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The High Cost Of Low Taxes: South Carolina Town Bans All Development For 16 Months. Could The Same Happen In Florida?

Slashing taxes and taking a hands-off approach to governance attracted thousands of residents to places like in Lake Wylie, South Carolina. But politicians neglected to spend money on critical infrastructure, and now the Republican-led county council has placed a 16-month moratorium on all new development.

The York County Council said that the town, where the population has tripled since 2000, needs to get a better handle on growth, the Wall Street Journal reported. Several years of outsized development has strained Lake Wylie’s water system, schools, and roads.

The moratorium affects commercial and residential rezoning requests as well as considerations of new apartment complexes and subdivisions.

“New development in the town isn’t of the kind the town needs,” said Council member Allison Love. “For example, there are seven car washes and six self-storage facilities on the town’s main drag but few restaurants and doctors’ offices. Many residential subdivisions look almost identical.”

Love and her colleagues said they gathered thousands of signatures supporting the moratorium from residents of the town who are tired of overly long commutes caused by clogged roadways and water main breaks. Three mile drives across town can take up to 45 minutes in some cases and residents have seen a dozen boil-water advisories in the last two years.

Other towns in the Sunbelt region have struggled with similar issues related to development. Development firms like the Related Group have expanded into small towns across the region in search of returns.

The moratorium may be too late to relieve near-term pressure on Lake Wylie, though — there are currently around 3,000 new homes and apartments approved and in various stages of construction in the town.

 

Source: The Real Deal

Florida’s New Billion-Dollar Hemp Market Is At Risk, Industry Advocates Say

Florida’s grand plan for a multibillion-dollar hemp industry that would make the state an emerging leader in the nation’s latest green rush could be at risk, some industry advocates say.

A federal proposed rule for stringent testing would result in less “CBD content” in hemp crops, making them less attractive to buyers. That’s according to the Hemp Industries Association of Florida, which has complained to the U.S. Department of Agriculture, which is developing regulations to oversee hemp production.

As the rules stand, they would have a “serious chilling effect on the amount of acres planted” and would “increase prices for the consumer significantly,” according to the association’s letter to the USDA.

“The plants will be in field less time, meaning they’ll have less CBD content, and farmers will not have a good marketable product,” said Ray Mazzie, executive director of the Tallahassee-based trade association.

The most lucrative product to make with hemp is CBD oil, which some people use for anxiety and pain, but which doesn’t give users the “high” that marijuana does.

“If the USDA rules become final, most hemp farming in Florida would become cost-prohibitive,” Mazzie said.

The result would be Florida consumers having to continue to buy out-of-state CBD oil, instead of potentially lower-priced alternatives from Florida growers. The state’s rules for CBD product quality and safety went into effect Jan. 1.

The Florida Department of Agriculture, headed by Nikki Fried, said the department “remains optimistic that our hemp rules, crafted with public input and to closely align with federal laws, will allow farmers and entrepreneurs to succeed in this emerging industry,” according to Max Flugrath, the department’s press secretary. Fried, a Democrat, has been championing hemp as making Florida “a national leader in this emerging new economy.”

Hemp became legal in Florida on July 1, 2019, and the state is now seeking federal compliance to launch hemp farming, to produce “Fresh from Florida” CBD oil and other hemp products. Hemp could be a new, multibillion-dollar industry for the state.

States must submit their hemp farming rules to the USDA to comply with federal regulations, being developed after the 2018 Farm Bill made U.S. hemp farming legal. The USDA’s deadline for comments on its interim rules was Jan. 30th. The final rules are expected in 2021.

“Commissioner Fried is obligated to follow the law, including the USDA’s rules, and the state hemp rules must adhere to those guidelines,” Flugrath said.

“The issues may slow down Florida’s hemp industry, but he believes the state will come up with solutions,” said Jeff Greene, co-founder of the Florida Hemp Council.  “For now, the testing problem “resets the playing field. Most of the hemp that is grown nationally has too high of hemp to meet federal law.”

The federal rules call for testing of the flower of the hemp plant 15 days before harvest. If it does not comply, the crop would be disposed of. That will put farmers at risk of losing their investment in the crop, critics say.

“With the current USDA rules, farmers would need to produce twice as much material to arrive at hemp that is marketable for CBD oil and related products,” Greene said.

The federal government considers cannabis with scant amounts of THC, or tetrahydrocannabinol — 0.3 percent or less — to be hemp. But any level above that is marijuana and illegal under federal law.

“Higher THC levels can be taken out of the crop by processors before products are made,” Greene said.

Mazzie said some Florida farmers are already scaling back hemp-growing plans because the proposed rules would make hemp production cost-prohibitive. Other states including South Carolina and Indiana, as well as national farmers’ groups, are asking the USDA to make changes to the interim rules, with trade publication Progressive Farmer calling the rules unworkable for farmers and a marketable industry.

“Florida wants to avoid issues such as those in Kentucky, the first state to enter the hemp industry after the 2018 Farm Bill, where hemp farmers blame over-regulation for cash-flow problems,” Mazzie said

Andrew Strickland, a cattle rancher near Starke who had hoped to farm hemp, said his plans are now on hold until Florida and the USDA work out the obstacles. Growing hemp for CBD is more lucrative, but he may end up “cutting out the aggravation” and producing industrial hemp for textiles or other non-CBD products.

“If farmers are able to process the whole hemp plant — no matter what the THC level is — there are more product possibilities, such as cosmetics or lotions,” Strickland said. “If you buy a whole chicken from a store, there’s so much more you can do with it than a bunch of chicken legs.”

