As he prepares to launch his downtown property Icon Brickell, the Related Group’s majority owner remembers his vivid past-and looks toward a radiant future in Miami.
On a prime five acres in downtown Miami, adjacent to the Miami Circle and Brickell Park, a large banner announces, “Icon Brickell.” Those two words cannot convey the enormity of what will happen there in the next few years. By 2008, three ultramodern glass towers, ranging from 52 to 60 stories, will be built. A veritable small town will have 1,800 residences, with homes fetching pre-construction prices starting at $400,000 and running to several million for sky lofts and bayfront lanai- style townhouses. Leading Miami architectural firm Arquitectonica, in conjunction with the Parisian-based arbiter of cool Philippe Starck, have concocted a development that will transform downtown Miami, the skyline and how people view luxury living.
Icon Brickell is one of the largest projects under way in Miami’s greatest-ever building boom. In a town where 7,000 condominiums were built during the 1990s, 62,000 luxury condos are now on the drawing board. If they all get completed before the much talked- about bursting of the real-estate bubble, these projects will redefine not only downtown Miami, but also largely deserted or blighted neighborhoods running along Biscayne Boulevard into midtown and the upper east side, and even Wynwood.
Standing across the street from the site of the future Icon Brickell is 55-year-old Jorge Perez, the son of Cuban parents, raised in Argentina and Colombia. The majority owner of The Related Group, the largest force behind the South Florida boom, Perez is an extremely likable entrepreneur. Sometimes described by friends as “an incidental billionaire,” he has created an enormous personal fortune by doing simply what he loves-real-estate development. A rags-to-riches success story, Perez is a poster boy for capitalism at its best.
But another man also stares at the empty parcel of land. He too is 55 and the son of Cubans, but his background was not as an enthusiastic booster of capitalism. Instead, he was the head of his college’s Students for a Democratic Society (SDS), a radical 1960s organization at the forefront of the anti-Vietnam War movement. Most people would expect this former SDS leader to be against the unbridled development that gentrifies neighborhoods into ones that mostly only the affluent can afford.
Of course, the two men are the same. So how did the young student who embraced a leftist agenda for a post-Vietnam America end up as Miami’s condo king?
The path to his success is not as strange as it might first seem. And often in his career, the roots of his social activism have been evident. But instead of taking to the streets to protest the system, he has used the power of money and the force of his personality for change.
We meet Perez at La Piaggia, a Saint-Tropez- styled semiprivate beach club at the base of one of his buildings, the luxe Murano at Portofino in South Beach. Perez meets one of his partners, Tom Daly, and his long-time attorney, Matt Gorson, a senior partner at one of the nation’s largest law firms, Miami-based Greenberg Traurig, at La Piaggia every Saturday for a business lunch. Although they have a party to attend that night-a birthday bash at fellow real-estate developer Thomas Kramer’s Star Island mansion, complete with a million-dollar fireworks display-what is supposed to be a half-hour interview turns into hours of leisurely conversation and a rare personal glimpse into the man who is often thought of only as a developer of luxury high-rises.
Perez, dressed in off-white linen shorts and an open-collared short-sleeve shirt, is at once charming and approachable. He is consistently enthusiastic, whether talking about one of his projects, some art he just acquired, or even a pizza he found the night before. “Awesome” is one of his favorite words.
“Real estate is his passion,” says Gorson. “For Jorge, he has hit the lotto.”
“You either love real estate or you don’t make it in this business,” says Perez. “I’ve always said that real estate is half art and half science. The science part you can learn, but the art you’re born with.”
The traditional profiles done about Perez say he came to the U.S. to study urban planning. “That is a good story,” he confides, “but I was actually just following a girlfriend from Colombia to America. I went’ to Miami Dade Community College because she was at a nearby school. And when she moved north, I went to Long Island University.”
When he broke up with her, he considered returning to Colombia. He had written and produced a play there while in high school, which was well received and presented in the national theatre. (“I don’t write anymore,” he says somewhat ruefully. “In my business it is all sound bites.”)
“Instead of going back, I decided to travel.” He trekked through Europe “and fell in love with cities, with the architecture of Paris and London. It set a fire in me.”
He returned to America and spent a semester at Berkeley. Still studying economics and philosophy, and involved in campus politics, he went to graduate school at_ the University of Michigan. His new pursuit, however, was a master’s degree in urban planning.
