Nearly finished with their latest condominium development, the Related Group is getting ready for a new series of projects. The Miami-based developer is led by Jorge M. Pérez, the billionaire Chairman, and CEO. The Related Group has developed 3,790 condo units since 2010, which makes it a leading builder in the condo boom. By late 2019, Related will have completed a vast majority of the 2,643 units left in their South Florida condo projects. That leads to…what’s next?
The answer may be surprising and will show how Related has stepped out of their familiar territory and diversified. During the early 2000’s the company was known almost exclusively as condo developer in South Florida. As the condo industry has its booms and busts, Related took a hard hit when the market took a dive during the Great Recession. Their future projects include modest-sized condo towers, apartments, affordable housing, and even micro units. They’re spreading beyond South Florida to develop multiple states and other countries. This is all part of the company’s plan to diversify.
“The key to South Florida is timing,” Pérez said. “We have gotten very good at playing and understanding the cycle. We hit it right on the dot in this market.”
Pérez’s biggest project, which is a condo development, features well-known brands, stand of art, and a large selection of amenities. This is Related’s biggest project yet. It’s a four-tower project in Miami’s Edgewater called Paraiso. Paraiso is over 4 million square feet and has a resort feel. It has a large arrangement of amenities, including several pools, tennis courts, its own bowling alley, a cinema room, and several restaurant options. There is also a signature restaurant by the famous chef, Michael Schwartz. The towers are already 97% sold.
Pérez expects the company to close over $1 billion in condos in 2018.
“It’s great to finish the cycle the right way and prepare for the next one,” he said. “The good thing about this market is it’s not an abrupt stop.”
Ron Shuffield, who is the president and CEO of EWM Realty International, said Related Group’s condos have elevated expectations for condos in Miami’s market. “Each building is a mini country club – and that wasn’t always the case,” Shuffield said.
There’s an overabundance of condos on the market now, he added, but he expects that to be only temporary as sales pick up and fewer projects break ground.
Pérez said this strong cycle was ignited by buyers paying deposits of 50 percent.
“It surprised us we were able to get so many sales with so little leverage,” he said. “In the previous cycle, we had many sales, but everyone was getting 10 or 20 percent deposits. We did 50 percent to protect ourselves from people walking away from contracts, and we were pleased with the results.”
The strategy was very attractive to foreign investors, who use condos as second homes or rental properties. In the future, Related has projects that will appeal more to domestic buyers. Related won’t wait long before getting back into the dirt. Pérez says he has plans to launch another South Florida condo project soon. It won’t be the massive condo units like in the past, but instead a micro-unit in Miami’s urban center – and maybe even more than one.
Smaller units in attractive neighborhoods appeal to young locals and make it more attainable. Pérez recently completed a condo building in Brazil that housed 400-square-foot units. It was very popular in the area.
“In 400 square feet, you are able to create a space with a bedroom, a small kitchen and a counter where two people can eat,” Pérez said. “The key to this development is, if I have six friends coming to eat dinner or watch TV, where do I take them? So, in micro-unit buildings, we will have great amenities.”
“You can live comfortably in 400 or 450 square feet, particularly if they are in neighborhoods where young people want to live,” Rosso said. “People in New York want to have a little place in Wynwood.”
Related has plans underway to develop an eight-story headquarter in Miami’s Coconut Grove. They will finally have a new home of their own.