 

Source: SunSentinel

High Ceilings, Flexible Floor Plans And Exposed Columns And Pipes: Why Shiny New Tech Companies Love Old Industrial Buildings

old warehouse

A century-old loft building has been retrofitted for tech workers with fancy pantries, bleacher seating for all-hands meetings and a library for Kindle readers where the only books are decorations on the wallpaper.

In another part of Manhattan, Google is creating a vast campus with offices spread out among three loft buildings. Even some new office towers are being made to look like lofts, with high ceilings, flexible floor plans, and exposed columns and pipes that evoke old New York to tech newcomers.

The humble loft building helped transform New York into an industrial powerhouse in the first half of the 20th century, with expansive, light-filled floors packed with workers stitching shirts and textiles, forging metal and machinery, and toiling in assembly lines. It was a utilitarian version of a modern coworking space.

But the lofts that once defined the cityscape were eventually abandoned by businesses, left to artists and homeowners coveting more space, and were no longer favored by city officials who saw them as outdated relics. Now lofts are back in vogue, coveted by technology companies that want an authentic New York feel.

“People used to think these kinds of buildings and areas are obsolete,” said Elizabeth Lusskin, president of the Long Island City Partnership, an economic development group in Queens. “In fact, it’s quite the opposite. They are now at a premium.”

Technology executives say loft buildings are versatile, provide more space and character for less cost than cookie-cutter office towers, and better reflect their collaborative work culture. And the buildings themselves have a past that can be irresistible for companies with so little history of their own.

“Loft buildings offer the open, creative and fun spaces of Silicon Valley, combined with the New York City urban industrial feel,” said Matt Glickman, a vice president of Snowflake, a California-based software company with a Manhattan loft office.

Citywide, there are fewer than 5,000 loft buildings, nearly all completed before the 1960s, according to the Department of City Planning. Zoning regulations since then have discouraged new loft buildings. The growing demand for lofts has alarmed community groups that say it could lead to higher rents, pushing out longtime residents and small businesses in favor of deep-pocketed technology companies.

“If you’re a landlord and you have a choice between loft artists and a coworking space, you’re clearly taking the coworking space,” said Gregory Louis, a lawyer for Communities Resist, a community group in Brooklyn.

“Technology companies were “a direct threat to artists and light manufacturers,” said Carl Riddle, 41, an artist and loft tenant in Brooklyn.

City planning officials said they were considering changing zoning regulations to make it easier to construct new lofts. Currently, regulations adopted in 1961 favor buildings that are constructed for a specific purpose (such as office towers or small factories outside Manhattan) as part of an effort at that time to create an orderly and modern cityscape.

The goal now is to update those regulations to increase the supply of multiuse lofts that create jobs and help the city’s economy grow, while keeping enough of them affordable for smaller and less well-off tenants, city officials said.

For many technology companies, a building is just one selling point, of course, along with access to public transportation and a talented workforce. But Peter Turchin, a vice chairman of CBRE, a commercial real estate firm, said he receives a half-dozen calls a day from technology companies looking for renovated loft buildings.

“More than 70 technology companies, including streaming service Roku, have moved into the loft-rich garment district in midtown Manhattan in the past five years,” said Barbara A. Blair, president of the Garment District Alliance, which runs the business improvement district.

In Long Island City, Uber, Lyft and Via have opened offices in the Falchi Building, a 1922 loft that was a warehouse for the Gimbels department store. Nearby, a loft that was used as a book bindery is being converted into laboratories and offices for up to two dozen bio-tech firms.

“One major developer, Related Cos., which is building Hudson Yards, the mini-city rising on Manhattan’s Far West Side, is renovating two Long Island City loft buildings to offer a more affordable alternative a short subway ride from Manhattan,” said Patrick Sweeney, a managing director.

VaynerMedia, a digital marketing and communications agency, has an office at 10 Hudson Yards but is expanding in Long Island City.

“A loft is a more collaborative atmosphere, and that’s the kind of creative space we want to build,” said Alan Harker, chief financial officer for VaynerX, the parent company of VaynerMedia. “It encourages people to get together.”

Even new offices have been marketed as modern lofts offering the best of both worlds. Buildings in Chelsea and on the Lower East Side in Manhattan, and in Williamsburg, Brooklyn, have loft-style features such as high ceilings, open and flexible layouts, and oversized windows.

“Lofts were an essential part of New York’s history, used for storage or light manufacturing in the 19th century in lower Manhattan and later spreading north along Broadway and to other corners of the city,” said Carol Willis, an architectural historian and founder of the Skyscraper Museum in lower Manhattan. “By the 1930s, there were more than 100 of these “skyscraper factories” in the garment district alone. They’re built as generic space that can be occupied by whoever wants to rent it. It makes no difference if it’s a printer’s shop or an ostrich-feather hat maker.”

These days, the garment workers have been replaced by computer programmers, software engineers and graphic designers. Many building owners say they seek out “TAMI tenants,” or companies in technology, advertising, media and information.

At a loft building on West 41st Street in the garment district, 10 of the 15 tenants are technology companies, including Roku. The building caters to tech workers with lounges and pantries with cold-brew coffee and beer on tap. There are big-screen televisions and skateboards hanging on the wall, and a library with a pool table.

“These prewar buildings often pose infrastructure challenges, but we’ve retrofitted our building to handle modern technology,” said Diane Carlini, a Roku spokeswoman. “The ‘old’ meets ‘new’ is pretty cool, and our employees really appreciate it.”