He ended up in Miami because of another girl, this time-his first wife, Debbie, whom he married on graduation day. Their honeymoon was in Key West. “And when we returned,” says Perez, “I had an interview with the guru of urban planning, Anthony Downs, and he wanted me to become his assistant in Chicago. I was celebrating!” But when he told Debbie, she was crestfallen. Having grown up Michigan, she did not want to move to Chicago.
With his parents in Miami, the Perezes instead moved to Florida. The graduate-school dean helped Jorge land a job in Miami’s Planning Department.”
Two years later, in 1978, he left for a private company that did market studies for real-estate projects. “I knew nothing about market research when I got the job,” he admits, “but I told them I could do it.” With the intensity typical of his career, Perez gathered every public document from the company and “spent two months, reading 24 hours a day to figure out how to do market surveys. When I finally started, they thought I was brilliant.”
The following year, 1979, Perez was again itching for change. His social conscience dovetailed with his real-estate interests in several projects for affordable housing. One of his competitors was New York developer Steve Ross. “Steve was single,” Perez recalls. “When he came to Miami, I set him up with some dates, and at that time both our fathers were dying of cancer. We bonded.”
Late that year they founded The Related Group. With the same force that drove him through grad school and mastering market surveys, he began building government-subsidized rentals. Eventually, Perez graduated to market-rate garden apartments and within five years was Florida’s biggest apartment builder.
At the time Perez was becoming the apartment king, others were making reputations in the luxury-condo market. German-born Kramer came to South Beach and bought 35 acres south of Fifth Street. (“He had ‘OPM’ to play with,” Perez told us. “‘Other people’s money.’ “) Kramer planned to build the neighborhood’s first tower, Portofino. His partner was Daly, who was then riding a wave of success thanks largely to his Aventura condominium community, Mystic Pointe.
But by 1995, Kramer and Daly had financial difficulties as costs mushroomed. To the rescue came Perez. With his unblemished business record, he locked up a $53 million construction loan, and the 228-unit Portofino was built. And when Kramer ended up in litigation tying up the rest of his land, attorney Gorson, who represented both men, arranged for Perez to buy it.
“Kramer had paid $9 million for that land,” recalls Gorson.
“I paid him $52 million,” says Perez. Today it would be worth about $580 million.
Perez was not certain then that condos were the right way to go. In May 1997 he told The Miami Herald that apartments were a “much safer business than condominiums.” “It’s still true,” he says. “Condos have a much greater risk, but with the same amount of work, you can make five to 10 times as much on condos as on rentals.”
First came Murano at Portofino in 1999 (its pre- construction prices of $300 a square foot set a record-”If you had told me then that the average price in South Beach would be $1,000 a square foot,” Perez told us, “I would have said you were smoking too much”), then Murano Grande and Icon South Beach, and now, under construction, the ultraluxe Apogee, where apartments start at $4 million.
In between, Perez has been busy doing what he promised himself when he launched his company: “Most developers come from business backgrounds where profitability is the only goal. My goal was always to change the urban environment.”
Five years ago, Perez built the $550 million ($80 million of which was taxpayer money) City- Place, an enormous project that overnight revitalized West Palm Beach’s dormant downtown. Covering 11 city blocks, with hundreds of condos, 80 upscale stores, and ten restaurants, CityPlace was a critical and financial success. “It was a model for city living,” says Perez.
Perez had CityPlace in mind when he combined work, play and living in his downtown Miami project One Miami. Within sight of Icon Brickell, One Miami will add 900,000 square feet of high-rise housing for professionals now commuting from the suburbs.
After driving through the downtown area a couple of years ago and finding it mostly deserted after dark, Perez became convinced that the city’s urban core needed transformation into a pedestrian neighborhood. “They say people won’t walk in Miami, that it is too hot,” says Perez, “but we intend to prove them wrong. There is no great city in the world that does not have a 24-hour downtown district. Miami has to change. It will.”
Besides Icon Brickell and One Miami, Perez has more than 50 other major projects under way, more than at any time in Related’s history. Included are major complexes in Fort Myers (again remaking the downtown), and even a 522-unit Icon in Las Vegas, east of a Ross Dress for Less store.
“The lack of being satisfied drives me,” he says softly. I do have a lot of moments of happiness-. They come from my wife [he married a nurse practitioner, Darlene, four years ago] and my children. And I have great happiness with each project, but then I want to go on to the next one. I am never satisfied.”
