WEST PALM BEACH - Has the fat lady sung at Opera Place?
A New York-based hedge fund confirmed it has contracts to buy two troubled
downtown properties, including land belonging to the still-unbuilt Opera
Place condo, the largest private development planned downtown since
CityPlace. CityPlace merchants complain of sagging sales behind fewer shoppers.
But none of that seems to bother Stillwater Partners. In its pitch to
investors, Stillwater characterized West Palm Beach as "perfectly situated
to become the next major city in Florida."
Stillwater has a contract to buy the vacant Opera Place parcel for $43.75
million and turn it into a mixed-use project including offices, stores, a
hotel and some condos, according to documents being sent to potential
investors of the hedge fund.
The hedge fund also has a contract to buy the troubled 1515 Tower condo on
South Flagler Drive for $35 million, the documents stated. Stillwater wants
to raze the storm-ravaged building and turn it into a luxury condo.
The 1515 Tower was badly damaged during the 2004 hurricanes, and frustrated
condo owners have been seeking to sell their units outright. A deal to sell
the tower for $56 million to another buyer recently fell through.
The contracts for Opera Place and the 1515 Tower still are in the
preliminary stages and are not done deals, cautioned Stillwater partner Jack
Doueck. He would not talk further, saying, "It's a little early."
But the agreements are the first indication that Opera Place might not be
built as planned. Construction on the 3-acre site along Lakeview Avenue was
to have begun this summer. But so far, no work has started on the project.
Willy Bermello, president of Miami-based BAP Development - Opera Place's
developer - did not return a phone call and e-mail seeking comment on the
status of Opera Place and the existence of the Stillwater contract.
However, observers say the Opera Place deal reflects the troubled nature of
the condo market, both locally and in South Florida as a whole. Indeed, like
Opera Place, several West Palm Beach condos have been delayed or canceled
for reasons ranging from rising construction costs to balky lenders to
disinterested buyers.
"West Palm Beach was caught off guard with the speed at which all these
units were being developed," said Neil Merin, chairman of NAI/Merin Hunter
Codman in West Palm Beach, and one of the area's top brokers. "But it's not
an unlimited market where you could put up anything and sell it."
In an interview Wednesday, West Palm Beach Mayor Lois Frankel said she was
familiar with the Opera Place deal but would not discuss details.
Frankel, however, cautioned not to read too much into the fact that some
condo projects might not move forward as planned. "If we have one less
condo, so what? We have so many other things going on," said Frankel, citing
the new library, a new office building and plans to redo the waterfront.
The condo market was so crazed with new entries, Frankel added, "For people
who live here, it was almost too much at once."
There are 1,355 condo units under construction in West Palm Beach, according
to Chase Scott, a spokesman for the mayor. But a total of 4,889 units are
planned or under construction in West Palm Beach, according to Jack McCabe,
chief executive of McCabe Research and Consulting in Deerfield Beach.
At the center of that condo boom was Opera Place. The project called for two
26-story towers, containing a total of 536 lavish units. Prices were high,
from $300,000 to $4.5 million. Buyers were promised big perks, including
massage suites, spinning and yoga rooms and an infinity-edge pool. Another
selling point was that Palm Beach Dramaworks planned to move to a 240-seat
theater in the ground floor of the project.
BAP paid $16 million for the Lakeview Avenue parcel in 2004. The land was
formerly owned by the Palm Beach Opera. Despite some opposition, BAP won
city approval to build extra-tall towers on the site.
Indeed, Opera Place would have been the tallest building downtown since the
downtown master plan was adopted in 1996.
In recent months, reports have circulated in real estate circles that BAP
was trying to partner with another developer on the project, or else sell
the site outright. In an e-mail sent in February, Bermello denied Opera
Place was for sale. "All of our activities at Opera Place are aimed at going
vertical with construction in the summer of 2006."
Now, summer has come and gone with no construction start. And Opera Place
buyers are antsy.
"What bothers me is they don't communicate. They don't let you know why
there is a delay," said Dan Palmon, who put $180,000 down on a $950,000
Opera Place unit.
Last week, a frustrated Palmon called the Opera Place sales center. He said
he was told the first tower would proceed as planned, but the second tower
was being canceled because the developer could not get the necessary sales
to satisfy its financiers. Palmon said he was also told deposits for the
second tower were being returned.
Sales director Lisa McKeon did not return a phone call on Tuesday seeking
comment. But earlier this month, she said the project was still waiting on
its bank loan. She said the first tower was about 85 percent pre-sold but
the second tower was only about 60 percent pre-sold. "As far as I know we
need a little bit more" in the second tower to qualify for a bank loan, she
said at the time.
Opera Place was to have been BAP's second condo in West Palm Beach. It
recently completed 610 Clematis. BAP also was working on plans to develop
Harbourside in Jupiter. But earlier this year, BAP called it quits and sold
the land, saying it had given up trying to win town approval.
By Alexandra Clough
Palm Beach Post Staff Writer
Thursday, October 12, 2006
Posted by Donald Urschalitz P.A. at October 14, 2006 03:01 PM
