Last night’s Downtown Action Committee (DAC) meeting approved One West Palm, a massive mixed use project sited at 550 Quadrille Boulevard.
The size of the site is over 3 acres and has been through multiple plans through the years, including a transfer of development rights (TDR) at some point which are still able to be utilized on the property. A prior site plan approval has expired and the new plan by developer Jeff Greene was made possible by a rewriting of the Downtown Master Plan that allows for large increases in height and development capacity for class A hotel or class A office space at select sites along the eastern side of Quadrille Boulevard. Renowned architecture firm Arquitectonica is handling the design.
On the market for downtown land
This project fills a long vacant tract of land and will serve as an anchor to the north end of downtown. New class A office space, long talked about by economic development types in the county, may finally come to downtown West Palm Beach. This project will rightfully be touted as a locus of economic activity and jobs, as well as a substantial contributor to the property tax rolls. If it gets built.
My concern is that in the quest for landing these big projects, we are undermining the many smaller development opportunities that could take place in downtown West Palm Beach. Land prices in downtown simply will not support anything other than a project of this size along this corridor. Because land prices have been driven so high by upzoning, in order for the numbers to pencil, massive projects that utilize high rise construction are the only types of projects that work in most of downtown. Form follows entitlements, and so much of downtown is overzoned that building anything without major institutional capital (or a Jeff Greene) is going to be impossible.
Additionally, the market can only absorb so much office/hotel/apartment supply. A few lucky landowners strike it rich by getting their land upzoned from 10 to 30 stories, absorbing most of the demand for these uses in a couple large projects. Meanwhile, a large amount of vacant parcels languish for years or even decades. See map below depicting the large amount of developable land in downtown.
What is the effect of upzoning actions on real estate development downtown?
Arbitrary upzoning actions introduce uncertainty and speculation. The original intent of the Downtown Master Plan and the DAC was to make the development process more apolitical so there is a predictable environment in which to develop (see excellent video at end of post, presented at CNU20).
If an investor owns a parcel of land that is currently entitled to build to 10 stories at a 2.5 FAR, now the precedent has been set that you need only hold your land for a number of years and lobby for an upzoning to make a large capital gain. As more landowners engage in speculation, the opportunity costs to the city of land that could have been developed rises. This means foregone value: Foregone property taxes, foregone urbanism. Rather than new building supply taking the form of a range of building types and ages over time, only the most capital intensive and massive projects are built in a boom and bust cycle.
I hope this project gets built. It does a lot of things well, and large office towers are an important part of any urban center. The site makes sense for a use such as this. But it’s important that development of this intensity be planned in a predictable fashion, for all the reasons previously mentioned.
In our quest for chasing after the dollar bills, so to speak, of real estate development, let’s not forget about the many nickels and dimes we may be foregoing in the process.
Palm Beach Post story: City OKs One West Palm, perhaps biggest project in its history