales rose 21% in the Americas to €184.6 million ($247.5 million). That comes on top of a slew of strong U.S. performances for its peers, such as LVMH Moët Hennessy Louis Vuitton SA MC.FR -1.20%and Cartier owner Cie. Financière Richemont SA. Gucci parent PPR SA PP.FR -0.44%could confirm the pattern when it reports full-year profits on Friday.

Click the link to read the entire article including a quote from Luxury Institute’s CEO Milton Pedraza:

August 7, 2012

10 Things Apple Won’t Tell You

From customer service to app safety and even how its devices affect our relationships, here are 10 things Apple won’t likely tell you about its products and its business.

By Quentin Fottrell
August 6, 2012

1.”Our customers are worn out.”

All that initial excitement over the first iPhone or iPad has quickly given way to what analysts are dubbing “upgrade fatigue” — with even Apple’s most loyal customers upset about the steady stream of newer models. In fact, when people buy Apple’s latest product, the company is usually already preparing its replacement, says technology consultant Patchen Barrs, who has owned 25 Apple products over the last 20 years. “Everything we buy from them is already out of date,” he says. Take a count: Since 2001, there have been six iPods, two iPod minis, six iPod Nanos, four iPod Shuffles and four editions of the iPod Touch. Apple has released five iPhone models since 2007 and has had three iPads since 2010.

Of course, newer models have their upsides: They’re usually slimmer, faster and have additional features like better cameras and improved screen quality. And Apple, which declined to comment for this story, has said that such improvements more than justify the fast pace of their new additions. (In March, for example, Apple spokeswoman Trudy Muller said the latest iPad delivered a “stunning” screen display.) But that argument isn’t enough to appease some cash-strapped consumers. Almost 50% of consumers say they’re increasingly unwilling to buy new products for fear that they will be rendered outdated by even newer versions, according to a recent survey of 2,000 people by Marketing Magazine in the U.K.

Click the link to read the entire article which includes a quote from Milton Pedraza, CEO of Luxury Institute:{61E63842-DFED-11E1-961B-002128049AD6}

October 10, 2011

Stocks Tumble; Wealthy Keep Shopping

By Cotten Timberlake
October 7, 2011

When stock markets tumble, wealthy U.S. shoppers typically cut back their visits to such luxury emporiums as Saks Inc. (SKS) and Nordstrom Inc. (JWN) Yet even as the markets have seesawed, they’ve kept right on spending.

Exhibit A: Saks and Nordstrom yesterday reported September sales that exceeded analysts’ estimates, while luxury retailers as a whole outpaced all other segments except gasoline-selling wholesale clubs.

Affluent Americans aged 24 to 49 who have a yen for high living and bling are helping drive luxury sales, says Unity Marketing, which conducts quarterly shopper surveys. One cohort, called the “X-Fluents” — for “extremely affluent” — are responsible for 23 percent of luxury sales in the U.S., up from 18 percent in 2007, the Stevens, Pennsylvania-based firm said in a Sept. 14 client presentation it provided to Bloomberg News.

“The U.S. marketplace is more concentrated among young people,” said Unity President Pam Danziger. “They are more predisposed to luxury indulgence and represent more promising targets to luxury brands.”

X-Fluents were out in force again last month, she said.

Another group that Unity has dubbed “Aspirers” are also spending more on luxury, according to Danziger. They favor “flash, bling and status” and now account for 18 percent of luxury sales compared with 16 percent in 2007, she said.

Wealth Effect

In the past, affluent shoppers’ willingness to buy baubles has been tied to the stock market because its performance affects the perception of their own wealth — the so-called wealth effect. Luxury was the hardest hit retail segment during the financial meltdown three years ago; sales in the U.S. plummeted 9.1 percent in 2009, according to theInternational Council of Shopping Centers.

This time is different. Though the Dow Jones Industrial Average swung by 4 percentage points daily for an unprecedented stretch in August and consumer confidence stagnated near a two- year low in September, luxury sales may outpace the overall industry this holiday season.

Sales at luxury stores open at least a year will climb 7.5 percent, faster than the 6.7 percent increase in November and December of 2010, predicts the ICSC. Other retail segments will see slower or unchanged sales growth, the New York-based trade group said.

Unity, which sells the results of its surveys to such retailers as Neiman Marcus Group Inc. and Tiffany & Co. (TIF), has been asking luxury shoppers questions since 2002.

Survey Questions

Respondents are asked to agree or disagree with such statements as: “Luxury is defined by the brand of the product, so if it isn’t a luxury brand it isn’t a luxury.” Or: “Once you experience luxury in your life, you never want to go back to the ordinary.”

The firm devised five personality groups based on income and spending patterns.

X-Fluents are the most highly indulgent, spending more, buying the most frequently and dedicated to maintaining a deluxe lifestyle. Aspirers like to buy and display brands.

“Butterflies” are on average are over 47, mostly female and enjoy luxury experiences such as travel. “Cocooners,” also over 47 on average, express their luxury identity by spending on their nests. “Temperate Pragmatists” — average age 45 — have a take-it-or-leave it attitude towardluxury goods and the lowest income of the five.

X-Fluent Incomes

X-Fluents laid out an average $253,960 on fashion accessories, cars, home furnishings, travel and dining last year, up almost a third from 2009. X-Fluents’ income averages $410,152 before taxes, and they are the youngest, or 42 on average, with a majority 40 or younger.

Some of the purchases they reported were paid for with financing and others by tapping net worth. The averages were pulled upward by the super-wealthy respondents.

The younger luxury consumers are, the more concerned they are with “bragging rights,” the Affluence Collaborative, a New York market research firm, wrote in a July research report.

Aspirers have an average age of 43.5 and income of $303,057, with a minimum of $100,000 to qualify, Unity says. They have not achieved the level of luxury to which they aspire and are the most materialistic, according to the firm.

After pulling back for the past two years, aspirational consumers have returned to the stores to sate their pent-up demand, says Milton Pedraza, chief executive officer of the Luxury Institute, a New York-based research firm.

Stock Options

Their wherewithal stems from job security, bonuses and stock options, Pedraza said. Many are clustered in financial services and Silicon Valley, removed from the economic challenges other Americans face.

“Right now people continue to want luxury,” Neiman Marcus Chairman Burton Tansky said in an interview.

The Dallas-based retailer has been actively courting younger, affluent customers, Wanda Gierhart, senior vice president, said in a Sept. 30 phone interview.

It is updating its contemporary fashion department — which sells such brands as Diane von Furstenberg and Alice + Olivia — to give it “a different edge” than the rest of the store, Gierhart said. Six months ago, Neiman Marcus for the first time started allowing sales associates in that department to wear denim to work.

The retailer shifted “a lot” of its advertising spending to digital ads this past year, so customers know they can shop at Neiman Marcus whenever and wherever they want to, Gierhart said. It has ramped up its social media efforts and modernized the aesthetics of its publications, she said.

‘Emerging Customer’

The “emerging customer” likes to mix fashions according to her own taste, Gierhart said, which differs from a more traditional head-to-toe look in European brands, she said.

A greater concentration of X-Fluents does not necessarily bode well for the industry long term, Danziger said.

Since the recession, many former luxury buyers have dropped out and once again view themselves as middle-class, Danziger said. While many of these had spent significantly less on luxury goods individually, they together had accounted for a lot of purchasing, she said.

“Where is the growth going to come from?” she asked.