The Real Deal Miami

Riding the condo roller coaster

Jorge Pérez unloads on the crazy Miami market, his frenemy Trump, and whether his sons will take over

June 15, 2017
By Katherine Kallergis

Jorge Perez (Photo courtesy of Related)

When the development firm lead by condo king Jorge Pérez hit the brakes on Auberge Residences Miami, a three-tower, luxury project planned for Miami’s Arts & Entertainment District, South Florida’s real estate community took notice. When the king lays off the gas, that doesn’t usually bode well for others.

So what’s next for the firm in a challenging economic and political time? Differentiation is key, says Pérez. If a division or market slows down, Related can always focus on another.

Pérez recently sat down with The Real Deal to provide his take on Related Group’s future, his complicated relationship with President Donald Trump, and more.

Where are we in the market? Anybody who tells you the answer to that question is either a fool or a liar. The fact is that Miami is unpredictable, and the reason that Miami is unpredictable is that the demand, particularly for condominium product, is not local. So the typical local parameters that are used as demand are impossible, impossible, to predict in Miami.

Eighty percent of the condominium sales, particularly in Miami or on the beach, are foreign buyers. So how does anybody predict if Brazil or Colombia or Venezuela are going to be buying three years from now?
The fact is, when there’s imbalances in those countries, and you see imbalances continue to happen in those places, they come to Miami for security purposes and we see great demand. And when there’s prosperity without imbalances, we still see demand because now they have a lot of money and they want to spend it in Miami. And Miami in comparison to other cities around the world that are at the same international level is very cheap. So we’re much, much cheaper than New York, L.A., London, Singapore, Hong Kong, Monaco.

Do you think that slow and steady is the new normal for South Florida? I would think that we will always be a city of bumps and highs, a little bit like a roller coaster.

At heart, developers are cowboys. They like the business, and we try to control them, but I don’t have control. The good part about Miami is this huge international demand. The bad part about Miami is every time they [foreign buyers] come in, we also have developers coming in from Colombia and Argentina and they have these projects and we say, “Are they kidding? They don’t know the market.”

I’m not going to throw anyone under the bus, but you’re seeing some projects [where] I’m saying, “Even in a good market, these should not be developed. It does not make sense,” and we’ll get some of those.

That’s why we need to be very practical, very cold about decisions to proceed and not proceed, and let the market tell us. In condominiums at any time we might have 10 jobs under sales, right? So at all the times, we’re getting information on what kind of sales, where they’re coming from, if we have to give concessions. What do we have to do?

When the market collapsed at the 2008 recession, the first guys that came off it were us. We came off right there with Apogee and MyBrickell because we felt the movement coming. We’re ready to pounce at lightning speed. We know the way those markets behave and we want to get them early, before anyone else comes into the game.

You’ve discussed your friendship with Donald Trump and also spoken out against his proposed border wall. What effect do you think he will have on South Florida? More than the “Muslim ban,” what worries me is Latin America. I made my position very clear. I’m totally against the wall, and very happy it’s not included in the present budget because I think people sort of realized this is crazy.

I have been a good friend of Donald Trump since before he was president. He asked me during the campaign to help him, and I said no because I had a commitment to the Clintons and I believed in the policies of Hillary Clinton and President Bill Clinton, but more importantly because I was really opposed to all the things he was saying during the campaign. His disregard for global warming, the environmental issues, the further exploitation of natural land, [canceling] the Paris agreement, the issue of immigration, the issue of trade. … The [National] Endowment for the Arts. Education. I’m in favor of national [health] care like they have in Europe.

When I’m opposed to all of those things, then I really would be a hypocrite to back his policies. I told him that, and we still remained friends. He asked me if I wanted to be secretary of HUD, and I said, “Mr. President, I will help you in anything that I can, and always I will give you the truth as I see it.” And we talked a couple of times after he became president. But when I made the statements on the wall and so forth, the communications ceased.

I don’t believe in anything that he expounds. I can’t support him as president, although I’m an American and I want the best and I hope he changes. I hope he listens to rational minds. I’m still totally opposed to his immigration policies.

What is the relationship between the Related Group and your sister company, the Related Companies? Steve Ross has been my partner for 40 years and he owns a small share of this company. Both companies are totally independent … Both of my sons worked there. They worked till 11 o’clock at night. They exploited my children in the best way. [Son Nicholas still works with Related Cos. in New York.]

You told Bloomberg last year that you eventually plan on your sons, Jon Paul and Nicholas, taking over leadership of the company. Is that still the case? What is your timeline? Jon Paul is working for Carlos [Rosso, president of Related’s condo division] right now. I think he’s growing. He had one rental project and now he’s doing the Wynwood jobs and he’s got Brickell Heights, which is a huge job. He has one in Miami Beach. They’re growing and becoming more senior. There is no plan right now in a change in leadership.

Right now, the company is being run by myself and an executive committee that reports to me. And Jon Paul is on the executive committee.

I don’t think Nicky comes here for another two years. I would hope that in the future they would be in the leadership of the company when they’re ready. And [when] I’m ready.