Related Cos. Pays $195M for West Palm Beach Site to Build Luxury Condo
By Julia Echikson August 21, 2023 4:41 pm
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Stephen Ross’s Related Companies paid $194.6 million for a waterfront site in West Palm Beach, where the sellers had planned to build a Robert A. M. Stern Architects-designed condo complex, property records show.
Located at 1355 S. Flagler Drive, just east of the Norton Museum of Art, the 3-acre site faces the Intracoastal Waterway. The sellers, a joint venture between development giant Hines and local developer Frisbie Group, paid $41.5 million for the land last year.
Soon after, the pair launched sales for a luxury condo development, dubbed South Flagler House. The approved plans called for two 28-story towers, which together would house 82 condos and seven townhouses. Asking prices ranged between $10 million and $75 million for the two duplex penthouses.
But no construction took place, likely due to a lawsuit brought by Two Roads Development, which was under contract to buy the site until the Frisbie Group swooped in and ultimately closed the deal. Two Roads and Frisbie settled the case out of court last month, according to The Real Deal.
Houston-based Hines provided a $159 million mortgage to Related, which plans to keep the approved condo complex. It was not immediately clear whether Hines would keep a stake in the property.
The development marks the New York developer’s first condo project in Florida.
The purchase, one of the largest land deals in recent years, is the latest addition to Related’s West Palm Beach empire, which began 25 years ago with the construction of a mixed-use development, now called The Square, that anchors the city’s downtown.
Today, the developer is also the city’s largest Class A office landlord, having developed 360 Rosemary, which attracted financial heavyweights Goldman Sachs and Elliott Management as tenants. It’s now building the One Flager tower and is in the early stages of developing another 800,000 square feet of office space.
“We will bring the industry-leading luxury quality that we’re known for across the country to West Palm Beach,” Related chairman and founder Stephen Ross said in a statement.
While South Florida’s residential market has cooled in recent months, Palm Beach, an island-town home to billionaires including Ross, has continued to notch big-ticket sales. Developers are betting that the momentum will continue and that limited supply on Palm Beach island will push buyers toward the mainland.
Just north of the Flagler House site, Two Roads and Alpha Blue Ventures are building a 24-story condo building after securing a $122 million construction loan two years ago. Other luxury condo projects underway in West Palm Beach include Savanna’s Olara, BGI Companies’s Alba Palm Beach, and Forest Development and Royal Palm Companies’ Nautilus 220.
Julia Echikson can be reached at jechikson@commercialobserver.com.
