On a recent sunny afternoon, Jorge Pérez dug a shovel into the dirt and tossed a ceremonial clump.
“We’re changing Miami,” he said at the groundbreaking for the SLS Brickell, a project with about 450 condo units and 133 hotel rooms. “It really makes me proud that we are adding this to the skyline.”
The next week, Pérez celebrated the opening of MyBrickell, a smaller building that represents the first new condo tower in downtown Miami since the real estate crash that nearly decimated Related Group of Florida, where he is chairman and CEO.
“When you finish a job and it does what it’s supposed to do, it’s a great, great feeling,” said the developer, almost giddy as he mingled in a gray suit and orange tie that matched the building’s bright decor.
With more than a billion dollars in losses behind him — and costly lessons learned — Pérez and his company have entered a new cycle. And, for a change, the 64-year-old “Condo King” is trying not to be in charge of everything.
“I don’t know if I”m really good at it yet, but I think I’m better at giving other people responsibilities and letting them take the ball and not really be micromanaging as much as I used to,” he said. “Before, I was involved in everything, every detail. I would go to every job, every week. Now I depend on people a lot more. And I want to do that.”
The economic crash — a personal and professional blow — and a major health scare flattened Pérez and Related in 2009, prompting him to examine the way his company did business as well as his own priorities and eventual legacy.
In the years that followed, the art collector donated $40 million in cash and art to the Miami Art Museum, which now bears his name; publicly pledged to donate half his wealth to charity; restructured his company to rely less on profitable but risky condos and stayed mostly unplugged during a month-long vacation. The mass that was discovered on his pancreas more than four years ago turned out to be benign, and after recovering from surgery to remove it, Pérez has returned to an active schedule of tennis and other exercise five or six times a week (and, he admits, occasional overeating).
“I have thought of legacy a lot more, about giving back a lot more, philanthropy, about family and friends a lot more, about spending more quality time doing things other than work,” Pérez said. “And it’s changed me.”
He retains confidence that his contributions to Miami’s skyline have been transformative. Some observers have pointed out that the change was not always for the better, especially as the company courted speculators who fed into the condo frenzy that preceded Miami’s real estate bust of 2008.
“I think that during the last boom, Mr. Pérez and the Related Group overbuilt the market and overhyped the market and definitely were partially responsible for the overdevelopment and crash in South Florida,” said McCabe Research & Consulting CEO Jack McCabe, an independent housing analyst in Deerfield Beach who has not worked with Related. “Having said that, I would also say I think Mr. Pérez is a very smart man. I think he’s learned his lesson from the last decade.”
Still, the impact of the past several years remains. While Pérez has returned to the Forbes list of the 400 richest Americans since dropping off during the downturn — in 2013 he was at No. 350 with an estimated net worth of $1.55 billion — he acknowledges that neither he nor the company are as wealthy as they once were.
“It’s hard to lose the amount of money that we did and make it back in a couple of years,” he said. “Are we very well off and very strong financially? The answer is yes.”
Born in Argentina to Cuban parents, Pérez said his upbringing in an exile family showed him that everything can be lost in an instant. Especially now, he said, he takes nothing for granted.
“My wife and I pinch ourselves every day because we are so fortunate,” he said of his second marriage, to Darlene Pérez. “Great kids and a great marriage, and just lucky....We enjoy giving back, we enjoy life, we enjoy good restaurants, we’re just some of those lucky people.”
His three children from his first marriage are thriving, he said; the eldest, Christina, is earning her master’s in social work in Chicago and has shown interest in eventually working for the family foundation. Oldest son Jon Paul came to work at Related Group a year ago after getting five years experience for another company, a requirement of his father. And son Nicholas is getting that experience in New York now with plans to join the family business in Miami.
Youngest son Felipe, his 10-year-old with Darlene Pérez, keeps him on his toes.
“It definitely makes me feel younger because he’s got so much energy that I really enjoy things that I would never ever enjoy if I didn’t have him,” Pérez said. “So I get to go to Despicable Me and hang out with all his friends and have pizza.”
While admittedly not a football expert, Pérez is actively involved with the Miami Dolphins, where he is vice-chairman and partner. His friend and business partner Stephen Ross, founder and chairman of the separate Related Companies (and minority stakeholder in Related Group), owns the team.
“I go to all the games with him, I go to the locker room with him,” Pérez said. “We are happy together and sad together — misery loves company — when we lose.”
While Ross said his friend hasn’t changed too much since they met 36 years ago, he has noticed Pérez stepping back slightly.
“He’s taking a little more time off — but he’s getting everything done that he needs to get done,” Ross said.
Which, for Pérez, involves finding time to indulge his love for reading — usually after 11 p.m. Right now, the list includes rereading the works of crime novelists Dashiell Hammett, Raymond Chandler and Ross Macdonald.
The decision to donate part of his personal art collection (as well as $20 million cash) to the institution now called the Pérez Art Museum Miami has given him a new outlet for passions that might have once been devoted to dealmaking.