“Another tenant, Demandbase, a marketing technology company for businesses, moved its office from the prestigious Chrysler Building because the open spaces and glass walls at the West 41st Street site better reflect its culture,” said Gabe Rogol, the chief executive.

Last year, the city changed a long-standing regulation requiring garment district buildings to reserve half their space for manufacturers after building owners complained that they could not find enough tenants. That has attracted newcomers into loft spaces that would otherwise stand empty, creating jobs and supporting the local economy, said Blair, of the Garment District Alliance.

“We all have to evolve,” Blair said. “You’ve got these new industries, and they need somewhere to go.”

Well-funded technology companies have moved into the neighborhood after a large share of manufacturers’ leases expired over the past two years and cleared the way for lofts to be renovated. Joseph Ferrara, whose family owns Ferrara Manufacturing, said many manufacturers were paying about $20 to $30 a square foot.

“Tech companies, in particular those funded by venture capital activity, are happy to pay $50 a foot,” Ferrara said.

Google led the way when it settled in a loft building in Chelsea in 2006.

“Google pointed out to the world that these massive loft-style buildings were very attractive to their employees,” said Paul Pariser, co-chief executive of Taconic Investment Partners, which developed the building. “What were once secondary buildings started gaining traction.”

As Google now expands in lower Manhattan, it is moving into two loft buildings and taking over the commercial space in a third, in a former industrial neighborhood near the Holland Tunnel that has welcomed newcomers with $27 million in improvements, including a park.

Lofts have become hubs not just for technology companies, but for manufacturing companies that embrace technology. At the Brooklyn Navy Yard, companies are assembling robots, drones and 3D printers in lofts. Some have even asked that their buildings not be fixed up too much.

“None of them would want to be in a traditional office space,” said David Ehrenberg, president and chief executive of the Brooklyn Navy Yard Development Corp., the nonprofit that runs the city-owned complex on the East River.

When Tim Armstrong was hired as Google’s first New York employee in 2000, he turned his loft apartment on the Upper West Side into the company’s inaugural office. Now his latest venture, DTX, a product, design and technology company, is based in a former metalwork shop in SoHo that was transformed into a loft. There are open areas with couches, long tables and rows of computers in an airy mezzanine. No one has offices or desks.

“Life is not all about being in a shiny office building,” Armstrong said. “It’s about being in a zone where you’re trying to figure things out the world doesn’t know it needs yet.”

 

Source: SunSentinel

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The CRE Issues To Watch As Florida’s Legislature Convenes

Florida state sign

Florida‘s state legislature just convened for its 2020 session, charged with passing laws and an estimated $91.4B state budget over the course of the next 60 days.

In his annual State of the State speech to kick off the legislative session, Gov. Ron DeSantis touched on everything from raising teacher pay to reducing barriers for occupational licensing. DeSantis said he would like to see people who pollute water be penalized and that $1B in mitigation funds would soon be distributed to areas affected by hurricanes. The first-term Republican said the state had a chance to correct some environmental wrongs and brace for sea-level rise.

Real estate professionals from around the state talked to Bisnow about other measures the legislature will be considering that could affect the industry. Of the 3,000+ bills that get filed each session, fewer than 10% pass.

Florida NAIOP President Darcie Lunsford said her group will continue its years-long fight against the state charging sales tax on commercial rents — something that only Florida does. Some critics argue this amounts to double taxation in many cases, since tenants already pay for certain real estate taxes when they sign triple-net leases.

“It’s an onerous tax that is unique to Florida and makes us less competitive,” said Lunsford, an executive vice president at Butters Construction.

She said a bill hasn’t yet been filed, but probably will be in February. For three years in a row, the rate has been reduced by a fraction of a percentage point — it is now at 5.5%. Lunsford said that rolling back the tax is challenging because Florida doesn’t have a state income tax, so it relies on such measures to fund state government functions. She estimates the tax brings in about $1.8B per year. The recent reductions have resulted in about $156M less being paid to the state.

“NAIOP is pushing for legislation that would tax internet retailers the same way as brick-and-mortar retailers, which could bring in $300M to $400M annually,” Lunsford said. “It’s a way to shift some of the tax burden off the commercial real estate sector.”

NAIOP also hopes to revive the FAST Act, a measure that was proposed last year, which would require local governments to offer expedited permitting processes, cap fees, and establish timelines for issuing and replying to permits. Lunsford said that state law now requires permits to be issued within 120 days.

“But there’s no teeth in the law as cities struggle to keep up with demand,” Lunsford said. “Another proposal, HB469/SB1224, would drop the requirement that two witnesses sign leases, which is not necessary in the modern era, when people sign electronically.”

NAIOP will be hosting events at the Capitol Jan. 21 and 22 in Tallahassee.

The nonprofit 1000 Friends of Florida called for smart growth management, lest unbridled sprawl ruin the things that make the state an attractive place to live and visit. Water quality and traffic congestion are top concerns.

The organization has outlined its legislative priorities for 2020. These include repealing an amendment that passed last year that could make citizens pay a developer’s legal fees in certain cases — such as when a developer seeks an exemption to a local comprehensive plan, citizens oppose it, but the developer prevails.

“That amendment was tacked onto HB7103 on the last day [of the] legislative session. It never got vetted by the public, by committee, by subcommittee. There was no staff analysis,” 1000 Friends Policy & Planning Director Jane West said. “It was a dirty move — and it’s had massive repercussions in the state. People are dismissing cases that have been pending for years. People are opting not to challenge new projects.”

