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Lakeview Centre Land Sells For $24 Million

When we first took on the Lakeview Centre (formerly Opera Place) land sale engagement in November 2014, we knew we would face two significant challenges.  Specifically,

  1. The magnitude of the entitlements (nearly 1.1 million sf) would be perceived by many as too intense for the relatively small, West Palm Beach CBD.
  2. Uncertainty regarding the viability of developing the office space which comprises a substantial portion of the approvals.

Overcoming Skepticism to Stimulate Enthusiasm

To address these perception challenges head on, we embarked on a yearlong promotional campaign to demonstrate the extraordinary potential the downtown West Palm Beach market has to offer.

Anyone involved in large, mixed-use land developments must be a visionary who believes in the long-term potential of their property as well as its submarket.  Since Lakeview Centre will be a high-rise development, the planning and construction period will likely span several years.  Therefore, our job was to convey our vision for the property and downtown West Palm Beach two to three years into the future, when the buildings would likely be delivered.

At first, our pitch was met with skepticism.  After all, there has only been one office building developed in the market since 1989.  Furthermore, area multifamily rental and condo projects are still recovering from the last economic downturn.

Supporting the Vision with Tangible Performance Data

Notwithstanding, the downtown West Palm Beach statistics are quite compelling.

  1. Class A office space is rapidly approaching 100%.  Although this was an emerging trend when we launched our campaign in 2014, it is reality today.  The Class A buildings in the CBD are nearly 100% leased.
  2. At $50 to $60 per square foot, gross rents for Class A space in downtown West Palm Beach are the highest among the three South Florida CBD’s.
  3. There have been two recent Class A building sales in West Palm Beach at extraordinary prices.  CityPlace Tower sold in August 2014 for $507 psf and Phillip’s Point sold in May 2015 for $533 psf.
  4. Class A and B leases comprising nearly 400,000 sf are scheduled to expire between 2018 and 2020.  These tenants, along with new market entrants and tenants migrating downtown from nearby suburbs represent prime candidates to fill up a new Class A office building built on the Lakeview Centre site.
  5. The Bristol, West Palm’s newest and most luxurious proposed condominium is quoting prices ranging from $1,350 to $2,600 per square foot, dramatically enhancing the credibility of the downtown condo market.
  6. Several substantial rental apartment developers have announced and/or commenced construction of downtown projects within the past 12 to 18 months.

A Consistent Message

CapasGroup has arguably been the most consistent voice advocating for the investment desirability of downtown West Palm.  We have published multiple reports, articles and videos promoting the downtown West Palm Beach market which have, in turn, generated dozens of articles in local, regional and national publications.

At the same time, the City and Palm Beach County Business Development Board have been actively promoting the market and imploring developers for more Class A office space.

Generating Measurable Results

Over our year-long marketing campaign, we witnessed a clear evolution in investor perception of the downtown West Palm Beach market, specifically with respect to the viability of developing a new office building.  Developers who were initially hesitant came back for another look.  Serious interest was expressed by substantial, mixed-use development groups from across the US and beyond, including:  China, Canada, Argentina, Australia and Europe.

In the end, there were half a dozen highly qualified and very serious contenders for the site who submitted strong acquisition proposals.  Virtually all were “converts” who, over time, grew to appreciate the value and upside potential downtown West Palm Beach and the Lakeview Centre site have to offer.  We like to think our promotional efforts were instrumental in stimulating the investment community’s renewed enthusiasm for downtown West Palm Beach and Lakeview Centre.

Lakeview Centre closed in November 2015 for $24 million or approximately $7.48 million per acre.

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Published November 2015 by CapasGroup Realty Advisors.

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