Jeff Greene (AP)
Billionaire real estate mogul and former U.S. Senate candidate Jeff Greene said his investments in West Palm Beach’s last major undeveloped tracts of waterfront land could reach $250 million.
Greene has been scooping up parcels in the Currie Park corridor, a burgeoning area earmarked for redevelopment and rezoning by city officials looking to spur economic growth.
He’s acquired four lots and expects to close on a fifth in October, which would give him about eight acres west of Currie Park near the Flagler Drive waterfront.
“This is a very exciting and dynamic part of West Palm Beach,” Greene said. “But the plans will depend on the zoning. Once we know about the zoning as far as height goes, then we’ll know.”
Greene, who is No. 721 on Forbes’ billionaires list, has an estimated net worth of $2.5 billion. He gained most of his wealth purchasing credit-default swaps on subprime mortgage-backed bonds in 2007 and has since been on a buying spree, acquiring and repositioning distressed property.
He closed this month at a deep discount with affiliates of the defunct Lehman Brothers on two sites seized in a $24 million foreclosure action in 2013. He paid $5.5 million for both parcels—nearly 3 acres with a vacant 64,000-square-foot medical office building at 2617 N. Flagler Drive and 1.61 acres with a vacant 11,500-square-foot bank branch at 2609 Poinsettia Ave.
Greene said he intends to demolish both buildings and develop mixed-used projects with retail and residential.
“This area is experiencing robust interest from private investors seeking opportunities for development in the North Flagler/Currie corridor,” said Brad Capas, president of CapasGroup Realty Advisors in Fort Lauderdale. “With this transaction, all of the significant land parcels in this corridor are now owned by private developers, positioning the submarket for an exciting transformation.”
One of Greene’s earlier acquisitions was the 2½-acre Artist Square, where 75 residential units are allowed. On Poinsettia, Greene envisions a range of retail to serve residents and visitors to downtown West Palm Beach.
“It would be a good place for a supermarket, which that area desperately needs,” he said.
Greene is waiting to finalize plans while city officials mull a proposal to lift zoning restrictions that have stilled development in the Currie corridor. Despite the high-traffic, high-value location, the area has seen no major development in more than a decade.
“I’ve been active in that market for several years and encountered this time and time again,” said Capas, a broker who’s worked along the Currie corridor since 2011. “The small sites, coupled with height restrictions, really rendered development unfeasible.”
Current zoning restrictions tightly control development in the corridor and limit building heights to four stories. Unless developers can build taller projects, they’ll lose money investing in expensive downtown waterfront lots, Capas said.
City officials acknowledge the problem.
“There’s a challenge for people to develop very expensive dirt and be limited to those types of returns,” said Jon Ward, executive director of Redevelopment Management Associates, the contractor running the city’s Community Redevelopment Agency. “Why in the world during an aggressive development period would fabulous prime waterfront property not be developed? The reason is it’s just not profitable to do it.”
In March, the CRA held a weeklong charrette to gather public input and formulate development plans for the area. The following month the group presented a proposal to the City Commission that included plans to rezone the area and increase building heights to up to 15 stories. If the city approves the long-term plan, it would be the first step to connecting Currie Park to Northwood Village on the west and encouraging millions of dollars in private development.
“The momentum and interest in this area has been building for several years,” said Capas, who worked with Cushman & Wakefield of Florida on Greene’s last purchases and is handling the sale for the final parcel under contract. “But this is happening right now. In 2011 there were nine parcels and six owners, including distressed owners and three lenders who had taken properties back. But in the last few years, those properties have transferred to developers and private owners. The stage is now set for the area to be redeveloped.”
With his latest purchases, Greene became one of three major landowners in the area.
The other large stakeholders are Eastern Financial Florida Credit Union, which owns nearly 4½ acres at 2121 N. Flagler Drive, and BBX Capital Corp., which controls about 3 acres at 2501 N. Flagler Drive. The investors hired a design firm to evaluate potential projects but did not proceed with development.
“At this point we’re sitting back and waiting to see how the city changes the code,” said Harvey Oyer, a land use attorney at Shutts & Bowen, which represents both owners. “We will design the concept in compliance with the new code.”
Greene said he’s open to collaborating with Eastern Financial and BBX on development plans and has had brief talks with them.
“We bought these properties thinking we would develop what we could,” he said. “But I applaud the city’s vision. They’ve really done an amazing job of turning around downtown. I never thought they were going to change the zoning, but by changing the height, they’d solve a lot of problems.”