Change Is a Given
- Sep 04, 2008
High-profile developer Jorge Pérez, founder, chairman and CEO of the Related Group of Florida, earned a master’s degree in urban planning at the University of Michigan. While known for eye-catching luxury condominium towers, Pérez started his Miami real estate career working on affordable housing projects. His informative book, “Powerhouse Principles, the Billionaire Blueprint for Real Estate Success,” was published by Celebra, a division of the Penguin Group, in May and features a foreword by another famous developer, Donald Trump. The hard-working developer emphasizes the importance of having passion for what you do and shares his expertise on everything from securing financing to negotiating strategies to picking property, selling it and creating a “buzz.”Pérez is the only American developer to have received the Icon in Real Estate Award of Excellence from the international real estate expo, MIPIM. In recognition of his significant accomplishments in transforming south Florida’s real estate market, The University of Miami inaugurated the Jorge M. Perez Architecture Center in 2004.Born in Argentina in 1950 to Cuban-exile parents, Pérez has returned to his Latin American roots with expansive real estate projects on tap or planned for Mexico, Panama, Colombia, Uruguay, Argentina and the Bahamas. These projects may incorporate five-star hotels or oceanfront resorts, as well as signature residential projects. For example, at press time, The Related Group of Florida announced ambitious plans to build a luxury hotel and condominium complex in Miami with the renowned Orient-Express hotel company. This $150 million South Beach project will contain 100 hotel rooms and 28 condos priced from $2 million. It is expected to open in three years.Pérez is often quoted by the national mainstream media for his insights on the challenging real estate market. To get his views on the current state of the multifamily market, MHN Managing Editor Teresa O’Dea Hein posed the following questions.MHN: What lesson(s) can a multifamily developer take from your recently published book? The entire book offers lessons gained through my many successes and a few challenges that will be especially interesting to multifamily developers based on my experience in the sector.In the current market, multifamily developers could be best served by remembering a key principle of change— “Change is a given.” As the market ebbs and flows, you can either take a breather—because you think, “I worked really hard making all these condos while the market was going up; now, let me take a breather until the market comes back. Or, you can see the market slowing down and you can move into something new. Rather than sitting there and watching your pond dry up, you can find another ocean to swim in. If you do nothing, you die. So my lesson remains the same—pick the right location, conduct due diligence and choose the right partner.MHN: As mentioned in his endorsement of your book, what did you teach Donald Trump about real estate? All great teams succeed because different players bring different skills that complement each other. Trump and I are established players in our respective arenas but we have mutual respect for our commitment to delivering the best buildings with the finest amenities and extending our brands throughout the world. MHN: Where do you think the next condominium hot spots will be around the world? I am currently developing luxury-branded residences and hotels in international markets including Mexico, Panama, Colombia, Argentina, Uruguay and the Caribbean. Every day my teams are conducting due diligence on areas where I see future opportunities. MHN: You recently created a fund to buy distressed properties. Would those be just in Miami, or just in south Florida, or anywhere?Currently, the Fund is seeking acquisitions in markets across the southeast U.S. MHN: Given the state of the Florida marketplace, is it daring to be starting more condominium projects there now?Every market is cyclical and we are at a point in time in the market—it’s a fact that there is only so much waterfront land—so it is irrefutable that the market will turn around.In the high-end market, we continue to see unprecedented demand. For example, Apogee, South of Fifth on Miami Beach, on a per-unit basis of only 67 units, has commanded the highest sales price in Miami and it is completely 100 percent closed.MHN: What is your general assessment of the current condo markets in Miami, Fort Lauderdale and West Palm Beach? When do you think conditions will turn around in each?I think the market will return from the lull with the continued increase of South American, European and Canadian buyers and you cannot discount there is still a steady line of activity from the domestic buyer.MHN: Since you started your career with affordable projects, do you have any plans to do more of that type of building now?We continue to stay nimble and adapt to the market, so nothing is off the table. MHN: How are you reaching out to offshore buyers—what types of marketing efforts do they respond to in particular?We have engaged the best in-market sales and marketing professionals, so we recognize the value of combining our expertise with insights from the local markets. The buyer is extremely important, so we are engaging the existing network of Related Group clients—a good number of whom are international buyers—and reaching out to their families, friends and business associates. This is an approach which has had wonderfully successful returns.MHN: How do you think Florida multifamily developments will change in the next five years? The smart players will survive the down market and realize future gains during the turnaround; maybe fewer will proceed at a more methodical pace with a return to business fundamentals—it’s all about measured risk.