Jorge Perez explains his success with one word: Miami. The CEO of The Related Group of Florida grew his company's revenues 96.4 percent last year to a total $2.125 billion, making Related the No. 1 company on the 2005 Hispanic Business 500. Most billion-dollar companies don't double their revenue in one year; but as Mr. Perez observes, "most markets aren't Miami."
"There's only an old saying: 'It's better to be lucky than good,' and there's a lot of that here," Mr. Perez says. "The stars just lined up. Miami is the dear of the international community. It was a local market fueled by New Yorkers, and suddenly it became an international market."
A developer of upscale condominiums, Related caught the South Florida real estate juggernaut at precisely the right time. According to Director of Sales Harold Gallo, the company doubled its inventory of condos on the market during 2004, so the revenue jump followed naturally.
Demand peaked at the same time prices soared. "Prices have more than doubled in Miami over the last five years," says Manny Huerta, executive vice-president of American Southern Financial Group in Miami.
"The gains have been pretty incredible," adds Tom Milana, CEO of brokerage Milana Real Estate Investment Group in Boca Raton, Florida. "I've had customers, including myself, see gains of 300 to 400 percent. Related is one of the main builders we follow because anything [Mr. Perez] builds seems to turn to gold. He's probably the Donald Trump of South Florida right now."
Like most good luck, Related's hot streak came from hard work and great intuition about the direction of the market. Several years ago, the company's management team realized Miami would become more urban and populous. "We made the decision that [this trend] was going to happen, so we retooled our corporate structure to go away from rentals toward condominiums," says Mr. Perez. "We gambled, and now you're seeing the results of that gamble."
Several factors converged to produce the $2-billion year. First, Miami has emerged as the city of choice for international investors and vacationers. For decades, South Florida has functioned as a retirement destination for the East Coast of the United States, a market it still retains. Since the arrival of Cuban refugees in the 1960s, it has become a truly pan-American city, with strong communities of Cubans, Puerto Ricans, Venezuelans, Colombians, Argentines, Mexicans, and Central Americans. Mr. Gallo cites the U.S. Northeast and Latin America as the two main "feeder markets" for condominiums.
In the last few years, wealthy Europeans also have discovered Miami, thanks to the rising strength of the euro against the dollar. "The market in Miami is more diverse than it has ever been," Mr. Huerta says. "In addition to the Central and South Americans and European buyers, Miami is experiencing a large influx of Russian residents and investors."
Macroeconomic conditions helped fuel Related's growth. Low interest rates made it possible for more people to buy expensive condos as second or third homes, or for future retirement. Strong commodity prices in Latin America gave buyers from the region fresh capital to invest.
Mr. Perez's vision of a new urban lifestyle, with an emphasis on build-in construction and mixed-use projects, plays to the Miami market. Gentrification and new construction created a booming market for downtown residences. For years, Mr. Perez has predicted that "people are going to move away from suburbs into the city, especially the younger generation."
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