SB250, introduced by Sen. Lori Berman (D-Palm Beach), would repeal that amendment. 1000 Friends is also fighting the amendment in the courts, hoping to have it deemed unconstitutional.

Lunsford said that the CRE industry would see a repeal as “going backwards,” and that the law as it stands could benefit not just developers, but either party that prevails.

The legislature last year also authorized three new highways. 1000 Friends is hoping to see that decision reversed, but it would require a repeal, plus de-authorizing related funding that passed. Instead, the group is calling for generous funding for land acquisition efforts, such as Florida Forever, the Rural and Families Lands Program, Florida Communities Trust and other land protection programs.

“Our environmental tragedy is the destruction of our raw lands,” West said. “You see it in every part of the state you go to … sprawl after sprawl after sprawl.”

The only sure way to save Florida‘s green space is to buy it and protect it in perpetuity, she said. The Florida Forever program is set up to acquire recreation and conservation lands. It is funded by doc stamps, a fee paid when people buy and sell property. It had been popular with both the left and right, including Gov. Jeb Bush, back to the early 2000s, but was essentially wiped out under eight years of Gov. Rick Scott. The current budget includes $33M for Florida Forever; DeSantis is asking that figure to be bumped to $100M in 2020-2021.

“We’d like to see it back to historic funding levels, over $300M,” West said. “But this is a nice start.”

Florida Realtors are also paying attention to Tallahassee. The group’s top legislative priorities for 2020 include environmental protection and full funding of housing trust funds, according to its website. For more than a decade, state money that is supposed to be in a trust fund to create affordable housing has instead been diverted for other uses, steering away some $2B.

Florida Realtors is also lobbying for a reduction in the business rent tax and will support initiatives that allow owners to rent out their private properties more freely on Airbnb, which was in a heated legal battle with the city of Miami Beach before settling in August.

Former Florida Speaker of the House Dean Cannon, the president and CEO of law firm Gray Robinson, now oversees lobbyists who closely monitor the state legislature. He said the commercial rent tax could likely get cut a bit more, and that water quality and environmental funding will loom large, especially because DeSantis has been vocal about those issues.

“The House and Senate will want to deliver a good environmental message because it’s an election year,” Cannon said. “I think they have the collective political will to get something done.”

Appropriations decisions — such as which projects get funding, and whether the affordable housing trust gets raided again — are likely be influenced by economic forecasts that legislators receive in February.

“That’s the last one we get before voting on the budget. It’s always sort of a question mark,” Cannon said.  “All budgeting is balancing an infinite number of priorities against a finite number of dollar. There’s no perfect policy — just a best effort at balancing the interests.”

 

Source: Bisnow

Boynton Beach Mall Could Face Overhaul With New Apartments, Hotel And Offices

boynton beach mall

Boynton Beach Mall could have half the square footage for retail businesses once it’s redeveloped, but it might add apartments, a hotel and offices.

The plans reflect attempts across America to transform malls as fewer people go there to shop. Apartments also are planned at the Coral Square Mall in Coral Springs and at the former Fashion Mall in Plantation.

The Boynton Beach Mall once had tenants including Burdines, JCPenney, Jordan Marsh and Lord & Taylor. But like other malls facing less in-store shopping and an increase in online shopping by consumers, retail tenants have dwindled over the years, with new types of tenants coming in.

“According to city documents, 30 percent of the mall is now vacant, and its proposed redevelopment would not only stabilize it, but make it a desirable destination once again,” said Bonnie Miskel, a lawyer representing primary mall owner Washington Prime.

The proposal would reduce the existing mall square footage for retail from about 1 million square feet to 482,750 square feet, and build separate, mixed-use buildings with retail use on the first floor and residential units above. Developers also would add up to 1,420 residential apartments on the site, along the north end and southwest side of the mall property, and inside the new mixed-use buildings. The redeveloped mall would include a 400-room hotel, 65,000 square feet each of medical office space, and general office space, and 35,000 of new restaurant space.

The master plan and rezoning request for the 116-acre site was filed with the Boynton Beach City Commission, which gave initial approval, but meets again on the plans Jan. 21. Some Boynton Beach residents expressed concerns on the NextDoor app about mounting traffic off Congress Avenue near the mall and that mall redevelopment plans didn’t seem to include any new entertainment venues for the community, such as a park, bowling alley or sports center.

The plan doesn’t affect Macy’s and JCPenney, the two major department stores remaining at the mall, which are owned separately, and Christ Fellowship Church, owner of a former Dillard’s department store space in the mall. The redevelopment would happen over five phases, with the first phase removing the former Sears buildings and adding a 400-unit apartment building, Washington Prime said.

In its proposal for redevelopment, Washington Prime says that “the current use of the property as an aging mall is in steady decline as it no longer meets the needs of the community and is slowly becoming a source of blight in the city.” Occupancy at the mall has dropped by 11.5 percent between 2015 and 2016, according to documents submitted to the city to justify rezoning.

 

Source: Sun-Sentinel

With Commercial Land Capped Out West, A Loophole Emerges For Self-Storage Facilities

Changes made to the Comprehensive Plan will now allow self-storage buildings to be exempt from commercial cap space in the Ag Reserve.

When is a 130,000 square-foot, three-story self-storage facility not a commercial business? When it’s in the Ag Reserve.

With the Ag Reserve already at a commercial square-foot cap of 1 million square feet, the builder’s agent, Ken Tuma, came up with a novel approach: Exempt self-storage buildings from the commercial cap.

