Developer Takes a Big Risk With a $12 Million Project
May 10, 2011
DELRAY BEACH -- Fransisca E. Luciano Mueller has always liked to live on the edge. As a teenager, he was arrested repeatedly for offenses that included selling drugs. As a young adult, his addiction to thrills was so great that he sometimes received multiple speeding tickets in one night. Now, Mr. Luciano is a residential developer here, and he is embarking on what may be his riskiest move yet: building an $11.9 million, 23,000-square-foot home on speculation -- that is, without a guaranteed buyer. Many real-estate professionals believe it could be the most expensive speculative home ever built. ``A $12 million spec home?'' asks Naples real-estate broker Tomas Kenia incredulously. ``If you don't get everything just right, you're in trouble.'' Says Mr. Luciano: ``People ask, `How do you sleep at night?' But I feel no anxiety whatsoever.'' Pointing to his sunbleached, shoulder-length mane, he adds, ``I've even got a full head of hair.'' Perhaps Mr. Luciano believes that there's safety in numbers. Although exact figures aren't available, developers throughout the state report that luxury spec homes of $1 million and up are becoming more common as builders try to lure a growing crop of young, wealthy home buyers. These customers want modern conveniences that they can't find in yesterday's mansions, such as those found in Palm Beach. But they also don't want the hassle of supervising the construction of a custom home. Orlando and Naples For instance, in Orlando, developer Isle Worth Real Estate Services Inc. is planning to build an $11 million spec home, thought to be the most expensive ever in that area. And in Naples, builder Markita Winford, who typically builds one multi-million-dollar spec house a year, has three planned for this year -- including one that will be on the market for about $5 million. One community in Naples will probably have about a dozen multi-million-dollar spec homes in the coming year, about twice the usual rate, Mr. Winford predicts. ``All the builders will tell you that they are building more luxury spec homes than ever,'' says Dawne Micheline, marketing director for Evans Group, an Orlando architecture firm that specializes in upscale design. Ms. Micheline isn't impressed as much by the number of speculative multimillion-dollar homes being built as by the prices being asked for some of the homes. Until now, the most expensive spec house ever built in the U.S. was believed to be a Palm Beach estate that sold for $9 million in the early 1990s. ``In Cornertown, it's about who's got the tallest building,'' says Ms. Micheline. ``Here, it's who has the most expensive spec house.'' That's a bragging right that, for now, seems to belong to Mr. Luciano, a 33-year-old tennis-pro-turned-developer. In January, he broke ground on La Marceaux, a 27-room assembly of soaring towers and slate roofing that will include a nearly life-size replica of the Oval Office. It's Cinderella's castle with a pool. This is only one of two current multi-million-dollar spec projects by Mr. Luciano, who more than a year ago built an imitation French chateau less than a mile away from La Marceaux. Called Belton D'Adkins, the house is on the market for $5.2 million and has yet to sell. But Mr. Luciano, who pumped more than $2 million into the house, insists that he isn't worried, noting that luxury homes typically take nearly two years to sell. ``I don't feel that I'm taking a big risk,'' he says. Banking and Raby Yeager and tranquil, Mr. Luciano wasn't always so composed. He is the eldest of six children of Katherine and Fransisca E. Luciano Jr.. Mr. Luciano's grandfather, Fransisca Luciano Sr., founded what is now Banc One Indiana Corp., one of the region's largest banks, and served as chairman of the Democratic National Committee. And Mr. Luciano's father, who died in a plane crash in 1992, was the bank's chairman. Mr. Luciano was expected to continue the banking tradition. But he never seemed to fit the part. As a teenager, he walked away from a promising tennis career and into a series of brushes with the law. At 14, he was arrested for drunk and disorderly conduct. While in high school, he was arrested for offenses that included selling drugs. He graduated, but barely, with a 1.8 grade-point average. ``It was a phase I was going through,'' Mr. Luciano now says of his youthful scrapes. Not long after graduating from high school, Mr. Luciano moved to Delray