Don Peebles: Ascending from Coast to Coast
The steady rise of real estate mogul Don Peebles Jr.
By Matt Pressberg
Don Peebles had it all planned out. He was going to major in pre-med at Rutgers University, move on to medical school, and become a doctor to establish some financial security. Then he’d use his income to invest in real estate and get really rich. He even had a role model in his uncle in New Jersey, who had done the same and lived a very comfortable life.
But as a 19-year-old college sophomore, he had an epiphany: Why not just cut out the first step?
He set a goal to become a multimillionaire by the time he would have graduated from medical school at 26 years old. He got there.
Peebles, now the founder, chairman, and CEO of New York–based Peebles Corp., is one of the wealthiest African-American real estate developers in the United States, with Forbes estimating his net worth in excess of $700M. But the quiet force and longtime D.C. power player is now stepping into a brighter spotlight with his largest project yet in a land where many come to make it big: Los Angeles.
Peebles, 59, recently visited the location of that project, Angels Landing in Downtown Los Angeles, set to debut in 2024. The $1.6B residential, hotel, and retail complex that sits on a vacant parcel on Bunker Hill will feature an 80-story skyscraper, making it one of the tallest buildings in the Western United States. The plan is to build a vertical community to tie together one of the more disjointed areas of L.A.’s bustling core.
CSQ caught up with Peebles at the Waldorf Astoria in Beverly Hills after a long day of site tours to find out more about his path to success—and where it might be headed next.
A rendering of Angeles Landing in Los Angeles, which will combine hotel, residential, and retain in an 80 story tower, one of the tallest buildings in the Western US
MADE IN AMERICA
Roy Donahue Peebles Jr. was born in 1960 in Washington, D.C., to a 19-year-old mother. His parents divorced when he was five. Although his family struggled financially, his enterprising mother exposed him early on to real estate and politics. She became a real estate salesperson and broker as a way to make extra money to support the family when they were living in Detroit for a few years, and a young Peebles filed that away as a possibility to support himself in the future.
The family eventually returned to D.C., where Peebles got his first white collar job (he’d held the positions of gas station attendant and janitor previously), as a page in the House of Representatives on Capitol Hill during his last two years of high school. He was then an intern for two members of Congress, and during his senior year, served as a full-fledged staff aide for another member of Congress.
In order to do that work, Peebles attended a special school for pages. Classes were held on the top floor of the Library of Congress and began at 6 a.m., which meant he had to wake up at 4:30 a.m. to catch the bus. He would be in class until about 10:30 a.m., then cross the street to get to work at the U.S. Capitol. “I got a great education about life, politics, and how the world really works,” he says.
On top of that, Peebles was on the school basketball and chess teams, which meant he sometimes wouldn’t get home until 10 p.m. That was followed by at least two hours of homework and another pre-dawn wake up the next day.
After high school, Peebles went to Rutgers University in Newark, New Jersey, where he studied pre-med and worked part-time at his uncle’s office and in the local office of Rep. Peter Rodino.
“I was kind of bored with school,” he says. “I wanted to be busier.” So, at the end of his freshman year, Peebles decided to try real estate. He planned on giving it a year, going to college part time in D.C. and getting his real estate salesperson’s license.
The problem was, this was 1979 when interest rates were 25 percent. Peebles was a great salesman, but few people could qualify for loans to pay for houses. Nevertheless, by his sophomore year, he was dead set on becoming a real estate mogul.
RAISING CAPITOL
After leaving school, Peebles shifted gears and hung a shingle in D.C. as a real estate appraiser. In 1982, Marion Barry, whom Peebles had befriended as a teenager, ran for re-election as the mayor of Washington, D.C., and won. Since moving back, Peebles had become close with several of Barry’s staffers. He was offered a position as chairperson of the real estate commission. He wasn’t able to hold that role since he was a licensed salesperson and not a broker, but was urged to consider a different position: on the property tax appeals board.
