In early April, one of Miami’s iconic and most recognisable luxury hotels disappeared. The 23-storey five-star Mandarin Oriental on Brickell Key, long a flagship in the brand’s U.S. portfolio, was demolished in a controlled blast.
You would be forgiven to think this was sad news. However, it’s the opposite, as the demolition paves the way for a development all about the new belle of the ball: branded residences. Rising out of the rubble will be a two-tower scheme combining a rebuilt Mandarin Oriental hotel with hundreds of branded residences.
And Miami is not an isolated case. In Dallas, the historic Hôtel St. Germain is set to be replaced with The Montclaire Hotel & Residences, a $250 million mixed-use tower incorporating hotel rooms, residences, spa and dining.
Together, these projects amongst others, point to a trend of prime hotel assets being rethought in terms of what best use looks like…and branded residences are at the centre of that recalibration.
The redevelopment of the Mandarin Oriental Miami is perhaps the clearest example of where the market is heading. Developed by Swire Properties, the new Residences at Mandarin Oriental, Miami will offer 228 residences in the 66-storey South Tower, with the 34-storey North Tower will be home to what is planned to be Mandarin Oriental’s new North America flagship hotel with 121 rooms as well as additional condo units.
Scheduled for completion in 2030, early sales are already showing strong demand. More than half of the South Tower units have already been sold, generating $1.2 billion in sales, with two penthouses selling for nearly $50 million each.
The implication is clear. Historically, luxury hotels were considered the highest and best use of prime sites. That viewpoint is now being challenged, with branded residences securing immediate capital while luxury hotels generate long-term cashflow.
Hôtel St. Germain in Dallas reinforces this trend, demonstrating that the model is no longer limited to global gateway cities and that even smaller-scale luxury assets are being re-evaluated through a branded resi lens. The planned redevelopment of Hôtel St. Germain will replace a seven-suite boutique property with a 23-storey tower comprising 65 hotel rooms and suites, 12 to 15 residences, a spa, restaurants and event space.
In both cases, the logic is consistent. At both Hotel St Germain and Mandarin Brickell Key, the plan is to increase density, introduce residential inventory for early monetisation and then layer in hotel services to enhance value. In other words, secure cash through with upfront residential sales while using the hotel as a brand anchor and amenity layer.
The new normal
As Marriott International CEO Anthony Capuano has noted publicly, the economics of new luxury developments increasingly depend on…. “It's really hard, especially domestically, to get a luxury deal to pencil without at least some small residential component,” he told Hospitality Investor.
Across the industry, this is changing how deals are structured. Developers are using residential pre-sales to de-risk projects early and major players including Accor, Hilton, and Four Seasons Hotels and Resorts are all scaling their residential pipelines, with Accor’s Sébastien Bazin being particularly explicit about the shift, arguing that the group is “moving away from being just hotel minded” as it expands into broader lifestyle and residential offerings.
Demand is also playing a role in the outsized proliferation of branded residences. High net worth and ultra-high-net-worth buyers increasingly want turnkey, serviced living environments that offer flexibility between short stays and long-term use.
All of these factors show us moving towards an environment where increasingly, the hotel component will act partially as a support for the residential element, providing brand legitimacy and enhancing service delivery. The Mandarin Oriental redevelopment in Miami illustrates this perfectly: the brand remains central but the scale and the economics of the project are led by residences.
Moving forward, we may see more prime assets face redevelopment or partial conversion while new developments will be increasingly structured as mixed use hotel + residences schemes.