Driving down Miami's Brickell Avenue in his dark gray Mercedes-Benz S500 one recent morning, developer Jorge Perez did not like what he saw. Surveying a stark sidewalk edging bland office lobbies -- and even worse, a parking garage entrance -- Perez pronounced the avenue ``totally pedestrian unfriendly.''
Then Perez declared he will change that.
The 55-year-old high-rise condominium developer, more than anyone, is in a position to do it with seven towers planned for construction along Brickell Avenue, the boulevard at the heart of the city's financial district. His plan: erect new towers with ground-floor restaurants and shops and spruce up sidewalks with shade trees and benches.
The Brickell towers are just a fraction of the staggering number of Perez projects that, if all built, will put his imprint on the rapidly changing face of South Florida's cities, beachscapes and skyline.
At a time when even the most aggressive builders rarely have more than two or three projects going at once, Perez -- chairman and chief executive of Miami-based The Related Group of Florida -- has more than 40 condo towers in the works across South Florida. Projects in Fort Myers and Las Vegas boost that number to nearly 50, and Perez has plans for several more condo towers that have yet to be announced.
''We are in territory we have never seen before with Jorge,'' said Ezra Katz, chairman and chief executive of Coconut Grove-based real estate investment firm Aztec Group. ``There is no precedent anywhere in the 34 years I have been in real estate. I have never seen anything of this magnitude or production.''
In the last decade Perez, who got his start developing government-subsidized rental apartments in Miami, has become Florida's biggest condo developer with 14 completed buildings to his credit.
But now, in a move fraught with risk, Perez is making his biggest bet yet, throwing himself full force into a South Florida real estate market so frenzied some compare it to the dot.com boom of the late 1990s.
''It is so hard to even build one project, to get it financed and built efficiently,'' said developer Gregg Covin, who is building the Biscayne Boulevard high-rise Ten Museum Park and renovating South Beach's The Angler's Hotel. ``He is just an unbelievable force doing more than 40 buildings at the same time.''
If anyone can pull it off, it may be Perez. But even he acknowledges a downturn is coming in the superheated condo market.
His financial might, he maintains, will enable him to weather any market correction.
Unlike most South Florida developers of today, Perez has more than 25 years of experience. And he has demonstrated a knack for spotting and aggressively pursuing under-utilized markets before anyone else.
Perez was part of the development group that built City Place, the downtown mixed-use revitalization project that transformed West Palm Beach. Similarly, he built four high-rise towers in South Pointe, the once blighted neighborhood at the southern tip of Miami Beach that has morphed into some of the priciest real estate in South Florida.
CAUTIOUS APPROACH
''He is very careful with his money,'' said Matthew B. Gorson, a Greenberg Traurig lawyer who is Perez's attorney. ``He watches things, that is why he has done so well. Jorge is extremely disciplined.''
But Perez's huge bet on the condo market comes with equally enormous risks.
Though Florida's housing market, and the condo sector in particular, has been red hot, many observers suspect a downturn is looming.
The condo market is filled with speculators and the sheer number of condos going up or planned have led many to conclude it's all too much for even South Florida's booming market to digest.
Within the city of Miami, for instance, roughly 7,000 units were built in the last 10 years. Now some 62,000 units are in various phases of development.
In March, Credit Suisse First Boston downgraded the stock of Bonita Springs-based WCI Communities, one of the few publicly traded high-rise condo developers, due to concerns over ``investor speculation in high-rise real estate development, specifically in Florida.''
Similarly, Raymond James issued a report stating its belief that investors and speculators accounted for as much as 85 percent of condo sales in downtown Miami.
Perez himself predicts a correction, but maintains builders with staying power will see values rise to even higher levels longer term.
CYCLICAL INDUSTRY
''Real estate is extremely cyclical,'' Perez said at a National Association of Home Builders conference two weeks ago.
''Talking to fellow developers, you sometimes feel that has been forgotten,'' he said. ``But there will be a correction in the market... it is impossible to sustain the supply announced.''
Perez said he has socked away loads of cash and carefully selected properties that are either near the water or in a city center. Such sites, he contends, will not dramatically lose value in a downturn. And if need be, he said, he can rent rather than sell units until prices rise to new heights.
While Jeff Morr, chief executive of the Miami Beach-based brokerage Majestic Properties, thinks Perez will continue to succeed despite a downturn, he also wonders about the impact of Related's plans on the market.
''I think he is going overboard in the number of units he is bringing to market on an annual basis,'' said Morr. ``He has the potential of slowing down the market because of oversupply. He should leave a little room for other developers.''
CORAL WAY OFFICES
Headquartered in drab offices on Miami's Coral Way that contrast with many of the glitzy projects it develops, The Related Group of Florida is a privately-held, 500-employee company.
Perez owns the vast majority of Related while his long-time business partner, Stephen M. Ross, chairman and chief executive of New York City-based Related Companies, owns a small share.
The company's fortunes have rocketed skyward as it has aggressively built new condos. In 2000 The Related Group of Florida's revenue stood at $506 million. By 2003, annual revenue more than doubled to $1.083 billion. In 2004, it doubled again, coming in at $2.125 billion.
Condo sales, which account for 90 percent of the firm's revenue, are expected to total $6 billion for the years 2004, 2005, and 2006, said Perez. The company generally has a 20 to 30 percent profit margin on condo sales.
While refusing to disclose the size of his personal fortune, Perez recently said at a homebuilder conference that he has made ``unconscionable sums of money.''
The Related Group of Florida's success is built on its record, and reputation among lenders and buyers, for completing what it starts and quickly bringing its projects to fruition.
MEETING DEADLINES
''He will decide on a building, stick to the budget, and deliver it on time,'' said Carlos Migoya, 54, Wachovia bank president for Miami-Dade and Monroe counties. ``When you buy a unit from him and he says it will be done in 2006, he will deliver it in 2006.''
Now the slender Cuban-American developer -- known for his energy, art collection, liberal politics, affinity for fine food and tennis, and periodic tempestuous outbursts -- has set a dizzying pace.
Five of his condo towers are slated to go up in downtown Miami, an area with few residential buildings that is a virtual ghost town at night. Following Perez's decision to build there, some 20 downtown towers have been proposed by other developers.
HansenHomesAventura.com
more...FSBO Real EstateOriginally Posted on 5/23/2005 8:15:17 AMContent source: http://www.hansenhomesaventura.com/blogmiamirealestate/archives/2005/04/builders_condo.html
