Stiles, Motwani, Ellis talk Fort Lauderdale's development boom for Breaking Ground with Brian Bandell
Posted on 3/31/2017
Three of Fort Lauderdale's most prominent developers spoke about the transformation of the city's downtown in the Business Journal's Breaking Ground with Brian Bandell panel on March 30.
About 120 people attended the sold-out event at Broward College's downtown Fort Lauderdale campus. It was sponsored by Broward College and the Greater Fort Lauderdale Alliance.
The panelists were Stiles Corp. Chairman and CEO Terry Stiles, Merrimac Ventures President Dev Motwani and Ellis Diversified Chairman and President Jim Ellis. All three have prominent downtown projects in the works.
Stiles plans to build the Residences of Las Olas with 419 apartments behind theSun-Sentinel building. On part of BC's campus on Las Olas Boulevard, he has received the college's approval for a land lease to develop a 365,000-square-foot office building with ground-floor retail. Behind that office on a site that's currently a Bank of America drive-thru, Stiles has proposed 390 apartments. He hopes to attract a grocery store to the project.
Motwani has received city approval for the 195-room Flagler Village Hotel with a Hilton brand, which he hopes to break ground on this summer. He's partnering with Property Markets Group to redevelop half of the Las Olas Riverfrontshopping complex into 1,200 apartments plus new ground-floor retail. Motwani said he's considering plans for a hotel and condo on the other half of Las Olas Riverfront, but he first wants to see how condo sales perform at 100 Las Olas, which Kolter Group recently broke ground on.
Motwani is also a partner in several condo projects on Fort Lauderdale beach, including Paramount Fort Lauderdale, the Gale Hotel & Residences and the Four Seasons Hotel & Private Residences.
Ellis, who was one of the earlier residential developers in Flagler Village, has shifted his sights south of the New River. He's has secured approval for 380 apartments at Southwest First Avenue and Southwest Fifth Street, and is seeking approval for 362 apartments in the same area. He's also on the board of the city's Downtown Development Authority.
Stiles said the current downtown development wave was set up by the original wave of office towers, starting with the Sun-Sentinel building in 1989. Those first buildings had ground-floor retail space, but the tenants were focused on business — such as shipping and print shops — and not residents. Eventually, developers built residential towers downtown so people could live closer to work, he said.
"We are probably the most walkable 24-hour city in the Southeast U.S.," Stiles said.
The national trend of people moving back to inner cities has help attract residents to downtown Fort Lauderdale, Stiles said. Most millennials care more about living in an exciting environment than how big their bedrooms are, he added.
Ellis said about 3,000 residential units are planned north of the New River, with 2,000 additional units on the south side. That density would create more demand for retail, including grocery stores. Flagler Village has proven popular with millennials because it has lower prices. Ellis said 86 percent of the one-bedroom apartments he developed in Flagler Village have dual occupancy, demonstrating that the younger generation doesn't place a premium on living space. Because of that, he plans to build his next apartment units a bit smaller.
Motwani said many empty-nesters are moving to downtown Fort Lauderdale as they downsize from larger homes and want to live in the county's cultural center.
All three panelists said Fort Lauderdale hasn't seen the influx of international residents that has occurred in Miami. But Motwani said his beachside condo projects have recently received more attention from South American buyers because their prices are about half that of Miami, plus Fort Lauderdale-Hollywood International Airport has added more international flights.
Ellis said residential developers in downtown Fort Lauderdale will probably stick to rentals until it can be demonstrated that new condos there could sell for over $600 a square foot. He noted that the Related Group's Icon Las Olas, which is currently under construction, is slated as a rental, even though the developer has vast experience with condos.
"A condo downtown would have to be for the higher end of the market because banks want higher deposits," Motwani said. "There is demand, just not the velocity for 200 to 300 units now."
There are currently four hotels under construction or approved for downtown: Motwani's Flagler Village Hotel, the Hyatt Centric at 100 Las Olas, a dual-branded Tribute Portfolio-Element hotel by Wurzak Hotel Group, and a Fairfield Inn & Suites by Lucky's Management. Motwani noted that his hotel would be priced on the lower end compared to his competition, and he would be close to the Brightline passenger rail station.
"The residential buildings, and the new office building [by Stiles], will spur more demand," Motwani said. "More travelers will be coming to town, but they won't all stay on the beach. But downtown is still five to 10 minutes from the beach."
For the office market, Stiles said the time is right for a new Class A building on Las Olas because only two existing buildings are hardened to hurricane protection standards, and nearly 95 percent of the Class A space on Las Olas is occupied. Many existing tenants, especially law firms and financial professionals, want to expand, but have no space, he said.
In addition, office rents have increased so rapidly that it finally makes sense, from a financial perspective, to build, Stiles said.
The biggest issues with all of this construction is the growing cost, he said.
"The No. 1 challenge is skilled construction labor," Stiles said. "There's a fee creep for subcontractors because everyone is so busy. From Amaray [completed in 2016] to the Residences of Las Olas [now proposed], it is up 20 percent."