“Miami is not going to be buried forever.” You may disagree, but Jorge Pérez, Chairman and CEO of The Related Group –South Florida’s premiere real estate firm–has already dug himself out of the real estate hole.
If you owned a property in South Florida, chances are its value plummeted two years ago. Today South Florida’s housing market is on the up-and-up partly thanks to developers who’ve found success with international clientele, like Jorge Pérez.
“It was the toughest two years of my life,” says Pérez about the housing bust. Last week he broke ground on the 42-story, 382-unit 1100 Millecento Residences. “But what goes down must come up,” he says.
Pérez has been called the “Condo King of South Florida,” by the Wall Street Journal. TIME named him one of the top 25 most influential Hispanics in the U.S. And he just donated over $40 million in cash and Latin American art to the Miami Art Museum, which was renamed the Jorge M. Pérez Art Museum of Miami-Dade County.
“Mr. Pérez, he’s a visionary,” says Natascha Teller, President of the Miami Board of Realtors and member of the National Association of Hispanic Real Estate Professionals. ”He invested long before anyone knew Miami would become an international hub.”
He got his start as an urban planner for Miami. Growing up in Argentina and Colombia, Pérez never dreamt of a career in real estate. “I thought of myself as a writer, a college professor, a real do-gooder,” he says. His master’s thesis at the University of Michigan was about rural migration to cities and improving overcrowded neighborhoods for low-income families. And that’s when he caught the development bug.
Pérez made a connection with Stephen Ross and started The Related Group in 1979. “I just wanted to build great, affordable housing,” Pérez says of Related’s launch and his need for creative design. “I realized I could have social purpose and make money at the same time,” he says, though money was always secondary for him.
Pérez made the Forbes list of 400 Richest Americans from 2006 to 2008. He was knocked off the list in 2009, when things went sour for South Florida real estate. But if it’s any indication of a comeback – for Pérez and Miami real estate – he was back on the Forbes’ 400 in 2012.
“Hopefully we learned our lesson. Hopefully it makes us better,” says Pérez of the housing crisis, which he admits he saw coming. “Did I see the crisis? Yes. Did I see it to be as deep and pronounced as it was? No.”
Just as the recession hit, The Related Group was transforming Miami into an upscale international metropolis with four luxury condominiums in development. In 2007, they had reported sales of more than $1.5 billion. By 2010, Related was stuck with more than $1.5 billion in debt.
“I build seven-story high-rises. When you’re on the 10th floor and you’ve got two years of construction left to go, you can’t just stop,” says Pérez.
Instead they hunkered down, which he admits wasn’t easy. They were transparent about their problems, flexible on paying back at least 80 lenders, never had a lawsuit and never declared bankruptcy, according to Pérez.
Many South Florida neighborhoods looked like ghost towns when families were forced to leave. As recently as August, South Florida’s Case-Shiller real estate index had increased, showing a five percent gain in eight months. That was the strongest gain since December 2006 and it made South Florida second in the housing rebound, only behind Phoenix, AZ.
“[South Florida] has rebounded faster than anyone anticipated. We thought it would take a few more years, but the international market has really helped,” says Teller. South Florida has ways to go – values are off 48 percent from peak levels in 2006 – it’s bouncing back, especially in Miami. Thirty percent of the market in South Florida is international with clients from Venezuela, Colombia, Argentina, Brazil, Mexico and even Canada and France taking advantage of low prices. Ninety percent of those international clients are paying for their properties in cash, says Teller.
According to the Miami Herald, as many as 55 new condo projects have been proposed for development since last month. That’s more than 10,000 new units for the coastal South Florida market. “It’s not just the beach areas or very sexy condo market, either,” adds Teller. “It’s also our single family market.” With demand on the rise, more condos go up.
Pérez isn’t getting ahead of himself; not after the crisis cost him billions. “The lesson was to be a lot more conservative,” he says. Despite as many as 10 projects in the works for Related, the crash left Pérez humble and wanting to get back to his “do-gooder” nature. That includes Related’s renovation of a dozen affordable housing units for seniors.
“I’m really lucky. So I have an obligation to give back,” Pérez says, speaking specifically about his donation to the Miami museum after the recession created a 70 percent decrease in donations to the arts. For Pérez, who also signed the Gates-Buffett pledge to donate half his wealth, giving money to the arts is meaningful. “The art museum is dear to me. And the collection keeps me connected to my Latin roots,” he adds.
Pérez’s Hispanic heritage and being a role model for other young Hispanics is a point of pride for him. But his Hispanic roots don’t define him, his drive does. Pérez wants to be more than just his heritage; he wants to be top-dog. “I’m not the best Hispanic developer,” he says, “I’m the best developer. Period.”