Is the Recession Over? Miami’s Developers Like Jorge Perez Say Yes, and Are Throwing the Lavish Parties to Prove it
Jorge Perez is a household name here in Miami. He is as well-known for his iconic Brickell Avenue buildings as he is for the media attention he receives. So, when Jorge Perez speaks, Miami tends to listen. When he decided, that he would bail out Miami Art Museum and bestow upwards of 40 million dollars to the building fund, they listened. And, that the new museum, should bear his name, they listened. In fact, Miami as a whole listened. And even though there were grumblings about his large ego, most Miamians understood that this avid art collector wanted more than just a Real Estate legacy – however large it is.
Fast forward a few months and Perez was in the news once again, this time discussing how he was overextended based on the real estate recession. Perez had to offload tons of property and lost more than $1 billion of his personal net worth. That would stop most of us, but in Perez’s case, it seems to drive him forward. In fact where most developers have sat hard on their hands hoping to just come out of the recession intact, he has been buying up development sites, distressed real estate and has several new projects in the works. A former urban planner for the city of Miami, he has long dreamed of transforming Miami into a 24-hour city with restaurants and night life downtown. He has also brought a new level of luxury to the market catering to upscale professionals, professional athletes and celebrities.
“What goes up must come down,” Mr. Pérez says. “This is true. But the opposite is also true.”
Some of his latest projects include the Omni International Mall complex, 1100 Millecento on Brickell and One Ocean in the South of Fifth neighborhood of South Beach
It is this new development, that has caught his excitement. “We have built over 80,000 units thus far. But, One Ocean is my legacy for Miami Beach,” says Perez.
For One Ocean, the Related Group has recruited a team of cutting edge designers, artists and architects, that include Architect Enrique Norton of Mexico’s TEN Arquitectos; landscape designer Enzo Enea, creator of Switzerland’s Tree Museum; interior design firm Yabu Pushelberg and fine artists Jose Bedia, Eugenio Cuttica, Michelle Oka Doner and Daniel Azouley.
The project, which includes two all-glass buildings of seven stories, is intended to appeal to a younger, monied, dynamic demographic. Related Group, based in Miami, plans to open a sales office at 91 Collins Avenue within weeks in time for Art Basel. Related Realty and Fortune International will oversee sales. In addition to 46 residences, the buildings will have four villas on the first floor and will have commercial space separated from the residential area by a garden. The units will have 3,000+ square feet of space, and include a private elevator, underground parking, membership to the beach club, a gym and a lavish pool. Some apartments will also feature rooftop spas and solariums designed by Enea, as well as front and back terraces. Prices will be $1,000 to $2,000 a square foot.
“Our vision was to design outdoor spaces that create a consistent language among the unique architectural elements of One Ocean,” Enea said. “This language is used throughout the entire site, providing lush private gardens, luxurious pool top cabanas, and elegant rooftop terraces with Miami’s aqua blue waters as their backdrop.”
“This is going to be our most unique building ever, the culmination of everything Related has done,” said Oswaldo Betancourt, One Ocean’s Project Manager. “A unique boutique experience targeted to people who are very art-oriented. It will be a fusion of the ocean, architecture and art.”
Perez and his Related Group are not the only developers starting new luxury projects. nine new condo projects in Miami-Dade County broke ground in the past year, and at least two more are scheduled to begin construction by year end, said Peter Zalewski, principal at Condo Vultures in an article in the Wall Street Journal.
“Most of the buyers these days are wealthy Brazilians, Argentines and other foreign clients looking for second homes or investment properties to rent out”, he said. “Their tendency to pay in cash makes them attractive to developers”.
Because banks are still reluctant to provide construction loans, developers are relying on buyers to finance condo projects, requiring that they put down as much as 80% before closing, Zalewski stated. The vast majority of projects in the area are now using that model.
So that begs the question, Is the recession over in Miami? According to Perez at the lavish launch party for 1100 Millecento Residences, it is.
“Miami is back!” he yelled to the crowd of 500 who sipped cocktails and munched on empanadas.
According to a July report by the Miami Downtown Development Authority he is right. They found the volume of residential sales in the downtown area increased 24% in the first half of the year, compared with the same period in 2011. In the Miami area, home prices increased 11.3% in August, compared with a year earlier, according to CoreLogic Inc., a Santa Ana, Calif., data firm.
And, according to Related Group, At 1100 Millecento, 90% of the units are under contract.
At the March launch party for the Mansions at Acqualina—a luxury tower going up in Sunny Isles Beach, developers Jules and Eddie Trump entertained their guests lavishly. They put up a huge tent on the beach complete with chandeliers. Filet mignon and risotto was served, while Il Volo, a trio of Italian pop-opera tenors performed.
Flashes of former Real Estate opening opulence or just crazy extravagant spending?
Perez stands by his formula. He is planning an opulent December party to launch One Ocean during Art Basel and is aimed at the major collectors flying into town. And, Perez plans to use the same buyer-financing model his company has relied on for all his recent projects. 10 percent at the time of making a reservation and another 10 percent at contract signing; 20 percent at groundbreaking and 10 percent when the building is topped off.
A private event last week for “friends and brokers” for One Ocean already has resulted in 27 reservations, Betancourt said.
If the Miami market continues to perk up, count on the revelry ratcheting up as well. “At the end of the day,” Mr. Zalewski said, “Miami is a party place.”