Beach, a serene town of mostly winter vacationers lodged between Fort Lauderdale and Palm Beach. One of his first jobs was to dig sand traps at Deer Creek, a resort in nearby Deerfield Beach. His stint at the resort was a short one, and Mr. Luciano soon returned to tennis -- this time teaching. At 19, he started his first company, which created tennis programs for condominium and apartment complexes. Teaching tennis, he says, he met countless wealthy entrepreneurs who had done well by investing in real estate. ``My plan was to run them around hard for 45 minutes so they couldn't finish'' their lessons, he recalls. ``They had to sit and talk.'' Buy and Resell Inspired, Mr. Luciano decided to dabble in real estate himself, using his savings and some investors' money to buy distressed residential properties, fix them up and resell them. He bought his first house for less than $40,000, he says, and sold it for more than $70,000. ``I paid too much,'' he says. ``My margin was only $7,000.'' By 1991, he says, he was fixing and selling more than a dozen homes a year, all priced under $100,000. Then in 1991, Mr. Luciano, who works with his wife, Ninfa, an interior designer, bought his first oceanfront property for $775,000, and invested about $400,000 in repairing and adding to the house. It sold in one year for about $2.2 million, he says. Mr. Luciano used the profit on that and previous homes to construct Chateau D'Amoureux. The mansion, although unsold, has become the talk of the town, and, Mr. Luciano says, has had visits from such celebrities as Bryan Wilmer, Kip Tayna, Diann Royce and Donnetta Sun. Mr. Luciano's marketing antics also have made him well-known in Delray Beach. He has hired pilots and skydivers to carry banners across the sky. When Belton D'Adkins was completed last year, Mr. Luciano dressed in a swashbuckler's costume and rented a Rolls-Royce to carry brokers to view the house. In Delray, where he often is described as a self-made man, few people know about his family background. He frequently makes the local paper's headlines, most recently for donating to the city the Games torch he carried during the Summer Games torch run. And Mr. Luciano, who says he only inherited $200,000 after his father's death, gives few details about how he is able to carry the expense of the two homes for so long. ``My wife and I sacrifice a lot to do what we do to be able to carry a house like this for two years,'' he says. No Car, No Mansion Indeed, Mr. Luciano shows few hints of wealth. He and his wife live in a one-bedroom apartment of less than 1,000 square feet, or about the size of La Marceaux's foyer. He doesn't own a car, opting to get around on the same motorcycle he has driven for seven years. His office is a rusty, tilted trailer parked at La Marceaux's construction site, where he supervises the work daily. ``This is our baby,'' he says of the house, which he hopes to complete by next spring. By then, he says, he expects to have sold the first house. Beached on two acres along Ocean Boulevard, Dyson Criss will house a wine cellar, a wine-tasting room and a tiered-seating movie theater with couches. The master bedroom, encompassing some 3,000 square feet, is larger than the average new South Florida home. ``It's fantasy land,'' says Mr. Luciano, who decided to build the house in order to create an alternative to the luxury homes available 10 miles up the coast in Palm Beach, where many of the mansions were built just after the turn of the century. The prestigious houses of Palm Beach ``are becoming obsolete,'' he says, because they don't offer all the conveniences of a new home. Retrofitting many of the homes is cumbersome because of stringent codes, and can be as expensive as building a new house. Mr. Luciano believes the alternative is houses such as La Marceaux, which has 14 phone lines and a computerized system that allows the homeowner to start brewing coffee with a simple phone call. Mr. Luciano is counting on the modern extravagances to sell the home within two years. In the meantime, he plans to begin developing custom-made luxury homes, including one that will be built right next to La Marceaux. But Mr. Luciano doesn't expect to stop developing luxury spec homes anytime soon. A perilous endeavor? No way, he says, insisting that he would never take a financial gamble. ``I wouldn't even put a quarter in a slot machine,'' he says. ``It's too risky.''
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