Since a gloomy forecast at the nadir of the condominium bust, Miami’s real estate fortunes have turned around dramatically, so much so that the city is seeing a rash of new ground-up condo projects. At the forefront is Related CEO Jorge Perez, who in one day — yesterday — launched two new projects — Apogee Beach in Hollywood and the My Brickell development in the heart of downtown Miami For the latter, Perez is aiming at undercutting the surrounding projects in Brickell with a sub-$300-per-square-foot price tag, hoping that a high-tech Arquitectonica (and Karim Rashid) project, along with European and South American demand, will prove the right move. The Real Deal talked to Perez about My Brickell, how Latin America saved Miami and the potential impact of casino gambling on Miami.
Please talk about the My Brickell project.
This project is very special to me, because it is the first job of the new Miami. We’ve gone through three or four years of no new construction, a debacle in the economy and in the housing industry, and Miami has proven to be highly resilient. In another year, we’ll have almost no development inventory left. The key is how you price that product. Miami is still perceived as an area where you can get a very, very good deal. What we’re doing [with My Brickell] is pricing this building below the level of the distressed buildings that are still being sold. For example, Icon Brickell is at $400 a square foot, and 500 [Brickell] is at $300 per square foot. We’re going to be next door to them starting at $295 on average. So it’s a very good economic proposition — and we’re not skimping on any of the finishes.
What’s going to be the challenge of coming in at that price point?
I don’t think we have a challenge. I think the project will be accepted really, really well, so much so that we are not waiting for financing or waiting for anything. This product will start when it is slated to start, and construction will start very soon [likely early 2012]. We have no concerns economically on the outcome of the project. I think, because of the land price and the construction, we are such a good market that if I only were to sell 50 percent of the job [presale], I would not be concerned whatsoever on the balance.
Has the impact of Latin American buyers, led by Brazil, allowed for this kind of development to happen?
I think the Brazilian market has been very important in making the development happen. The other Latin American countries are more than 50 percent [of the market] combined, but Brazil is right now the most important of all the countries.
For this project, you’re sending brokers, information and marketing teams down to Latin America. What’s motivating that?
You know, what’s saved Miami the last few years has been Latin America. Miami is a city that, at the height of the condominium boom, was selling condominiums at almost twice the price of most Latin American countries. It is the inverse today. If you go to Rio, where I just came back from, and you see a well-built condominium like this one, you’re talking about $1,000 per square foot, not on the ocean, and $2,000 or $3,000 per square foot on the ocean. The same building here is one third of the price. So they have been coming in droves. So yes, given that we have that great demand from those countries, we are going to see them in their countries to tell them about our new products.
Earlier this month, you spoke about your Omni purchase, which is at the heart of Genting’s large-scale casino resort plans for the area. What is your opinion on casino development in Miami?
First of all, we don’t know if casinos are going to happen in Miami. The legislature hasn’t approved it, and that’s still a debatable question. I don’t see the opposition that we saw in past year — it’s not been as vociferous as in the past. I have not taken a position on gambling. I, like every citizen, need to weigh the short-term benefits of increased employment and maybe some trade and tourism with the long-term consequences that could be negative. If it meant that Miami was going to turn into a Las Vegas, I would be adamantly opposed to casino gambling. I think that, at most, we should have one casino in downtown, two casinos would be too much. I think that if we do have a casino, it should be highly regulated, and it should pay — not just for the state, but to pay for the improvements we need for the downtown area, like parks and transportation. It should be highly regulated, and should be followed with very, very strict laws that will not allow further casinos to come into the area. Because, as I said, if it means that Miami would become a city known for gambling, I would be radically opposed to casinos.