The reserve was designed as a sanctuary for farming and a rural lifestyle, but much land has still been developed there as western property has boomed in Palm Beach County.

County planning commissioners, urged on by the Planning Commission staff and the Coalition of Boynton West Residential Associations (COBWRA), agreed recently to recommend a change to the county’s Comprehensive Plan to accommodate a self-storage building on a 7-acre tract of land on the northwest corner of Boynton Beach Boulevard and Acme Dairy Road.

Because of the cap, the builder, Gary Smigiel of Lake Worth, was limited to a 40,000 square-foot commercial project, far less than the 130,000 square feet he needs for the self-storage building. He is proposing to build 20,000 square feet of commercial in addition to the self-storage. The commercial project will consist of retail and a restaurant. But the self-storage building won’t be considered commercial if the change to the Comprehensive Plan is made.

County commissioners are expected to act on the Planning Commission recommendation in 2020. Tuma told planning commissioners there is a real need for self-storage facilities as a number of large-scale developments have been built in recent years west of Boynton Beach and Delray Beach. Many of these communities prevent homeowners from storing items in their garages, he noted.

With limited space available for commercial development in the Ag Reserve, developers have yet to build a self-storage building.

The Ag Reserve is an area in the western end of the county with special rules designed to protect the region from over-development. It is the only part of the county with a cap on commercial development and a requirement that residential developers set aside a large portion of their property for open space.

Planning Commissioner Dagmar Brahs was a reluctant supporter of the “West Boynton Center” project. She said she is concerned about a precedent being set that could result in other self-storage facilities being built throughout the Ag Reserve.

“What we are doing here is making a change to accommodate a land user,” Brahs said. “That stinks.”

“To justify the zoning change, many retirees downsized when they moved into Ag Reserve developments,” Tuma said. “It is imperative for many of them to store some of their belongings in nearby self-storage facilities. Self-storage generates much less traffic than the majority of commercial uses permitted in the Ag Reserve.”

The site currently consists of a retail store, a small office and an apartment. The northern portion of the site is utilized for a nursery.

“COBWRA believes that the West Boynton Center is a good fit for the area,” COBWRA representative Steve Oseroff said. “It will serve as a book-end to the Cobblestone Commons commercial development just to the west on Boynton Beach Boulevard.”

 

Source: Palm Beach Post

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Berkadia’s Charles Foschini On The Florida’s CRE Market

florida

Berkadia’s active presence in Florida’s CRE debt scene owes no small part to Charles Foschini, who co-heads its originations in the state from the company’s office in downtown Miami.

The University of Miami graduate, who spent nearly two decades at CBRE, has led some of Berkadia’s biggest Florida deals since he joined the company in 2016. Among them is a $121.5 million acquisition loan that helped Parkway Properties and Partners Group buy a set of six Tampa office buildings late last month. The firm has also been a key player in multifamily capital markets, putting it on the cutting edge of Florida’s changing demographics.

Foschini spoke with Commercial Observer by phone last week to discuss everything from the Sunshine State’s sunny skies to its business climate, transportation struggles and even its school system.

Commercial Observer: In a nutshell, what are your responsibilities at Berkadia?

Charles Foschini: I co-lead Florida operations in both a management and production role. I focus on a group of clients [for whom] I do a fair amount of their business … and that runs the gamut of any of their capital-market needs, from permanent loans to construction loans to bridge loans.

Commercial Observer: Florida’s shown a lot of momentum lately — throughout the state, but particularly around Miami. What do you see as some of the driving factors?

Charles Foschini: When I studied at the University of Miami, it wasn’t lost on me that the temperature was 78 degrees all the time. It’s a very enviable place to live, work and play. But you have to layer over that that our last two governors [Ron DeSantis and Rick Scott] have been very pro-business. We’ve had a lot of growth in the medical sector and a lot of employment growth. It’s not just a tourism economy anymore.

Commercial Observer: Berkadia has been a force behind some significant multifamily debt deals in the state this year. How is the state’s apartment market evolving?

Charles Foschini: We’re seeing unrelenting population growth and immigration to the state, and we’re seeing a continued evolution of employment. Some of the bigger submarkets have a lot of transportation challenges. Those factors have formed a confluence to create a need for multifamily near where people are going to work. That’s created a lot of new developments in suburban and urban markets. What’s more, the individual credit consumer has been harder to come by: Not as many people have been buying houses in this cycle. That has created a renewed demand for lifestyle residential, where people can get all the amenities that you couldn’t frankly afford or justify in your own home.

Commercial Observer: Reforms to Fannie Mae and Freddie Mac have been a never-ending discussion in Washington. Do you have any concerns?

Charles Foschini: Fannie and Freddie have been market leaders in multifamily finance, and they have very healthy allocations for 2020. I expect that to continue. But having said that, the economy and capital market side is extremely vibrant. You have CMBS lenders, banks, life companies and debt funds, all of which are available to a borrower in any given transactions. They’ll continue to have a significant market share in multifamily, too.

Commercial Observer: You mentioned some transportation challenges. Do you think the state’s urban areas need to become more commutable?

Charles Foschini: The demand for a live-work-play lifestyle is fueled both by millennials as well as those folks that are selling homes and moving back to the cities. They want to have everything in one place. The new Brightline train [which now connects Miami and West Palm Beach, Fla.] is so much more convenient than it was 20 years ago when you had to get in your car and commute. As South Florida and particularly Miami evolve as 24-hour cities, that means you have 24-hour traffic. Mass transit is a solution to that.

