Downtown West Palm Beach on brink of apartment building boom
There’s a rush of new construction set for West Palm Beach.
Don’t expect to see another glut of condos, however.
This time, apartment builders are hot to build new rental housing.
Activity is so strong that the city expects to collect about $320,000 this fiscal year in planning fees, the most in seven years, according to Rick Greene, West Palm Beach’s planning manager. He called the construction resurgence “a function of what’s happening in the market.”
The move to build apartments come as rental rates are being pushed up by strong demand, particularly from people who lost a home during the real estate crash and now have damaged credit, making obtaining a mortgage impossible.
New apartments already are in the works for several cities, including Boynton Beach and Boca Raton.
But downtown West Palm Beach hasn’t seen any new apartment activity – until now.
Already in the works are apartments on two sites near Currie Park, along Ponce de Leon Avenue.
One site will be 102 apartments and the other will be 105 units, according to Greene. The properties are owned by Neil Kozokoff, president of Parkland Companies in West Palm Beach. Kozokoff once had planned to build a luxury condo called Barcelona Square during the real estate boom but sold the land when the market began turning south.
Kozokoff said he assembled the two sites near Currie Park years ago, but decided to build the four-story apartments now because he sees from his other apartments that occupancy rates are on the rise. He said construction could start by the end of the year on the 105-unit building, at Ponce and 23rd Street, with completion expected by early 2014.
“West Palm Beach is a very attractive place to live,” Kozokoff said. And with the sudden increased demand for apartments, “the glass is finally half full,” he said.
In addition, Cypress Realty of Florida is talking with several prominent national developers about turning a 2 1/2 block parcel in West Palm Beach into apartments, said Nader Salour, vice president of Jupiter-based Cypress.
The West Palm Beach parcel was approved for a condo project years ago known as North Olive Place, but with the crashed real estate market, the project never was built. The mostly vacant but prime site is located between Dixie Highway and Olive Avenue.
Salour said the project could be two or three towers, consisting of 400 to 500 apartments, possibly rising as high as 12 stories. Apartment developers are interested in a joint venture, so financing would not be a problem, he said.
“We’re in discussion with at least three entities,” Salour said.
If city approvals go smoothly, Salour said he could start construction in 2013, with the apartments completed in 2014. He expects to make a decision shortly on choosing an apartment developer.
Salour believes that apartment demand will be strong for some time. “The universe of renters has increased over the last few years, and I don’t think that’s going to change,” Salour said.
Another possible apartment site: A parking lot on Banyan Boulevard at Dixie Highway next to an office building that contains a Wells Fargo Bank branch. The property is owned by the Johnson family, which also owns the Flagler Center office complex on Flagler Drive.
Richard Johnson Jr. said he’s talking to apartment developers now about developing the parking lot, but it’s still unclear whether the family would sell the property or do a joint venture.
Bill Jacobson, a West Palm Beach real estate lawyer, said an old H&R; Block building on the southwest corner of Datura Street and Olive Avenue also is being considered for apartments.
“Apartments are easier to finance than condos or an office building, and my client’s experience is in residential,” Jacobson said. “Apartments have good long-term upside, and as rents grow these projects become more valuable and can be converted to condominiums.”
In addition, a tract owned by WCI Communities along Flagler Drive, near Currie Park, is being eyed by apartment developers, according to Brad Capas, senior director for Cushman & Wakefield in Fort Lauderdale. The land once was approved for a 64-unit condos rising six stories, but new height limitations would limit the project to four stories unless an exception were granted, he said. “We’ve had folks looking at it as rental multi-family, but it is not under contract,” Capas said.
West Palm Beach attorney Harvey Oyer also is working on a potential downtown apartment deal, but he wouldn’t identify the client or the site, yet.
“Folks are bullish on West Palm Beach residential,” Oyer said. “By the time (a project ) is approved or built, it’s three years into the future, and the first guys in are going to make money.”
Ram Development of Palm Beach Gardens this year will start building a 208-unit apartment complex in the heart of downtown Boca Raton. Ram president Casey Cummings said the company is looking for potential sites for new apartments in downtown West Palm Beach too.
The lawyers and developers agreed that since the West Palm Beach condos built during the boom are filling up with renters, buyers and investors, by the time the apartments are built, there will be demand for new housing downtown.
In addition to people with credit problems, some of the demand will come from prospects who want the flexibility of renting without a long-term commitment, as is the case with a purchase. Other renters might be people enrolling in the Digital Domain Institute classes offered downtown in partnership with Florida State University.
Meanwhile, outside the downtown, along Palm Beach Lakes Boulevard at Hank Aaron Drive, former Senate contender Jeff Greene is planning an apartment complex dubbed Mizner Lakes, consisting of some 500 units, according to West Palm Beach’s Greene. The site is across the street from the soon-to-be-rebuilt Palm Beach Mall.
The 22-acre vacant property previously was zoned for 677 condos but the owner lost it in $44.8 million foreclosure judgment to a bank. Greene scooped it up for about $6 million, said Reese Stigliano, senior vice president of Brenner Real Estate Group in Fort Lauderdale, who handled the sale.The apartments are expected to be three stories with surface parking.