But the combination of relatively cheap prices and a potential return by more traditional buyers suggests that the housing market has room to run. “I think we’re in the fourth inning of a nine-inning baseball game and we’re winning,” said Robert Kaplan, a principal based in Miami for Ackman-Ziff Real Estate Group, an advisory firm.
For anyone who went through the crucible of the housing collapse in Florida, the current revival feels slightly unreal. “I knew it was going to come back,” Mr. Perez said. “I didn’t know it was going to come back so fast.”
Four years ago, Mr. Perez stood at the front of a packed ballroom at the cavernous Miami Hilton Downtown and made a plea to save his company. Lehman Brothers had collapsed four months earlier and the global economy was in a tailspin. Sitting in the audience were the representatives of the lenders to whom Mr. Perez owed more than $2-billion (U.S.) on projects gone bad.
“My God,” he recalled thinking, in an interview earlier this year with a real estate publication. “Everything I worked for could be gone in a matter of minutes if these people say ‘We’re not going to work with you.’ ”
It was a rare moment of crisis in a stellar career built from scratch. Born in Buenos Aires to Cuban parents, Mr. Perez spent the first part of his childhood in Havana. Later, after Fidel Castro came to power, his family moved to Colombia. Mr. Perez came to the U.S. for college, earned a master’s degree in urban planning and took a job working for the city of Miami.
He never expected to go into business, but gradually it drew him in – first as a consultant, then as an investor in affordable-housing projects. By chance, he met Stephen Ross, a New York developer, and the two forged a friendship that endures to this day. In 1979, they started Related Group, the Florida arm of Mr. Ross’s Related Cos. Today Mr. Perez owns 75 per cent of the privately-held company.
Mr. Perez is “probably one of the smartest guys I’ve ever met,” said Mr. Ross, whose firm is currently developing the Hudson Yards megaproject on the west side of Manhattan. “We have a great time together. We have similar interests. Art, sports, travel – in the old days, women.”
In the mid-1990s, Mr. Perez spied a new opportunity – building high-end condominiums in downtown Miami. His bankers told him he was crazy: The neighbourhood was fine for work, the thinking went, but no one wanted to live there. After 5 o’clock on weekdays, the city’s core emptied out.
“You could come in with a machine gun and shoot down Flagler Street” – a main thoroughfare – “and you would hit nobody, unless you aimed low and there was a homeless person,” Mr. Perez recalled.
After his first downtown condominium launched, Mr. Perez proved the naysayers wrong. That helped ignite a construction boom that transformed the city’s skyline. In the four decades leading up to 2002, there were just 11,500 units constructed in the neighbourhood, said Peter Zalewski, who heads Condo Vultures LLC, a Miami consulting firm. By contrast, between 2003 and 2009, there were 22,000 units built – a quarter of them by Mr. Perez.
Greed, speculation, overoptimism – this is how Mr. Perez describes his mistakes today. Well before the crash, he was uneasy. He knew that nothing could expand forever and that Florida had always been a place where developers made and lost fortunes. But the speed and the force of the collapse took him by surprise.
One project called the Icon Brickell would prove iconic in ways Mr. Perez never intended. A splashy $1.5-billion hotel-condo complex on the water, it features giant coppery and silver pillars inspired by the statues on Easter Island. It was home to 1,650 condos. Nearly all of them were sold in advance to buyers in exchange for 20 per cent deposits. By 2008, prices started to fall, banks stopped lending and the buyers – many of whom had intended to flip their properties – simply disappeared.
“We had done models saying, ‘What if 40 per cent of the people don’t close, or 50 per cent?’ ” remembered Carlos Rosso, the head of Related Group’s condo division. “Nobody imagined that it would be 97 per cent.”
Taking drastic measures
Mr. Perez invited his lenders to Miami in 2009 to start the arduous process of restructuring his loans. A day before the presentation at the Hilton, his advisers had organized a bus tour of Miami for some of the lenders, which included institutions from Germany, Austria and Holland. As they pointed out the legion of largely vacant condominium towers, the message was clear: We’re not exaggerating how bad it is.