Is Tampa the next Miami? Related Group CEO Jorge Pérez weighs in

When Miami-based developer Related Group entered the Tampa market 40 years ago, the sprawling suburban enclave was known to outsiders mainly as the butt of a joke: the country’s “strip club capital.”

Then, in the last five years, something shifted.

It’s hard to pinpoint what exactly caused it — Florida’s lax COVID-19 regulations during the peak of the pandemic, the relatively cheaper cost of living, the strong job market. But following a long line of once-overlooked cities like Austin, Nashville or Charleston, suddenly Tampa became trendy.

As developers descended on the region, looking to get a piece of the action, Related already had its foot in the door. To date, the company has completed construction on more than 2,000 residential units in Tampa and has thousands more in the pipeline.

“We are by far the largest development entity today in Tampa,” said Related’s founder and CEO, Jorge Pérez. “Tampa has become our second home.”

The company’s projects range from the ultra-luxury Ritz-Carlton Residences — which just broke the sales record for Tampa Bay’s most expensive condo — to Rome Yards, a sprawling mixed-use apartment complex with 20% of units reserved as affordable housing.

“It’s a city that wants to be great,” Pérez said. And, with plans to spend upward of $3 billion in Tampa in the next few years, he’s betting that it will be.

Pérez spoke with the Tampa Bay Times about Related’s strategy in Tampa, how the market compares to South Florida and what challenges lie ahead. This interview has been edited for clarity and length.

Related had a presence in this area long before it was considered a hot housing market. What drew you to Tampa Bay?

This is a city that has the most diversified employment base in Florida. Tampa is not just a tourist economy.

While people love to go to the beaches in St. Petersburg and they like Tampa as a city, with the culture that they’re trying to bring and the businesses that are there and are coming to there, we see it as definitely becoming the second-most-important city in Florida, competing with the South Florida area.

Because of that, we’ve made a very strong commitment to Tampa. We think that the growth that you’re seeing now is nothing compared to what you’re going to see in the next decade.

With all the high-rise development that’s happened in the past few years, a lot of people say that Tampa is turning into a mini-Miami. What do you think?

A mini-Miami is the wrong description. Sometimes they call Miami a mini-New York. I think every city has its own idiosyncrasies.

I think the businesses and the people that are coming to Tampa are in many ways different than the ones coming to Miami. When we sell condominiums in Tampa, our sales are mostly to people from the Midwest, some from New York, and mostly to Tampa people that want to not be in a big home anymore. In Miami when we do the same thing, the market is almost 50% made up of Latin Americans that want to be in Miami.

The commonality is that businesses are starting to move to these two areas in a very rapid way. They’re leaving the older cities and the more problematic cities. (Tampa and Miami) are going to be in competition for many of these new corporations that want to set up total bases or regional bases for their companies.

Both cities were highly suburban and I think they’re becoming much more urban. Tampa is trying very smartly and very aggressively to get the urban core to become something that is attractive to people.

A lot of people, particularly those that have lived here for a long time, are against the sort of high-density development you’re describing. They miss the days when Tampa was quieter and more suburban. What would you say to those who are concerned about the direction the city is moving?

I think there are some cities that are destined to grow. Growth means that there are going to be issues. I think that you need to make growth sustainable, of course, you need public transportation, roads, infrastructure, education — all that that goes with it.

To go back to the way things were in the past, it’s something that is nostalgic, but not really in the benefit of the community. Communities grow or die. And the world is becoming very competitive.

Corporations and people that are employed by those corporations and people that want to retire are looking for certain things in cities. They’re coming from larger cities. They’re coming from places where things are provided to them in the urban core.

When you talk to corporations, and we’re talking to them all the time, and you ask them, ‘Why do you want to relocate here? What do your employees want?’ They want good schools, they want access to culture, they want open spaces with parks in walkable areas and they don’t want to drive long distances to get to those spaces.

At Related, we try to bring the best concepts from other places and work within the densities and heights of those environments. When we go to Bayshore, we’re not going to do a 100-story building like we would in New York.

We work very closely with cities to provide projects that are keeping with the zoning and development vision that the government and planning departments have laid out. There are very few variances that we ask for with the developments that we do. We just try to make them more beautiful and responsive to the needs of the community.

