Real estate developers are rushing to buy land along the waterfront in West Palm Beach, but not just along the Intracoastal Waterway.
Instead, the money also is encircling Clear Lake, the rippling body of water on the western edge of downtown, north of Okeechobee Boulevard. For the past several months, developers have battled it out to buy prime properties along South Australian Avenue fronting the lake.
These investors say the city's growth is pushing the downtown's growth west to create a new neighborhood around Clear Lake, "a city within a city," said Thomas Morrison, a Palm Beach investor who just bought his second commercial building along the lake.
This growth is spurred not only by the Brightline passenger train station, but also the promise of the University of Florida establishing a graduate school campus downtown, said Sky Groden, executive managing director of JLL, which handled the recent Morrison transaction.
Related Cos. partner Gopal Rajagowda alluded to both Brightline and the University of Florida during a talk to Kravis Center for the Performing Arts donors in March. New York-based Related Cos. built The Square, formerly known as CityPlace.
In his March 30 presentation, Rajagowda highlighted efforts by the New York-based company to expand The Square's boundaries to meet the expected demand for more office and residential towers.
But Related also has joined other companies in spreading its holdings west to the lake In February, Related Cos. bought the Reflections office building, which real estate sources said could be torn down and redeveloped into residential towers.
Morrison said the area around Clear Lake "will definitely be a residential neighborhood, with some commercial component and all kinds of accommodations for the university. We're speaking to a lot of people with some very interesting ideas."
Earlier this month, an entity linked to Morrison and his father, Carlos, beat out a host of contenders to buy the American Cancer Society building at 621 Clearwater Park Road, which faces the lake. The sales price was $7 million, JLL's Groden said.
It's the second purchase by the Morrisons in this section of the city. In December, they paid $6.5 million for 601 Clearwater Park Road, the former Paxson Communications building.
Morrison said if the University of Florida comes to West Palm Beach, graduate students will need a place to live, which makes the properties appealing for redevelopment into residential towers. Zoning in this section along Clear Lake allows for buildings rising 25 stories.
State lawmakers recently set aside $100 million for the campus, and UF President Kent Fuchs said private donations have nearly matched the pending state appropriation. The classes would be for graduate students in financial services, financial technology and artificial intelligence.
Even Related Group, the Miami condo king, has picked up property in this section, in anticipation of demand for apartments.
Last year, Related Group, a Miami-based builder led by Jorge Perez, took control of Transit Village, a mixed-use complex of apartments, hotels and offices slated for 10 acres around the Tri-Rail station. The company now wants to build 986 apartments on three towers, more than double the number previously planned. A fourth tower would feature hotel rooms and office space. All towers would rise 25 stories.
"It's a new neighborhood," said Michael Masanoff, the project's lead manager.
Much of the focus on West Palm Beach's growth has been tied to the demand for office space in the city's Class A towers. Related Cos., the entity owned by billionaire developer and Miami Dolphins owner Stephen Ross, is even building a new office tower, One Flagler, along the Intracoastal Waterway.
But people working in downtown office buildings need a place to live as well, said Angelo Bianco, managing partner of Boca Raton-based CP Group, a major real estate development and investment company.
The area around Clear Lake is appealing because it is directly off the interstate, right near the Tri-Rail and away from downtown traffic. "It's a superior location," Bianco said.
To plan for future growth, Related Cos. recently expanded its ownership of land west and north of The Square.
In February, a group that includes Related Cos. and Wexford Real Estate Investors paid $35 million for the mid-rise Reflections office buildings at 400 and 450 S. Australian Ave., facing Clear Lake.
During an interview before his presentation at the Kravis last month, Rajagowda would say only that the company "was in the exploratory phase" on what to do with the site.
Nevertheless, the Reflections office complex no longer is actively being marketed on Loopnet, the office leasing website, said Peter Reed, managing principal of Commercial Florida Realty Services in Juno Beach.
Real estate sources said Related Cos. could eventually redevelop the office buildings into residential towers.
Meanwhile, on the northern boundary of The Square, Related Cos. bought Ballet Village, an apartment complex along Fern Street, on the block where Related Cos. already owns retail buildings at 460 and 480 S. Rosemary Ave.
Entities linked to Related Cos. paid $16 million for the 76-unit apartment complex, a property that Related has wanted to buy for more than 20 years. Developer Joseph Crossen, who sold the complex to Related, declined to comment.
During a presentation to top Kravis corporate donors in March, Rajagowda laid out the company's long-term vision for The Square, noting that the company is working to transform the former CityPlace shopping and dining complex into "a place in the city."
Conceptual drawings beamed on two large screens at the Kravis Center revealed blocks of towers of steel and glass.
One rendering showed a boxy tower with tiered, palm tree-topped pedestal floors next to the new 360 Rosemary office tower along North Rosemary Avenue. Another image shows a high-rise that appears to be on the east side of the 550 block, looking north from the Harriet Himmel Theater.
Related's plan for West Palm Beach evokes Miami's Brickell Avenue, where luxury condominium and office skyscrapers stacked like wedding cakes punch holes in the skyline.
Although West Palm Beach won't be hosting 70-story towers, Related Cos.' vision for The Square is a modern high-rise business and residential district, peppered with high-end restaurants.
Earlier this year, Related Cos. took the first step toward its plan for more high-rise buildings at The Square when it obtained a zoning change that would allow the construction of a tower rising 25 stories.
Zoning approval is a required foundation for Related to later submit building plans to the city if the company decides to go forward with the tower.
During a January City Commission meeting, a company representative showed renderings of two proposed buildings, a 350,000-square-foot-office building near the Harriet Himmel Theater, and a smaller office building built over the Hibiscus parking garage.
In its application to the city requesting the taller zoning height, Related said its interest in building tall towers was driven "by the unprecedented number of high-paying jobs to the city via the relocation of multiple out-of-state financial and technology firms."
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