Stephen Ross’ Takeover of South Florida Is All Going According to Plan
For legendary developer Stephen Ross, it was yet another ribbon-cutting for his latest skyscraper in West Palm Beach, Fla., One Flagler. The city’s mayor, Keith James, led the groundbreaking, celebrating his city’s chief benefactor with a quip. He recounted how Ross, the founder and chairman of Manhattan-based Related Companies, once stopped him at an event.
“‘Mr. Mayor, I’m spending money in your city like a drunken sailor,’” the mayor said, imitating Ross’ famously low, scruffy voice.
Ross’ shadow looms over South Florida’s third-largest city, where he has developed much of the city’s center. Even amid the broader rush to South Florida, West Palm Beach today is booming, in many ways, thanks to Ross, whose buildings now attract a new generation of white-collar workers. But Ross has also applied pressure to get his way, and city officials rarely say no to the developer. Today Ross finds himself in the spotlight in particular for his ownership of the Miami Dolphins NFL team following an explosive lawsuit filed by the team’s ex-coach, Brian Flores.
Ross’ real estate affair with South Florida began with Palm Beach, an island town founded over a century ago by another strong-willed tycoon, Henry Flagler. After making a fortune in oil, Flager built the railroad that led to the barrier island (and much of Florida’s eastern coast) as well as the Breakers Hotel, which opened in 1896 under a different name. The opulent resort put Palm Beach on the map as a ritzy holiday destination. West Palm Beach, located just over the Intracoastal Waterway, housed the workers who serviced the island town.
For over a century, Palm Beach retained its reputation as a getaway town — until the pandemic hit. Wealthy finance executives, stuck in cramped cities like New York, fled to the tony island town in search of larger homes, few COVID-19 restrictions, low taxes and sunshine. Many took their businesses with them, signing long-term office leases in West Palm Beach. No longer was Palm Beach considered just a destination for swanky winter vacations or retired billionaires. Instead, it became a nascent financial hub, and Ross was pivotal in facilitating that transition. (Ross declined to speak to Commercial Observer for this article.)
Raised in Detroit and Miami, Ross got into development after obtaining a $10,000 loan from his mother in the 1970s. He launched Related Housing Companies, building low-income housing nationwide. It also probably helped that his uncle was Max Fisher, an oil and real estate baron who at the time of his death in 2005 was considered one of the richest people in the country. By the turn of the 20th century, Related had grown to become one of the Big Apple’s most prominent developers. The company was behind Time Warner Center (renamed Deutsche Bank Center in 2021), a 2.8 million-square-foot mixed-use complex at Columbus Circle, and most recently the 28-acre Hudson Yards on Manhattan’s Far West Side, the largest private development in the nation.
Like many wealthy New Yorkers, Ross was a frequent visitor to Palm Beach, in part thanks to his wealthy uncle who owned a waterfront home. In 2007, Ross bought an oceanfront mansion of his own for $31.8 million. He hobnobbed with former President Donald Trump, another Palm Beach homeowner, and hosted a fundraiser for him in 2019 at his Hamptons estate, which thrust Ross into an unwelcome national spotlight. (This despite the fact that Ross openly trashed the former president in New York magazine six months earlier.)
As a longtime Palm Beach homeowner, Ross banked on corporate migration to West Palm Beach even before the pandemic. A 2017 tax reform bolstered Florida’s position as a low-tax haven. In 2019, Related began developing 360 Rosemary, a Downtown West Palm Beach office project. The Class A development became the newest and shiniest office product in the city. After COVID-19 hit, the office attracted the first wave of financial exiles from New York, such as Goldman Sachs, Elliot Management and Point72 Management.
When COVID-19 first ravaged the country, Related doubled down on West Palm Beach offices as others pulled back. During the height of the pandemic, when the future of the office looked bleak, Related snapped up a slew of office properties for big bucks, including CityPlace Tower for $175 million and the Phillips Point complex for $282 million. Meanwhile, another billionaire developer, Jeff Greene, paused the construction of his office-heavy mixed-used development, One West Palm.
Related’s bet paid off. The building 360 Rosemary, completed in 2021, is now fully leased. The property is in such high demand that Related is converting the top parking floor into offices.
Today West Palm Beach is one of the hottest office markets in the entire country, a notable feat given the rise of work from home. By the end of 2021, the city boasted the country’s second-highest office absorption rate, which stood at 3.1 percent, well above Miami’s 0.2 percent and New York’s -0.9 percent, according to data from JLL. Wanting a piece of the gold rush, other developers have since entered the fray with plans to build, but all are playing catch-up to Related, including Brand Atlantic Real Estate Partners and Wheelock Street Capital.
Beyond offices, Related has long had a towering presence over West Palm Beach. The firm developed a sprawling outdoor retail complex in the city’s center in 2000. Despite undergoing three rebrands and intermittently falling out of favor with shoppers when many stores were vacant long before the pandemic, the 600,000-square-foot development is today 85 percent leased and has become a vibrant neighborhood known as The Square.
