Related pays almost $200M for former PBAU dorm site that will become luxury twin towers
Related Cos. of New York last week doubled down on its bet on West Palm Beach, paying nearly $200 million for rare Intracoastal Waterway land slated for luxury condominium towers.
South Flagler House, an ultra-luxury condo project planned by Frisbie Group of Palm Beach, will now be developed by Related, West Palm Beach's dominant developer.
In an exclusive interview, Related Chairman and Miami Dolphins owner Stephen Ross explained why he made the stunning $195 million purchase, which closed on Friday and was recorded with the Palm Beach County clerk's office on Monday.
Related has poured billions into the city during the past two decades, and Ross said he remains bullish about the future despite the economic warning signs, including high interest rates.
More: PBAU, Frisbie Group settle lawsuit over WPB land. What's next for S. Flagler House condo?
"I really believe in West Palm Beach," Ross, a part-time resident of Palm Beach, said on Monday. "It's going to become the model city in the country. It's going to attract more people and the growth will continue."
Frisbie Group recently settled a lawsuit with a rival developer that had previously stymied efforts to build the 27-story, twin-tower complex at 1355 S. Flagler Drive, site of two old Palm Beach Atlantic University dormitories.
The lawsuit’s settlement will now allow the waterview project just south of the downtown to be built.
More: Related Cos. has plans for West Palm and neither hurricanes nor a recession can stop them
Related's purchase comes as the company, which is building the mammoth $25 billion office and residential Hudson Yards complex in New York, seeks to expand its presence in West Palm Beach. In addition to building high-rise office towers, Related now is seeking to dominate the city's skyline with high-rise residences as well.
Related Cos. is a New York-based real estate development company that built The Square, formerly CityPlace, in 2000. The company also built the Hilton West Palm Beach, and owns three Class A downtown office complexes, including CityPlace Tower, which it also constructed.
Currently, Related is building three more office towers in the city, plus a mixed-use apartment, retail and office tower at 575 Rosemary in The Square. Plans also are afoot to build a condominium tower at 1901 N. Flagler Dr., where Temple Israel is located. The temple would move into the tower when completed.
Ross said sales of South Flagler House's units are expected to begin in the fall and will be led by Suzanne Frisbie, a real estate agent with the Corcoran Group on Palm Beach. Frisbie is related to the family that owns Frisbie Group.
Ross praised the South Flagler House plans by Robert A.M. Stern Architects, marking the global architecture firm's first luxury residential high-rise in Florida. Related Cos. built a number of buildings designed by Robert A.M. Stern Architects, nicknamed RAMSA.
“We see this as a great market, and I think Palm Beach deserves a great building," Ross said
The South Flagler House condos were set to feature 82 units plus seven ground-floor townhouses. But Ross said the townhouses will not be built because the site needs more parking. However, he expects to increase the number of condo units to about 100.
Real estate sources said this means that units will be slightly smaller than originally planned by Frisbie. They also are expected to be less costly. Related said prices will start at $7.5 million.
More: Boynton Beach: Developer claims "extortion" by rival property owner, now a major project is on hold
Frisbie Group starts South Flagler House sales, then is stopped by lawsuit
In 2021, Frisbie Group revealed plans to build a twin-tower condo complex on a three-acre parcel of property belonging to PBAU, a private Christian college perched between the Intracoastal Waterway and Olive Avenue, just south of the Royal Park Bridge to Palm Beach.
Last July, Frisbie Group, in partnership with Houston-based developer Hines, paid PBAU $41.5 million for the land.
Pre-construction sales quickly went through the roof. Condo units were selling for Manhattan prices, about $10 million each, with some penthouses pre-selling for a whopping $70 million each. Within months, Frisbie Group said it had racked up half a billion in sales.
More: PBAU, Frisbie Group settle lawsuit over WPB land. What's next for S. Flagler House condo?
But a lawsuit from rival builder Two Roads Development stymied development, and financing for the project.
Two Roads accused Frisbie and PBAU of conspiring to "steal" the luxury condo plan and site from them. Frisbie and PBAU responded by calling Two Roads "failed and disappointed bidders."
After a year and a half of fierce litigation, the lawsuit was settled in July. Terms weren't disclosed.
Ross said Related wasn’t involved in the South Flagler House litigation between Frisbie Group and Two Roads, however.
More: Palm Beach West: How West Palm is becoming an extension of the island
Related's big bet on West Palm Beach
More than any other company, Related is responsible for transforming a once-sleepy city across three bridges from glamorous Palm Beach into an emerging luxury enclave for residents and companies.
Florida always is a popular destination for migration, but the pandemic accelerated the trend by residents coming from cold, dense climes elsewhere in the country. And West Palm Beach in particular became a magnet for migration during the pandemic as hedge funds and private equity firms made their way to Related-owned office towers in West Palm Beach from the Northeast, the Midwest and even California.
Palm Beach County's growth during the pandemic caught the eye of other developers eager to buy land and built their own projects. But Related and Frisbie Group quietly have capitalized on their deep ties to West Palm Beach and Palm Beach to win the right to build residential projects on prime sites near the coast.
Sometimes these locations are sought after by both companies.
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Earlier this year, members of Family Church in West Palm Beach picked Frisbie Group over Related Cos. and another firm to lease half of the church's prime 9.7-acre site at 1101 S. Flagler Drive. The price for the Family Church land is $90 million to $120 million for a 99-year lease.
Frisbie Group and Related have been in talks about jointly developing two residential towers on the site, but Ross said there’s no agreement yet.
Meanwhile, in the weeks leading up to the sale of South Flagler House,Related’s name came up as a new partner with Frisbie Group to replace Hines. Instead, Related wound up buying the condo project outright.
What's ahead? More growth, to a point, Ross said
Residents and companies still are coming to Palm Beach County, albeit at a slower pace than during the heart of the pandemic, Ross said.
He likened West Palm Beach to Greenwich, Connecticut, a suburban enclave for New York executives and a financial hub in its own right.
But Ross said Palm Beach County's expansion has its limits, and people shouldn't fear a transformation to a notable city to its south.
"No one is trying to create Miami in West Palm Beach," Ross said.
Alexandra Clough is a business writer and columnist at The Palm Beach Post. You can reach her at aclough@pbpost.com. Twitter: @acloughpbp. Help support our journalism. Subscribe today.
This article originally appeared on Palm Beach Post: Related Cos. pays nearly $200 million for WPB waterview condo site