Will Tampa look very different 10 years from now? Without a doubt. In my opinion, will it be much more beautiful? Without a doubt.

A lot of people associate the changes Tampa has undergone with rising prices. How can we ensure that people who were here before this renaissance can afford to stay here and reap the benefits?

This is a problem for every high-growth city.

People are unfortunately being priced out of the urban core that we’re trying to create. Every time you go into a neighborhood and the neighborhood becomes upgraded, there are people that suffer and people that benefit. That’s just the private market system. We don’t have a totalitarian system that says, ‘You can’t go into this neighborhood.’

That displaces some people. That’s why with the West River development, for example, we’re trying very hard to work with the city and the housing authority to make developments that are affordable for a wider income range. When you look just at us building 3,000 units of affordable housing, that is a huge amount compared to other cities.

Is a developer greedy for charging more? In reality, we’re making the same or lower profits. We’re having lower margins because of the huge cost of land and construction. There is no development that is going to happen at a loss. The huge increases of cost we have seen will have to be paid by the consumer.

It is going to be up to the cities and to the governments to work with developers like us to continue to provide necessary subsidies. They can speed up the building permits, they can create greater density, they can lower real estate taxes for products that are more affordable. They can provide land or low-interest loans or grants.

On the private sector side, we need to look at ways to build apartments that are less costly. So we’re doing both condo apartments in which we have 400-square-foot studios, 550-square-foot one-bedrooms, 700- to 800-square-foot smaller two-bedrooms. We’re doing some apartments that are built for apartment sharing, where we will build a four-bedroom apartment with a common living room dining room, and each bedroom has its own bathroom.

I think a lot of people are shocked by just how suddenly the cost of living has gone up though. During the peak of the pandemic, rent spiked 30% in one year. How did this happen?

During COVID … people were not moving from their homes. Businesses were not moving. It was a very quiet time.

Then, people in the older cities and in the Midwest and Northeast realized they wanted open areas. They wanted to be in places with sun and fresh air — cities like, you know, Tampa, St. Petersburg, Miami, Fort Lauderdale, West Palm Beach. All of the sudden with work from home they realized they can live in these places.

We don’t have the high taxes like they do in New York or San Francisco or in Chicago or the social problems they have in some of those areas.

We have a much more pro-business government. Companies started moving much faster. That produced a huge increase in demand for housing and other services. And that demand is still outpacing the supply and raising costs.

It’s very hard to stop the flood. Market forces are market forces. What cities need to do is plan accordingly.

Developers are facing high interest rates, high labor costs and high material costs which can make it difficult to finance new construction projects. Will this put a damper on the recent growth Tampa has seen?

With COVID we saw an increase in demand and people started buying everything. Prices went up. That means inflation went up. The Federal Reserve increased interest rates to try and dampen that growth.

The Federal Reserve thought that they going to have two or three interest rate reductions in 2024. But inflation has not gone down at the rate they wanted so — so far, we haven’t seen that interest cut.

We are predicting that 2024 will be a flat year and that then we will see an expansion of growth in ‘25 and ‘26.

Florida will continue to have, as it has in the last five decades, periods of a boom and bust. That has been our history and I think that will continue, unfortunately.

I do not see any decreases happening in rents or home prices. No one I know is predicting that.

What will it take for Tampa to become a world-class city on par with Miami or New York?

I think cultural facilities are very important. So you don’t have to go to New York to look at great art shows or see great theater or see great opera or see great bands.

I think education is very important. So upgrading of all education systems from K-12 and university. Tampa has the University of Tampa and it’s got the University of South Florida. Those will continue to have to be upgraded to compete with schools that you see in California and the Northeast.

Transportation systems are extremely important. How do we get people to their jobs without always having to be in a car? And even if they are in a car, how do we make it easier?

Parks, recreation, great restaurants. Those are the things that people really want.

In the old days, the government would fund all of this, but these facilities are not self-supporting now. So with Related, both the company and our family foundation, we give huge amounts, I’m talking tens of millions of dollars on a yearly basis to support these community facilities — both cultural, social and economic — so that the city can compete.