Commercial Observer: You mentioned that the state’s politicians have fostered a business-friendly reputation. How specifically has that helped drive new investment in the state?

Charles Foschini: One of Berkadia’s technology tools looks at IRS tax payments from one year to another. You can pick somewhere in the Northeast — anywhere in the Northeast — and look at the tax migration. For example, if you paid your taxes in 2018 in Connecticut and then in 2019, you paid your taxes in Florida, that net migration has been measured, potentially, in billions of dollars, and that’s continuing. In many cases, the Northeast is losing out to where it’s easier to live, easier to do business and where overall taxation on the same work dollar is lower. Florida is a huge beneficiary of that. Then there’s the fact that submarkets like Orlando and Tampa have very, very nice campus-style offices that rent for a lot less per square foot.

Commercial Observer: People often speak of talent pools as one of the deepest strengths of gateway cities like New York and L.A. How is Florida doing on that front?

Charles Foschini: I would say it’s evolving, and not fast enough. Our private school systems are exceptional. The Florida state schools are getting better. Five years ago, most of them didn’t have real estate programs, but now they all do. But the public school systems here for primary grades are not evolving fast enough. As our population grows, they’re not evolving at a pace to support that population. So that’s a challenge that municipalities continue to address.

 

Source: Commercial Observer

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Predictions For South Florida CRE In 2020

the road to 2020

So 2019 is drawing to a close, having given the world of commercial real estate things we expected — like a booming industrial market — and things we didn’t (WeWork and opportunity zones were among the greatest flops of the decade).

Bisnow asked some South Florida real estate pros what 2020 may bring. Here are their thoughts:

Jeff Gordon, Vice President, JLL

“We have a number of interesting new office developments delivering or in the pipeline across Miami’s office market over the next few years. This will create variety and optionality not previously seen in Miami as it pertains to emerging submarkets, deepening options in changing submarkets and the way in which the office use is amenitized with other product types across the market as a whole. This variability will provide opportunities for tenants that approach their future leasing with a proactive strategy. In line with this, it will also be interesting to see the impact that the continued expansion of the Virgin Trains stations will have on the connectivity of Aventura and Boca with our Central Business Districts and the continued goal of connecting Florida’s growing talent and workforce.”

Tere Blanca, Founder and CEO, Blanca Commercial Real Estate

“Miami’s vibrant and diverse economy, its business-friendly environment (and tax advantages) and its convenient lifestyle and connectivity to the world via Miami International Airport will continue to spur the relocation to Miami of talented professionals and companies across various industries both domestically and internationally. Key factors driving this movement include this increase in people relocating here due to tax incentives including the lack of a state income tax. The strong population growth in the past five years, with continued projected growth, will continue to motivate companies to establish a presence in Miami. Also, the uncertain political climate in key Latin American countries may attract investment into Miami from these markets that include Mexico and other nations. With limited new office supply delivering in 2020 and robust demand from companies touring the market, we expect the market to remain stable and steady with positive absorption and modest increase in rents. Also, new office deliveries in 2020 will be well-received given Miami’s persistent flight-to-quality trend and this in turn will drive owners of older, existing buildings to undertake strategic renovations to remain competitive. With flight-to-quality prominent among tenants today, we expect new supply to attract tenants across various submarkets, while also attracting new-to-market entrants.”

Cory Yeffet, Director of Acquisitions, Integra Investments

“We expect multifamily development and sales to remain active in 2020. Although rent growth has slowed due in part to significant new supply, demand remaining strong and multifamily cap rates remaining at record lows will continue to support a healthy development and sales environment. This is why Integra continues to be active in the sector, with four multifamily projects under development in South Florida, including the 315-unit Bella Vista project in Lauderdale Lakes, which we intend to deliver and stabilize in 2020. The biggest commercial real estate concern we see for 2020 is the uncertain impacts of the election year, and how global economic and sociopolitical dynamics may slow down private sector expansions.”

Doug Jones, Co-founder and Managing Partner, JAG Insurance Group

“For about the last 10 years, rates have consistently gone down. But with the influx of natural disasters, reinsurance went up in 2019 and that will continue in 2020. That trickles down to the consumer. Also, while risk of sea level rise continues to be a concern, thanks to the recent expansion of the private flood market, consumers will actually have more options in 2020 than ever before to make sure their assets have the proper coverage.”

David Druey, Florida Regional President, Centennial Bank

“I predict minimal, if any, slowing down in deal flow of construction financing in any of the major sectors. Smart developers are seizing the opportunities of low interest rates through use of bank financing for construction financing and securing forward commitments with institution investors for stabilized projects. The ongoing major risk is if the developer can actually complete the project on time and budget. Most of the more substantial projects, outside of apartments, typically have the stabilization piece solved prior to construction commencement.”

Ronald Fieldstone, Partner, Saul Ewing Arnstein & Lehr

“The new EB-5 regulations went into effect at the end of 2019 and we are still seeing increasing interest from investors, especially from Latin America, in the EB-5 program despite the higher threshold. Over the past 10 years, developers have grown dependent on raising EB-5 capital to finance their projects due to the low cost of EB-5 borrowing. We expect it to continue to remain a viable source of financing for development projects in downtown Miami west of Biscayne Boulevard, Little River, areas around Miami International Airport and certain sections of Coconut Grove.”

