Housing shortages are pushing Miami-based developer Related Group deeper into Section 8 and affordable housing, principal and co-founder Jorge Pérez told The Real Deal at the sandy, future site of IconBay in Miami’s Edgewater.
“It’s partly diversification – we’re looking to not put all our eggs in one basket into condominiums which happened the last boom,” he said. “It’s partly demand.”
Five years after South Florida’s housing market dropped out, crippling Related and other Miami-based developers with debt, homeownership has declined significantly, with many residents moving into rentals.
Even so, Miami has an acute shortage of affordable housing, according to local advocates, developers and the non-profit National Housing Conference.
Rent or mortgage payments and transportation consumes 72 percent of moderate-income households, defined as those taking home $25,444 to $50,888 in the Miami metropolitan area, according to the NHC’s most recent report.
In spite of Miami’s glitz, three out of four households have an income of $75,000 or less, with housing and transportation disproportionately high.
Stephanie Berman, chief executive of Carrfour Supportive Housing, Florida’s largest non-profit affordable housing developer, told TRD there is huge demand whenever units go on the market.
“I have people lined up around a city block,” she said.
A handful of for-profit players, sometimes partnering with local NGOs, build for and house Miami’s large median-income population, who take home about $32,000 a year.
And the pool of developers has at least temporarily shrunk with the chilling effect of the federal grand jury investigation of Miami-based Carlisle Development Group, the third largest affordable housing developer in the U.S. with a slate of $1 billion in completed projects.
Related is happy to pick up some of the slack, Pérez said.
The company has branched off into four business areas: new condo construction, market-rate rentals, acquisitions and government housing, including The Loft towers in downtown Miami.
“We’re doing a Section 8; we’re doing some for sale-affordable, we’re doing some redoing of public housing affordable, construction, rehabilitation, so we’re very busy,” he said. “We’re doing very, very well.”
The company is returning to “its roots,” said Pérez, 64, a native of Argentina and naturalized U.S. citizen whom Forbes estimates has a net worth of $1.2 billion.
Pérez is simultaneously overseeing construction of an eponymous art museum in downtown Miami by the Swiss architectural firm Herzog & de Meuron.
The former city planner started in low-income housing before going into luxury development with Related Companies’ Stephen Ross, the present-day owner of the Miami Dolphins.
More than one in three of Related’s 41 projects are in the affordable housing sector, in cities and towns from Miami-Dade County to Orlando in Central Florida.
“It’s how to make the numbers work and how to get selected, right? It’s very competitive,” Pérez said.
“The higher priced the job, the greater the profits, but it’s much less risky than the condominium so it’s a good way of diversifying oneself and reaching all the segments of income,” he said.