In South Florida, Related Companies is not to be mistaken with Jorge Pérez’s Related Group, Miami’s largest condominium developer. While the Related Group is an affiliate of Related Companies, the two companies are separately owned and operated. In 1979, Ross and Pérez partnered to found the Related Group and remain friends today.
Related Companies is further stretching its real estate empire in West Palm Beach, the only Florida city to hold Related-owned properties. Last year, Related bought two affordable housing buildings with plans to renovate them and keep them affordable. Earlier this year, the West Palm Beach City Commission gave an initial nod for Related to plan a series of towers surrounding The Square.
Related’s ultimate goal is to transform West Palm Beach into a “15-minute city,” Gopal Rajegowda, who leads the developer’s Southeast operations, told Commercial Observer. Conceived by French-Colombian social scientist Carlos Moreno, the concept stipulates that the daily activities of residents, including their work and social life, should all be situated within 15 minutes from their home, either by walking or cycling.
To create this vision for West Palm Beach, Ross played power politics.
Locals opposed One Flager, Related’s latest Class A development. The developer wanted to build along the waterfront, mere feet from a Christian Science church built in 1928. West Palm Beach residents voted twice to block skyscrapers such as the one Related proposed, favoring instead to keep a five-story cap. Yet city officials overrode voters’ wishes and created a new zoning district in 2018, based on a proposal submitted by Related, which paved the way for its 25-story development. Officials said the city needed Class A offices to attract high-flying companies.
Opponents of the new zoning included JZ Capital Partners and RedSky Capital, owners of neighboring office building Esperanté Corporate Center. In Florida’s 15th Judicial Circuit Court, the joint venture sued the municipal government soon after it approved the district, claiming the city’s move amounted to spot zoning to favor one developer. Related came out victorious. It won the court battle — and bought a 50 percent stake in the Esperanté building last year from Redsky as the firm faced financial hardships.
At the One Flagler groundbreaking ceremony last November, the wrangling over the luxury project seemed like ancient history. Related touted how it would preserve the historic church and name the development’s surrounding park after Julian Abele, the Black architect who designed the church but didn’t receive credit for the achievement.
The West Palm Beach mayor praised Ross. “When a billionaire says it’s spending money in your city like a drunken sailor — that’s a lot of money,” Mayor James said at the groundbreaking. “And he has been true to his word. Thank you, thank you, thank you, Related.” The office development is expected to be completed next year.
Ross has also flexed his muscle in Miami. After becoming the owner of the NFL’s Miami Dolphins in 2009, Ross wanted to update its home base, the Hard Rock Stadium. When he failed to score public money to fund part of the renovation, worth in excess of $350 million, the developer launched a political action committee to support his agenda. Ross, who’s worth an estimated $8.3 billion, would end up paying for the upgrades out of pocket.
Most recently, construction for the Formula One race, which occurred last week at the Hard Rock Stadium, seemingly broke local rules. Despite city officials rebuffing plans to build a pit area and garage for fear it would disrupt the underground sewage system, the work went ahead anyway earlier this year. Once officials learned of the construction, they ordered the stadium’s owners, companies tied to Ross, to pay a $45,000 fine, but the structures would remain intact.
“Steve Ross just appears to be buying his way through this,” former County Commissioner Betty Ferguson, who has long opposed plans for the stadium to host the race, told the Miami Herald. “If the pockets are deep enough, they seem to get away with ignoring rules and regulations that are put in place for others.”
Controversy once again dogged Ross inside the Dolphins stadium. Ross fired Flores, the team’s head coach, a move that surprised many given Flores’ winning record the past two seasons. The coach struck back, filing an explosive lawsuit alleging that Ross offered him $100,000 for each game the Dolphins lost during the 2019 season. The allegation — which Ross vehemently denies, describing it as “malicious” — could see the developer give up ownership of the team, if substantiated.
Beyond the allegation of tanking, Flores alleged that the NFL and its 32 teams had discriminated against Black coaches in their hiring practices, and named several individual teams outright, including the Dolphins. That put Ross in an uncomfortable position given his philanthropic work. The billionaire founded RISE in 2015, a nonprofit that vowed to fight systemic racism. In the wake of Black Lives Matter protests in 2020, Ross said he would commit $13 million to the RISE over the following four years. The lawsuit shows that Ross had effectively failed one of the few Black coaches working in the world’s most profitable sports league.
But Ross is unlikely to just walk away from the contest, given his track record. Overcoming dissent has long been part of his winning real estate formula. The master builder is now looking to expand his South Florida empire to Miami proper. Related is in the early stages of developing an office skyscraper in the heart of Brickell, which could become one of the city’s tallest.
To read more about what Stephen Ross has been up to in 2022 check out Commercial Observer’s Power 100 entry on Ross.