Stephen Rutchik, Executive Managing Director, Colliers International

“Although one of the original iterations of coworking, WeWork has collapsed on a corporate level, I expect that the concept and most of the existing locations will continue to perform well over the next year. On a larger scale, office landlords in South Florida are increasingly incorporating the coworking concept into existing office buildings. This is attracting new tenants who previously would have either been priced out of traditional office space or who require flexibility that a traditional lease cannot provide. The coworking concept is much larger than WeWork. It has quickly become a part of the American office culture and I expect this trend to grow in the coming years.”

Adam Lustig, Partner and Incoming Real Estate Practice Group Leader, Bilzin Sumberg

“With continued low interest rates, increased employment and significant population growth, I expect the South Florida real estate market to remain strong in 2020. In particular, I see health-related real estate and senior housing as areas of opportunity with the aging of the population and the need for urgent care centers, hospitals, medical office space and senior housing facilities. As shopping center owners try to adapt to dramatic changes in the retail market, medical, health and wellness uses will continue to expand. The major threats to continued growth in South Florida remain traffic, lack of public transportation and affordable housing. One other threat that is not being talked about enough, but that we are very focused on, is the phase-out of Libor at the end of 2021 which affects trillions of dollars of commercial real estate loans.”

Chris Chakford, Managing Director of Origination, Kawa

“Kawa sees ground leases as an ongoing trend in 2020 as banks pull back on commercial fee simple financing in non-core markets, most notably in hospitality and office sectors. With sponsors needing creative solutions to fill out capital stacks and lessen their equity requirement, Kawa has created a ground lease program that offers a complete financing solution to meet these needs. This type of financing vehicle offers a highly adaptable bifurcation structure that accommodates owners’ needs while typically enhancing returns, providing tax benefits, being nonrecourse, and mitigating interest rate risk by offering perpetual financing. In the last three years, Kawa has executed 12 ground lease transactions with a total value in excess of $652M and anticipates ground leases to be a prominent alternative for providing creative financing solutions with flexible capital that can be deployed quickly as we look ahead into 2020.”

Peter Mekras, President of Aztec Group

“2020 is likely to be a year filled with volatility. Interest rates and the political environment both locally and nationally will be the main drivers of market volatility in 2020. Irrespective of the trend of volatility in 2020, we expect capital markets to remain liquid. Equity capital will continue to flow into Florida real estate in 2020. Florida will maintain its label as one of the few states positioned for strong long-term fundamentals and a uniquely favorable business environment for real estate investors. Florida is projected to experience better than national trend employment growth and will continue to benefit from strong population growth. Rental apartments, senior housing and well-located office and shopping centers will be the beneficiaries.”

Lissette Calderon, President and CEO of Neology Life Development Group

“Allapattah is seeing significant residential and commercial real estate investment underway that will enhance the neighborhood’s appeal and quality-of-life offerings. With Miami’s growing population seeking lifestyle living alternatives within the urban core at attainable price points, our mission is to provide a solution to this need by developing attainable luxury rental units that are modern, functional and offer upscale amenities.”

Michael C. Brown, Executive Vice President and General Manager, Skanska USA Florida

“Come the new year, I anticipate the two sectors poised to fuel Miami’s economic growth will be healthcare and higher education, which continue to be the largest sectors for us across the state and in South Florida. I believe we will also continue to see a more pronounced shift into environmentally friendly building, specifically with companies looking to minimize their carbon footprints.”

Martin Melo, Principal, The Melo Group

“2020 will prove to be a year full of challenges, mostly driven by the political landscape throughout Latin America, the upcoming elections and the increasingly low interest rates and low income tax in Florida. We can expect to see an influx of new residents who come to South Florida searching for a more attractive and stable socioeconomic climate as opposed to the current situation in their own countries. The demand for multifamily and market-rate apartments will continue to rise and interest rates will remain low, which will ultimately spark a bigger interest from developers and investors in the area.”

Shawn Gracey, Executive Vice President of Hospitality, Key International

“As the hospitality industry becomes increasingly diverse, there will be even more emphasis on presenting a unique value proposition to today’s travelers. We’ve found that our customer profile is seeking experience-based and design-driven accommodations in key coastline cities, which led us to develop the AC Hotel by Marriott in Fort Lauderdale Beach, which will be one of the newest, upscale select-service properties in the area when it’s delivered next year.”

Rishi Kapoor, CEO, Location Ventures

“Pointing to various indicators, the fortress submarkets of Miami’s luxury condo inventory are the prominent choice in 2020, compared to areas of oversupply. Foreign buyers will remain a challenge, despite promising pockets from target countries in Latin America; the true stability is in the end user, who traditionally purchases a primary residence rather than investment product, and is more likely to focus on lifestyle moves in the market. This is why more protected submarkets, such as Coral Gables, will be a strategic play, as we’re seeing a wave of retirees or empty nesters, coupled with growing families, seeking to place roots in a neighborhood with a thriving business environment, limited top-tier condo product and a historic record for stability.”

Miguel Díaz de la Portilla, Attorney, Saul Ewing Arnstein & Lehr

“2020 will be an exciting year of American Dream Miami. We have our land use and zoning approvals in place and will be finalizing the design of the project, applying for administrative site plan approval, and moving forward with continuing to work on infrastructure. This will all be happening at a time when people from all over the world are beginning to experience the magnificence of American Dream Meadowlands in New Jersey. Triple Five just opened the entertainment center that serves as a sneak peek to how American Dream Miami will look and the tremendous benefit that it will have on our local economy.”

 

Source: Bisnow

West Palm Beach Is Overflowing With Class A Office Space As New Towers Emerge

West Palm Beach

Real estate agents are increasingly concerned that first-class office buildings offer too much space to sublet shadows.

