Podcast - Opportunities for Developers in the South Florida Real Estate Market

Jorge Escobar: Thanks for tuning in. My name is Jorge Escobar. I'm joined by my colleague, Tomas Castellanos. We are attorneys in Holland & Knight's Real Estate Practice Group, and we both sit in Holland & Knight's Miami office. We have the pleasure of presenting today's program. We are joined by Mr. Pearl today, principal and founder of Global City Development. For those of you who do not know, Holland & Knight is an international law firm, Brian is a friend and firm client. Welcome, Brian. 

Brian Pearl: Thank you for inviting me.

Jorge Escobar: Of course. We're glad that you can join us. So we wanted to invite you over to have this informal conversation about the current South Florida real estate market and the immediate future and beyond and whatever you forecast and want to talk about and take the conversation to. So before we get into that, why don't you tell us about yourself, about Global City and how you got into real estate development and particularly here in South Florida?

Brian Pearl: OK, thank you. I have been in real estate development for about 20 years. Prior to that, I worked on Wall Street just out of school. I worked for Salomon Brothers and for JPMorgan in New York as an equity analyst and really didn't know anything about real estate. Was fortunate enough to get to know the principals of a large real estate development firm here. Starting in about 2006, they began to get nervous about the environment. And really I was brought in because of my expertise with banks. And so I helped negotiate some of the debt during the great financial crisis. Really, that's how I learned the business, was by seeing things fall apart and us putting them back together again. Fortunately, things worked out well for that firm. They brought me on to do more things within the company, underwriting land, purchasing the land for them, really getting involved with the architects and the contractors and of course the legal team, land use counsel and the corporate side, and really just learn development. One of the great things about development is you don't have to have a degree in development, right? You just have to have an interest and a little bit of common sense, hopefully. And you can go into this career from many different angles. And so my angle really is just, you know, I look at the financial side of it in depth, and then later on I added the construction and the legal side, the understanding of the agreements, but that took some time and that was a very lucky decision to come to Florida. I lived in New York and was actually in London with my wife and we had our daughter there. And decided that there's no place we'd rather be than in Miami and it really worked out well, and it's better to be lucky than good and think I was lucky for sure.

Jorge Escobar: The rest is history, right?

Brian Pearl: Well, it's still being written, but yes.

Jorge Escobar: So what made you take that leap to actually go out on your own and form Global City?

Brian Pearl: We were focused a lot at the former firm on luxury product, and I really wanted to do more product for the middle class and something that was more socially oriented. So our focus is really on trying to come up with solutions for the middle class, whether that's different kinds of housing — it could be a tower, it could be a single family home, it could be, you know, many different things. But we're really trying to include student housing, which we've done a lot of, and just trying to find solutions where we can bring really high design to the middle class. And so we focus a lot on how the products look, how they function, and try to make it a place that people will be attracted to naturally and they can afford to live in.

Tomas Castellanos: Thank you, Brian, for that. Could you talk a little bit about, now that we're getting to the end of 2025, where you see the current state of the real estate market here in South Florida? And what are you seeing as ways to navigate the market in the future?

Brian Pearl: So the market has been tough since the Fed started raising rates in 2022, and it looks like things are getting a little bit better on the interest rate side. So hopefully that will help. But I would say just overall, Miami is on a strong growth path on a secular basis, regardless of whatever economic cycle that you're in. So I think there are always going to be opportunities. You really just have to be on the lookout. And we spend a lot of time talking to people, looking for opportunities, looking for things that are anomalies, things we weren't expecting, and trying to take advantage of that to create a product that we can all be proud of. So I think unfortunately it's a lot of idiosyncratic specific stuff, deal by deal, and you really have to be careful. You have to maintain discipline. No matter what you do, you don't want to get carried away, either too negative or too positive. And I think right now some people are very negative, and so we use this as an opportunity to hopefully look for some opportunities to partner with people or whatever it might be. And then when things swing around and they become too positive, then you know, also we want to be cautious. So I just think you have to have a good balance and that's to me the most important thing. And then just know an opportunity when you see it and be in the market every day talking to people.

Jorge Escobar: You said things sort of slowed down after 2022 when the rates start going up. You guys didn't stop. You still had projects going on and you were looking for opportunities. Anything that you are particularly excited about, particular project in South Florida, anything you want to talk about that sort of got done during that difficult time and how you navigated that.

Brian Pearl: Sure. Yeah. So we're focused right now on workforce housing near universities. And so we have a project that we've broken ground on. It's near Florida International University. We're very excited about that. We've done two other buildings in that market, and these projects take a really long time, so by the time you finish it, you'll be in a different cycle than the one that you started in. So it's important to have the right kinds of investors and contacts and people that are really going to be steady during the inevitable fluctuations. And so we've been able to keep going just by the fact that we have partners that have been with us on multiple deals and trying to look for ways to operate in an even difficult environment like this one through different financing mechanisms. We've worked on a lot of different tax advantage financing mechanisms through private activity bonds, which is a kind of bond where you can get some tax relief and that lowers the cost of the financing. So you just have to be creative, and I think coming from my Wall Street background at the beginning of my career, it's really helped me to continue to look for opportunities on that side. And sometimes people can't do deals with traditional financing, but we've been able to find ways to keep moving with less traditional financing.

Tomas Castellanos: So as we move forward into the next few years, can you tell us a little bit about the types of projects that you see evolving in South Florida, maybe in the mid to maybe in more long term, as the city continues to change, continues to densify? Can you talk a little bit about that?

Brian Pearl: Sure, I think that there will be a lot of luxury product, which is not something that we're focused on, but it's something that I have done a lot of in the past. And that's fine. And I think that that's something that Miami is known for, and you want to attract people that are, hopefully, that have good jobs and really keeping the economy moving forward. And I think a lot of people have an old view of Miami that's sort of a pre-pandemic view, which even was changing before that, but that it was something that was a seasonal place to live. There were a lot of older people. If you just walk around this office here in Brickell, where Holland & Knight's office is, you can be disabused of that notion very quickly, right? So I think that's just something to keep in mind, that there is going to be a lot of luxury products. Some of it's going to be spectacular. And I love that. I love great architecture. So I'm for it. I think that at the same time you have to be able to provide housing for the wealthier people and all those firms and try to keep this a community that is beneficial for all income levels. And so that's really what we do day in, day out, is focus on the middle class. There are other developers that focus on the high end. There are other developers that focus on the very low end. You know, we really felt like that was a great niche for us because it hadn't had as much focus in the past.

Jorge Escobar: We talked a little bit about the current cycle that we're in. What's your thought? Do you just like to live in the moment, or are you looking forward and —?

Brian Pearl: I'm the most pessimistic developer that you probably have as a client. I always think things are going to go wrong. And half the time they do. You have to be prepared for that. I really don't make predictions, except that I do believe in Miami over the medium and long term, right? So whatever's going to happen in one particular year? I have no idea, honestly. But I think that if you're prepared for an opportunity, you know it's going to present itself. You just have to be ready and have the skill set to be able to take advantage of it.

Jorge Escobar: Thank you again for this podcast. We appreciate you being here. 

Brian Pearl: Thank you for having me.