Jorge M. Perez and his Related Group are bullish on Tampa Bay. How bullish? Some $350 million worth.
That's how much the Miami-based company has invested so far in the area, particularly in the city of Tampa.
"We love cities, and this is a can-do city," says Perez, who founded Related in 1979 and built it into one of the nation's largest real estate conglomerates.
Perez was in Tampa on Wednesday for the official groundbreaking of Manor Riverwalk, Related's 400-unit luxury apartment project where the Tampa Tribune once stood; and a visit to the site of Town Westshore, where Related plans 396 apartments in the Westshore Marina District near the Gandy Bridge.
The company also expects to start construction in September on the 368-unit Icon St. Petersburg in the city's Edge District, and is lead developer on Tampa's $750-million West River redevelopment.
In an interview with the Tampa Bay Times, Perez, 67, spoke about a wide range of subjects including his longtime friend, President Donald Trump.
Q. What attracted Related to the Tampa Bay area?
We like Tampa and we like its waterfront location. It has diversified growth so it's not as susceptible to major fluctuations as some cities. Another thing we like is that compared to South Florida, we think there is a lack of luxury housing and we want to fill that gap, particularly in the urban area. We are able to buy land cheaper in Tampa and construction is a little cheaper. A luxury apartment in downtown Miami is upwards of $3 a square foot but you can still do those projects around $2.50 to $2.60 a square foot in Tampa. If you're a middle income household, that's a 15 to 20 percent differential in rental rates. We want to be involved more and more in the development of Tampa.
Q. Related is one of Florida's leading condo developers yet you build only rentals in Tampa Bay. Why?
Demand in the Tampa area is much greater for rental properties so there is not what we see as a deep demand for high end urban condos. The moment we see it is, we will invest in condominiums in Tampa. Two, there has been a shift (nationally) toward more renters by choice, home ownership is at the lowest level in 30 years, and we think both the millennial population as well as empty nesters or divorced people are looking for the greater flexibility and ease of renting versus the complications of ownership.
Q. Related recently scrapped its 1,400-unit Auberge Residences & Spa condo project in Miami. Why?
This is a very a large project and we decided at this point in the market to take a break and see what is going to happen. Miami is a city that has had a roller coaster condominium history. Right now we have 70 projects in different parts of the world and we are assessing all of the markets. We are completing the sale of condos we have under construction but we did decide to put the brakes on any new condo construction until we see how the market continues to react. We are still selling, particularly to South Americans and Europeans.
Q. Like many developers, your company took a big hit after the 2007 recession. Are the condo market and the U.S. housing market in general headed for another crash?
It's totally different now and the reason is leverage. All of our condo sales have 50 percent non-refundable deposits so there is very little leverage and very little risk people will be walking away from 50 percent deposits. We are closing on four brand new condo projects and we have had zero default or problems with people closing. I'm talking over 2,000 units we've closed in the last six months and there have been zero, zero problems. What we are seeing is a slow down, and the next couple of years are going to determine where the market goes, but the U.S. economy is actually doing the best it's done in a long time and I'm looking for at least a couple of very good years.
Q. The Miami Herald recently reported that federal authorities are investigating Related as part of a probe into the alleged misuse of public money in affordable housing projects in South Florida. Should that be cause for alarm by Tampa city officials as Related starts rehabbing 150 apartments for the elderly in Tampa's West River project?
Our best understanding is that (authorities) are looking at one job we've done, a very small 32-unit (Miami) job, and we are cooperating fully with the state attorney. There have been no allegations of misdoing. I want to make that clear: We have done nothing wrong and if by any chance anybody in Related has done anything improper, we would rectify and correct that and get rid of that person. We pride ourselves on our reputation .
Q. As rents and home prices rise, Tampa Bay and many other places have a serious shortage of affordable housing. Why aren't Related and other companies building decent housing that people of modest incomes can afford?
The cost of construction is very high. It's almost impossible for the private sector on its own to deal with housing affordability issues. The cities can do certain things — allow us to build smaller units, allow us to have greater density and less parking — but even with everything the city can do in its zoning codes there's going to be a great need for both state and federal subsidies to provide housing that not just the poor but the working poor can afford.
Q. Will the Trump administration up the subsidies?
No. As a matter of fact I think the opposite will probably happen because Trump and this secretary of housing (Dr. Ben Carson) have made it clear that they are not looking to increase the budget of HUD, which is the main provider of funds for housing. I think you are going to see programs that are couched as doing something for housing but overall, housing programs for the poor will be reduced, at least on the federal level, which means that cities and states are going to have to take over the burden.
Q. You've been friends with President Trump for 20 years — you've been called the "Donald Trump of the Tropics''' — and Related built four Trump condo towers in South Florida. What did you think of his comments that there were "very fine people'' on both sides of the recent protests and counter-protests in Charlottesville?
I totally disagree with those comments. I think the KKK and the white supremacists are an aberration and they do not represent what this country stands for. I think the president needed to have taken a much stronger position against what is now being called the alt right.
Contact Susan Taylor Martin at firstname.lastname@example.org or (727) 893-8642. Follow @susanskate