The Related Cos. has proposed a 25-story office tower at South Flagler Drive and Lakeview Avenue in West Palm Beach, just across the Intracoastal Waterway. And the proposal has billionaire real estate investor Jeff Greene up in arms.
“This is one of the worst ideas I’ve heard since I’ve lived here,” Greene, who owns more than $200 million of property in West Palm Beach, told The Real Deal. He noted that in a 1995 referendum, voters approved a five-story height limit for downtown buildings along the waterfront. And he doesn’t think city officials should adjust those rules for Related.
“That’s what people want. They already voted,” Greene said. “Driving along Flagler Drive is one of the most beautiful things about being here. You get a small town feeling, with boats on one side and [moderate-sized] buildings on the other.”
If the new building blocks someone’s view of the water or creates an eyesore for drivers along Flagler Drive, it will be a bad thing, Greene said.
Then there’s the traffic. “There could be 800 to 1,000 cars coming out of that building each day between 7:30 [a.m.] and 9:30 a.m. and again between 5 [p.m.] and 6 p.m.,” Greene said. “People in West Palm Beach can forget about going to the beach” around rush hour in the morning or evening. The closest bridge from West Palm Beach leading to the public beach in Palm Beach starts right across the street from the proposed building site.
Greene doesn’t buy Related’s argument that traffic woes can be lessened with smart stop lights and algorithmic traffic patterns.
He also doesn’t buy the argument that West Palm Beach is starved for Class A office space. Greene plans to build 200,000 square feet of it in his mixed-use One West Palm project at 550 Quadrille Boulevard. “I don’t have a single tenant yet, and brokers say only 50,000 square feet of my space will likely be taken by new tenants. The rest would come from other buildings.”
Related sees it differently, though the New York-based company declined to address Greene’s criticisms individually.
“We build and lease office buildings all around the world, and have spoken to close to 20 qualified potential tenants who have been looking for this type of space in the Palm Beach market for a long time,” Related Senior Vice President Gopal Rajegowda said in a statement.
“The Palm Beach County Business Development Board, and the top-tier commercial brokers in this market have been telling us the exact same thing we’re hearing directly from CEOs in the Northeast,” Rajegowda said.
So Related is ready to build without pre-leasing requirements, he said. “The demand is powerful, and West Palm Beach can’t at the moment capture the opportunities that are right in front of them because they lack this type of office space with its prime position and signature architecture.”
According to a recently released report from Colliers International South Florida, the office vacancy rate in Palm Beach County has been at 12.2 percent for the past three quarters.
If top-level tenants don’t see what they want, they’ll go elsewhere, Rajegowda said. “That’s what’s been happening in West Palm Beach, and we’d like to turn these opportunities toward this remarkable city instead of seeing it bypassed.”
But Greene is unbowed. If West Palm Beach officials approve the Related proposal, he’ll reconsider all his projects in the city. “Would I go forward?” he asked rhetorically. “I’m not sure. Maybe I’d sell my properties to other developers.”