The following excerpt was originally written by Alexandra Clough of The Palm Bach Post. Click here to view the full article.
A $250 million twin-tower complex in West Palm Beach is likely to stop construction within days, leaving the city with skeletal towers that could stand as unbuilt eyesores for the next decade.
Palm Beach billionaire Jeff Greene, who is developing the 30-story One West Palm apartment-hotel-office complex, said on Tuesday he is about to pull the plug on construction, three stories shy of reaching the top, because the city is pushing back against his request for a zoning change.
Greene wants to build apartments in a northeast tower, rather than the offices and hotel slated for the space. The southwest tower already is approved for 328 apartments.
With the coronavirus pandemic putting a halt to tourism and shuttering offices nationwide, office space and hotel rooms no longer work, Greene said. He said financing sources for the 200,000 square feet of office and 201-room hotel have collapsed, and a hotel partner withdrew.
Even before the pandemic, Greene said his real estate brokerage could not find even one office tenant willing to lease space in the project, a reflection of the market’s thin demand for new office space downtown.
Real estate experts said Greene’s concerns about office space are valid.
Last year, experts began warning that West Palm Beach’s downtown office market was loaded with empty space, even though business leaders insisted the city needed more space to lure employers.
The city’s existing offices buildings, including its Class A towers, had floors of vacant sublease space. This resulted in a shadow vacancy rate of about 17 percent downtown, said Neil Merin, chairman of NAI/Merin Hunter Codman in West Palm Beach.
Historically, downtown West Palm Beach can only absorb one new office tower every 10 years, Merin said. In addition to One West Palm, the 300,000-square-foot 360 Rosemary office tower also began construction last year.
With businesses alarmed by the pandemic or financially damaged by the tumbling economy, the outlook for urban office leasing is unpredictable.
Some theories predict office tenants will flock to less dense, suburban offices, Merin said.
Others predict companies will shrink their office space to save money on overhead while continuing to let employees work from home.