The next year, he politically maneuvered his way to become chairman of one of the most important real estate boards in D.C., at age 24. He continued building his real estate appraisal business, but in 1986 a real estate opportunity crossed his desk that would be pivotal in his career. He was just turning 26. It was in an area targeted for economic development by the mayor, with whom Peebles had a strong relationship. He got the city to pre-lease office space in the building. Then, he found some investors and got half the deal. “I understood how politics and business are interconnected,” he says.
Peebles had been looking at development sites that were owned by the city of D.C. When he started his appraisal business, he’d taken more office space than he needed because he got a good deal and sublet extra space to two real estate brokers. One of those brokers helped him find investors for a development deal he was putting together.
That deal didn’t get done, but the other subtenant came through with an opportunity just in time. “He presented a development site in this area that was targeted [by the city] for economic development and a letter from the mayor proposing to lease office space to be built on that site by a developer,” Peebles explains. “But the developer didn’t have control over the site, because he was haggling over the price.”
Peebles made a deal to pay the seller the asking price but asked for more time. He approached the investors from the other deal to ask how they’d like a deal to lease to the government for 20 years. Peebles still owns the property today, where his son is overseeing renovations.
Once he did that deal, he left the property tax board and used his institutional knowledge to start a business helping property owners appeal their tax assessments. Then the S&L crisis hit. It was a disaster for most real estate investors—but not Peebles.
“Property values were plummeting, so my tax appeals business skyrocketed. I was getting a lot of cash coming in,” Peebles says. “So I took the cash and started buying properties. Many of my clients lost their properties and the banks would hire us to do assessment appeals. Sometimes I would buy from the banks.”
Working in his New York office
BEYOND THE BELTWAY
In 1990, Barry was arrested after being caught smoking crack cocaine in a police sting operation. “The politics changed in the city for a period of time, so I had to look at alternatives,” Peebles says.
He got involved in national politics, serving on Bill Clinton’s national finance committee during the 1992 presidential race. But his old friend Barry had an improbable comeback, winning election as mayor of D.C. again in 1994. At the time, Peebles was negotiating with the city for two buildings. Despite what he says was a far superior offer, Peebles lost the deal. He took it as a sign that the climate had changed for him in D.C. and decided to take a vacation somewhere warmer. He and his new wife, Katrina, headed to Miami.
The two of them quickly fell in love with the energy of the city and decided to buy a vacation home there. Again, his timing was perfect, with Miami at the start of a real estate boom. While spending the holidays at that vacation home, Peebles read a hotel site in Miami Beach. The Shorecrest Hotel had recently been purchased for $900,000, but was now on the market for $5M, Peebles recalls.
What really caught Peebles’ eye was that the site was situated next to the Royal Palm hotel, which was owned by the city of Miami Beach. The city was looking to develop the site, and its request for proposal called for a majority African-American developer. Miami-Dade County was coming off a three-year boycott led by the African-American community, which targeted the region’s economic lifeline, the tourist industry. Peebles was the right developer at the right moment.
He called the broker who sold him his house and said he wanted to see the Shorecrest and get a copy of the RFP for the Royal Palm. Then he went back to D.C. “On the flight back,“I told Katrina, ‘Look, we’re going to bid on this hotel project, and we’re going to win it, and it’s going to change our lives,’” Peebles says.
Peebles approached Hyatt heir Nick Pritzker, his biggest competitor for the project, with an offer to work together and build a Hyatt-flagged hotel on the site. But Hyatt blew him off. Another local developer said, “there was no way a black guy from Washington, D.C., who hasn’t done anything here was going to win the site,” Peebles recalls. That only motivated him more.
They also underestimated his political ability. Peebles was a savvy operator who was experienced in partnering with government entities and capitalizing on opportunities set out for minority developers. He also had some Clinton connections that came in handy. After a hard-fought battle, Peebles was approved as developer of the Royal Palm in June 1996.
It was the biggest project he’d ever built. And it turned out that not winning those deals in D.C. was a bigger win. “It taught me the most important lesson,” he says. “Setbacks are opportunities in disguise.” It also forced him out of a comfortable path in D.C. “I would have stayed just like many developers do, in the same place,” he says. “And my life would have been totally different.”