But he has moderated some of his early career behavior. Gone are the self- admitted temper tantrums, replaced instead by notepads filled with “to do’ lists for colleagues. He is better at accepting constructive criticism.
“Yes, I am a workaholic,” he admits, “but now I recognize other important things in my life.” He used to stay at the office until 10 p.m. Now he leaves for home by 5:45. Between 6 and 7 he either plays tennis or works out at his personal gym.
“I am very disciplined about my time now,” he says. “I didn’t want another ruined marriage. When I finish at 7, I put on the Miami Heat, or do a few hours of work with my wife and child with me. It’s not all about work any longer!’ Darlene also visits job sites with Perez, sharing his enthusiasm for the business. That helps their relationship flourish.
While Perez might have a better balance, that is not to suggest he is any less aggressive in staying on top of Florida real estate. Related prides itself on getting projects done at 10 to 15 percent less than the costs of other developers and then rapidly selling out by pricing preconstruction units slightly under the going market rates.
“We would rather sell things fast at a fair value for our buyers and a decent profit for us,” says Perez, “than try to eke out the last dollar of profit on each project. We want to move product. Our goal is to sell quickly – get in and get out.”
He fully expects that at some time-he is too smart to hazard a guess when-real estate will deflate. “It is extremely cyclical,” he notes. “A lot of developers have forgotten that. There will be a correction. It is simply impossible to sustain the supply coming onto the market. South Florida has led in growth and will be the first to go down. Once it starts, the herd mentality will take control like when stocks fell in 2000.”
He is preparing for the inevitable downturn by storing away lots of cash. Related did $500 million in business in 2000. It doubled to $1 billion by 2003 and doubled again in 2004 to $2 billion. Perez says his profit margins are between 20 and 30 percent. He believes he is well situated to weather any slump and has tried hard to limit the number of speculators in his projects, requiring strict approval for anyone buying more than one unit. “And I can turn any project under development into rentals or office suites if I have to. I have deep pockets, but June 2005 other developers might not be so lucky.”
Perez also has increasingly pursued other passions. He is a major contributor to the Democratic Party, so it did not surprise many when Bill Clinton offered him his choice of an ambassadorship to either his native Argentina or his childhood home Colombia. He turned it down in order not to lose the time with his children. And his love of art has produced not only a great personal collection (Monet is his favorite), but also cast him as one of ton appointed him to the National Endowment for the Arts, and Perez recently gave $5 million to the Miami Art Museum, while agreeing to help raise much of the still needed $175 million to build a new structure in Bicentennial Park.
“It’s part of my passion because I want this city, Miami, to be even greater than it is,” he says enthusiastically. “Miami has come of age. Ten years ago, people came here for the beach. Now they are coming for the energy, the restaurants, the museums. It is becoming such a cool town. It excites and feeds me. No city in America has the same potential.”
Perez may be famous, and he can sit comfortably with U.S. Presidents, foreign dignitaries and the gatekeepers of South Florida high society. But he has not forgotten his simple roots. Recently he went for a sandwich at a Publix deli counter near Related’s headquarters. A few older Cuban women stared at him. One walked up.
“Are you Jorge Perez?” she asked.
Suddenly all her friends rushed over and in a torrent of Spanish told him how proud he had made them to be Cubans. Their excitement was real, the same as if young music fans had a chance encounter with their favorite rock star. To these Cuban emigrants, Perez is a legitimate hero, a singular success in America.
Perez, always the gentlemen, asked them about what they did and their own lives before thanking them and returning to the deli line. He was holding ticket number 42, and they were only serving 21. I’ll never get back to the office, he thought.
Then a young Cuban deli worker furtively beckoned him toward her with a flick of a finger. She took his ticket and simply asked for his order.
The man who can get President Clinton to take his call anytime had just received a much better vindication of who he is and what he had accomplished. The simple Cuban women who clamored around him, the worker who let him jump the deli line-these are the people who matter.
“I can’t tell you how important that day was for me,” he says. “The bigger you get, the more people bullshit you. People always tell you you’re great. I can get an award from an organization about the charity I do, or my businesses, but that day at Publix was special. Those are the people I want to relate to. I never want to lose that.”
He leans back and looks out at the water and the parade of pretty girls sunbathing nearby.
“Life is excellent,” he says, as much to himself
as to us.