November 2014

  • Nov
    14

How ISIS helped turn a WPB condo into an apartment building

November 14, 2014

via The Palm Beach Post by Alexandra Clough

There are no more plans to build a condo named Isis Downtown in West Palm Beach. Nor are there plans for a condo named 3 Thirty Three Downtown on the same spot.

Instead, the land at 333 Fern Street will be a rental apartment building.

About 30 pre-construction condo deposits were made for the 200-unit project, once dubbed Isis, a name derived from the Egyptian goddess. Prices ranged from $300,000 to more than $750,000.

But then ISIS, the terrorist group known as the Islamic State in Iraq and Syria, emerged in the early summer. As the murderous jihadist group rampaged its way through parts of the Middle East, Isis Downtown’s developers quietly changed the condo’s name to 3 Thirty Three Downtown.

The developers hedged on marketing. Then summer came, a time when condo sales are slow.

“We quit spending money the minute the ISIS thing happened. We knew we had a very unique problem and we took our time sorting it out,” said Bob Vail, president of Kolter Urban in West Palm Beach.

Indeed. Tim Harris, a real estate associate with Douglas Elliman in Palm Beach and the past president of the Realtor Association of the Palm Beaches, called the name  “scarily negative”  in an August interview.

After a re-evaluation, both Kolter and its joint venture partner, Ram of Palm Beach Gardens, decided a couple of weeks ago to change from for-sale condos to rental apartments.

The Isis debacle may have started things off on a bad foot, but market conditions convinced developers to make the switch.

“It’s a combination of the social change, with more people wanting to remain mobile” by renting an apartment, rather than being tiedto a purchased condo unit, Vail said.

In addition, Vail added, younger people wanting to live near downtown’s nightlife are more likely to rent than buy.

Perhaps most importantly, Kolter’s experience selling two waterfront condos in Palm Beach County reinforced that people who buy condos want water views.

Kolter’s luxury condo at 4001 North Ocean in Gulf Stream  on the ocean has only one villa left for sale. The project has 34 condos and four villas, with prices ranging from $1.4 million to $3 million. (The price for the remaining villa: $1.9 million.)

Meanwhile, in North Palm Beach, pre-construction condo sales at the 22-story luxury Water Club are going strong. Some 58 contracts worth about $55 million have been sold. The twin-tower condo has 166 units, right on the water.

But only about 25 percent of 3 Thirty Three’s units in downtown West Palm Beach had an eastern view that would offer water views, Kolter realized.

Now that 3 Thirty Three Downtown is an apartment, the construction process will move quickly, without the need for time-consuming condominium documents, for example.

(Vail said the name could change. But for now, the property still is being referred to as 3 Thirty Three.)

The 16-story building will commence groundbreaking in the first quarter of 2015, with completion set for sometime in late 2016.

Units range from 825 square feet to 1,700 square feet in space. Rents are expected to be about $2 a square foot, Vail said.

As part of the switch, amenities will be expanded to include a larger fitness room to accommodate year-round use by apartment-dwellers, Vail said.