CLUB MADE
Peebles was just getting started in South Florida, and as has been typical in his career, his timing was impeccable. The condo craze was exploding, and business was booming. A broker told Peebles that Miami Beach’s historic Bath Club, essentially a country club on the ocean, was in financial trouble and was going to sell. One other thing: It was a “restricted club” that didn’t allow black or Jewish members. “I got to buy a site and also make a point,” Peebles says.
To try to survive, the club had its property downzoned to reduce property taxes. Then a law was changed that limited upzoning, which kneecapped its value. However, during his due diligence, Peebles’ team discovered a technicality that eventually allowed him to get the club rezoned. He developed condos on the site and overhauled the club.
From there, Peebles saw a lot of possibilities and his goals and desires grew bigger and more national. His wife had lived in San Francisco, so he bought properties in the Bay Area. He bought the offices of Internet ad service DoubleClick and sold for twice the purchase price.
He also sold the Royal Palm, in December 2004 for $127.5M, the highest-ever price paid at the time for a Miami Beach hotel. (It is now part of Marriott’s Tribute Portfolio line.) He finished work on the Bath Club and sold all of the condos by 2006.
When Peebles built his first building in Washington, D.C., he donated 10 percent of the proceeds to a nonprofit community development organization. The head of that organization called Peebles one day to ask his opinion about a condo in Miami. The friend had taken out a second mortgage on his D.C. house to put a down payment on a condo and flip it before closing, because he couldn’t afford the mortgage. “If that’s who is buying condos, all these buildings that I think are sold out are not really sold out,” Peebles says. “The supply is even greater than statistics are showing. We’re done in this market for a while.”
Angeles Landing development site
ESCAPE TO NEW YORK
Peebles was relatively unscathed by the 2008 financial crisis, but the end of the last decade was challenging in other ways. He lost both parents and an in-law in a two-year period, and he and his wife decided to move to New York in fall 2011, where he made an immediate impact. In 2013, he was awarded the largest single building sale in New York City history by the administration of then-mayor Michael Bloomberg, at 108 Leonard Street. “I learned, again, that the public-private deal structure and the political skills I had developed as a teenager in Washington, D.C., were very portable,” he says.
He started developing in other cities, including Philadelphia, Boston, and Charlotte, North Carolina. Now he’s in Los Angeles for the biggest project of his career and the last one he’ll actively lead himself. “The nice thing about starting your real estate development career at 19 is that you can have lifetimes of success and still be a relative youngster,” he says.
MAKING AN IMPACT
Peebles says his proudest accomplishments are his children, Don III and Chloe. Don III is already making his presence felt in the family business. “He’s got me focusing on affordable housing,” Peebles says of his 25-year-old. “He wants to do something to make an impact. I’m very optimistic that the company I’ve built and the values I’ve worked for will evolve into even a better place through the efforts of my children; they are good people.”
In response to the lack of gender and racial diversity in the real estate development business and the increasing shortage of affordable housing, Peebles is starting a fund to invest in developers of affordable housing to help address the crisis in cities like Los Angeles and San Francisco. Peebles says supporting emerging, early career developers who are building midsize complexes with units not marketed toward out-of-town investors but working locals can help boost available supply. He’s putting his money where his mouth is, starting a fund focused on urban infill and workforce housing. The fund will invest in projects mostly in the $20M to $50M range. He’s setting a goal for the fund to do 60 deals, with 10 of those in California, and he’s encouraged by the reception he’s getting from an evolving society.
“I see our society finally being compelled to look at things that are wrong and being able to dream about what can be and then going out and demanding it,” he says, admitting it’s both altruistic and good business. “Those projects pay better returns than those big risky projects you’re seeing now,” he says.
He also believes more has to be done to open up real estate development opportunities—among the greatest wealth generators—to those who can’t tap establishment networks or rich family and friends to get started. He says that’s not the responsibility of the government, but the private sector. He’s tried to lead by example, showing that being more inclusive can bring greater success.
While Peebles has previously expressed interested in running for mayor of New York, that’s not in the cards now. There’s too many deals to be done. Others might want to rest on their laurels after 40 years of real estate development. But that’s why they’re not Don Peebles.