A new Marriott Autograph Collection hotel, which will be part of a larger mixed-use development on the site of the former West Palm Beach City Hall, got a $42 million boost from Aztec Group Inc.
Aztec managing director Boaz Ashbel in Miami secured the loan, which covers 70 percent of the $60 million construction cost, on behalf of hotel developer, owner and manager Concord Hospitality Enterprises Co. Florida Community Bank was the lender in the deal that closed May 15.
The 208-room hotel will be at 201 N. Flagler Drive overlooking the Intracoastal Waterway. It will be next to a 435,000-square-foot mixed-use project being built by the master developer, Navarro Lowrey Properties Inc., on the old three-acre City Hall property.
The larger project will include 250 residential units, more than 30,000 square feet of retail and restaurant space, a parking garage and a park.
Ashbel secured the loan even though the availability of hotel construction financing is in decline.
“Construction financing for hotels is very challenging, very hard to come by because you have very few lenders who feel comfortable with it,” Ashbel said.
In this case, Concord’s track record was a key factor.
Concord is a hotel developer, owner and manager with properties across the U.S. and Canada. Its hotels in South Florida include the Hyatt Centric South Beach Miami at 1600 Collins Ave., Hyatt Centric Brickell Miami at 1102 Brickell Bay Drive and Hyatt Place Miami Airport-East at 3549 NW Le Jeune Road, according to its website.
But it wasn’t just Concord’s good standing that aided the deal. Downtown West Palm Beach, traditionally quieter on the real estate front than downtown Miami and Fort Lauderdale, has been growing, Ashbel said.
“West Palm Beach overall as a downtown market has shown a tremendous amount of growth,” he said. “It’s a market that is still growing … so that made it a little bit easier.”
In the office market, downtown West Palm Beach in the first quarter had a lease rate of $44.83 per square foot, the same as Palm Beach County’s central business district and lower than that of only Palm Beach, where the lease rate was $65.27, according to Avison Young.
Some of the significant transactions there this year include Aventura-based real estate firm Triarch Capital Group LLC’s $22.5 million purchase of The Forum, two office buildings at 1655 and 1665 Palm Beach Lakes Blvd.
The retail market in the city also has strengthened with an 8.4 percent increase in the average asking rent, according to Marcus & Millichap.
The Brightline station at 501 Evernia St. in downtown West Palm Beach also is expected to encourage more growth.
“It’s a combination of factors that are making West Palm Beach quite attractive and exciting,” Ashbel said, speaking generally about the market and not about deal specifics.
Marriott’s Autograph Collection is a high-end brand that usually has 4 to 4.5 stars, according to Ashbel.
This hotel expected to open in fall 2019 will have more than 4,000 square feet of meeting space, a gym, restaurant and rooftop swimming pool and lounge.