Since the opening in December, he visits “all the time,” taking friends from out of town or stopping by for lunch at Verde, the museum’s restaurant.
“Since the thing was done, it’s just been one of the most joyful experiences,” he said. “It’s exactly what we wanted it to be; it’s not just a center of art, but it’s a community center. Try to get into that Verde for lunch.” (For the record, he never has a problem.)
Pérez relishes his role as a museum booster even as it takes more of his time — and money, but he calls that an “obligation”.
“There’s no fluff in that gift,” said friend and former business partner Alicia Cervera Lamadrid. “He’s really very passionate about art; it drives him in many ways. I think it soothes him in times of need and enthuses him in times of creativity.”
Museum director Thom Collins said Perez makes himself “extremely available” while staying away from any appearance of trying to run the show.
“He really understands that though he is the lead private patron of this project, that it’s not his museum,” Collins said. “He’s very careful about how he gets involved in decision making.”
Perez travels frequently to meet artists, attend fairs and acquire new work for himself, his corporate holdings and projects. But as he continues to rebuild his personal collection following the donation to the museum, he’s doing so with an eye on PAMM’s own collecting mission.
“I see myself sort of collecting on borrowed time,” he said. “I would like for the collection to continue to go to the museum. I presume that many of [my new purchases] will be going to the museum after a few years in my possession.”
Despite their boss’ engagement with the museum, Perez’s top executives say they still sometimes get emails from him at 4 a.m.
“When you’re dealing with these billionaire types, they are not typically low-key individuals,” said Steve Patterson, president and CEO of Related Development. “Even though I would say that I’m sure Jorge is more low-key today than he was in the prior cycle, he’s still a man with his hair on fire.”
But much has changed at Related, which increased revenues by 50 percent in 2013 to $1.5 billion, since the last cycle.
While the company, now valued at $8.85 billion, had 20 condo projects with more than 7,000 units under construction during the boom from 2004-2008 — with no rentals — today, the company’s business is more spread out. Of the 29 projects currently under construction, 12 are condos, 10 are affordable housing and seven are multi-family market rentals. That represents 3,050 condo units, 1,485 affordable housing and more than 2,250 rental units.
“I think the key is to learn from your mistakes,” said Matthew Allen, executive vice president and chief operating officer of Related Group. “The key thing is diversification. We’re well poised if the condo market slows down or halts; we still have money in the other divisions and I think that’s important to the successful future of Related.”
During the downturn, Related was forced to renegotiate $2-to-3 billion in debt; now, the company is entering more deals with partners and requiring more money up front from buyers. Where they might have borrowed 85 percent of a project’s cost from banks before the bust, now they are not borrowing more than 40-50 percent, Allen said.
“We’re trying to give up a little of the upside but not taking as much downside,” he said.
Patterson, who oversees multi-family market-rate rentals, joined the company in 2010 after competing against Pérez for 20 years.
“The ghosts are still there,” Patterson said of the bust. “Nobody has forgotten at all. The minute things started speeding up, the first thing everybody starts doing is saying, ‘Is this too much?’ This cycle is going to be, it’s a lot more transparent than the last cycle, particularly on the condominium side. The buildings are not going to get built unless the people are there with serious money.”
Jack Winston, a real estate analyst, principal at Goodkin Consulting in Miami and professor of real estate development at the University of Miami, said he doesn’t expect to ever see the “euphoria” of 2007, fueled by ready financing, again. The current market, he said, is based on buyers mainly from Latin America who are willing and able to fund construction by fronting cash.
“Is there enough of a Latin, all-cash buying market to continue?” asked Winston, whose company has done consulting work for Related. “So far, we’ve seen it run right through 2013....The problem is you can’t take that philosophy and export it out of Miami-Dade County.”
Cervera Lamadrid, who partnered with Related during the last cycle and is now managing partner of family company Cervera Real Estate, said she is not surprised at the pace that the company is building now.
“I think that there were lessons learned, tremendous lessons of success and challenges, and I think that they’ve appleid those lessons and used them to their advantage,” she said.
Peter Zalewski, principal of real estate consultancy Condo Vultures and a columnist for the Miami Herald’s Business Monday magazine, said the company this time seems to be “much softer, gentler, kumbaya-ish” this time around.
“He seems to be more legacy oriented rather than this swashbuckler who’s trying to just change the world,” he said. “Related of the past were primarily conquistadors, now they’re kind of bleeding heart liberals.”
But Zalewski pointed out that a massive new project, One Brickell, calls for three towers essentially across the street from Icon Brickell. That $1 billion project came to symbolize Related’s woes after speculators walked away from their contracts and two of the three towers were returned to lenders.
“It’s kind of interesting that they have a second shot at what was probably his biggest unsuccessful project of the last boom and bust,” Zalewski said. “He is going right back at it and you have to wonder: Has everything been sort of lost in terms of memory? He might just prove that it’s doing it right this time.”