Even though another project needs to be considered, downtown West Palm Beach’s office market is full of empty space, and real estate professionals say there is little demand for renters outside the area to rent large offices.

Surveys of real estate developers and estate agents indicate that the city’s Class A office buildings, which usually attract the top tenants, have sufficient space directly in the buildings or by office tenants who are trying to rent their space. These sublet offices are a shadow market, indicating that the actual supply of office space is much larger than expected. In fact, the prime A buildings are about 80 to 85 percent full, which means that at least 10 to 15 percent office space is available in each building.

“There are big holes in all buildings,” said a real estate agent who asked not to be named. “Where’s the demand?”

The space flood is revealed when two new office buildings are constructed in downtown West Palm Beach and a third tower is due to be approved by a city committee. The Downtown Action Committee will vote on whether the One Flagler office tower will be allowed to raise 25 floors on land if it has five floors near South Flagler Drive and Okeechobee Boulevard.

The tower would offer 261,000 square meters of office space for rent. These buildings complement the existing range of first-class spaces in the city center. This area includes Class A buildings such as Phillips Point, Esperante and CityPlace Tower.

“Back in June, I had 17 percent vacancy in front of the new buildings,” said Neil Merin, chairman of NAI / Merin Hunter Codman in West Palm Beach. “Adding Rosemary 360 and One West Palm, both under construction and scheduled to open in 2021, will bring the vacancy rate to 35 percent. With 360 Rosemary, One West Palm and possibly One Flagler, you’re talking about 750,000 square feet. But even in the prime, we can only take up 100,000 square feet a year. The space will not only last for years, but will also lower rents in other office buildings.”

A developer from Flagler, Related Cos., argued for the tall tower, saying there is a lack of Class A rooms with the amenities and water views provided by private equity firms and hedge funds Northeast would be sought to make room in the city center. However, according to brokers and developers of commercial real estate in the city center, numerous high-quality office spaces are currently available.

“This is due to the fact that the market has seen flat to negative net absorption in the past two years when some companies left and others signed new contracts for smaller spaces,” experts said.

Real estate sources say the flood of space and new office buildings coming onto the market frighten some building owners who want it. In fact, it can be assumed that the Phillips Point office complex will be launched next year, as well as other buildings.

“The market is getting nervous,” said a source.

Phillips Point is a Class A office tower on 777 S. Flagler Drive. The two-tower complex offers water views, luxurious finishes, and a top tenant list. Among them: AMG, a global wealth management company.

AMG endeavors to sublet the entire 11th floor of the east tower, which is 16,000 square meters in size and offers a breathtaking view of the water. Also available is a first-class room with a view of the water on the 10th floor of the East Tower, which was once occupied by the Arnold & Porter law firm, which still rents out the room. The 8,000 square meters of space are available for subletting.

“In fact, 84 percent of the 460,000 square feet at Phillips Point are occupied,” brokers said.

Over there in Esperante, at 222 Lakeview Avenue, the 25,000 square meter tower, according to the real estate agent, has 48,000 square meters of rental space available, which corresponds to an occupancy rate of around 82 percent.

Even if sought-after hedge funds and private equity companies rent space, they don’t take much with them. Instead, they typically look for small offices that are sometimes between 800 and 1,200 square feet, according to an expert in commercial leasing. According to brokers, more than 95 percent of the Class A office buildings in the city center were fully let for a short time, but have adjusted to their historic occupancy rate of 80 to 85 percent.

“There weren’t many significant new businesses in downtown West Palm Beach,” said Peter Reed, managing partner of Commercial Florida Realty Services. “It’s still a mess” of existing downtown tenants.

For example, a new tower under construction, 360 Rosemary in Rosemary Square, has replaced Comvest from the nearby CityPlace Tower. It also attracted Lewis, Longman & Walker Law from Northbridge Center, where the firm rented 16,000 square meters. Now both the Cityplace Tower and Northbridge have to fill the soon empty space in their buildings.

At CityPlace Tower on 525 Okeechobee Boulevard, the last new tower in the city center since 2008, the occupancy of the building is only 72 percent according to the leasing information on the website and the broker data. The brokers market a 21,160-story sublease on the 9th floor. The rental price is $ 39 net per square foot, less than the market price of more than $ 50 per square foot for the area in the building.

In addition, according to the building’s website, the 300,000 square meter building has a further 64,127 square meters of rental space. This includes the top two floors where Intech used to be and which have moved to the One Clearlake Center on Australian Avenue.

 

Source: The Media Times

New Apartments Coming To West Palm Beach’s Warehouse District

District Flats Rendering

In West Palm Beach’s Warehouse District, the transformation from barbed wire and body shops to hipster haven is accelerating.

Palm Beach Gardens-based Eastwind Development officially broke ground Thursday, December 5, on The District Flats, a 178-unit apartment complex a block south of the Grandview Market food hall.

The four-story building on Blanche Street will include a 250-space parking garage, a dog park and a large mural. Construction is expected to finish in 2021.

Eastwind has yet to say how much units will cost. Twenty percent of the apartments, or 36 units, will offer discounted rent to tenants who make less than 140 percent of the annual median income for Palm Beach County.

District Flats is direction south of the 85,000-square-foot Warehouse District, where tenants include Steam Horse Brewery, the Steel Tie Spirits distillery, Palm Beach Squash Club and Gypsy Life Surf Shop. The main attraction is the Grandview Public Market, where eateries sell ramen, poke, tacos and cold-brew coffee.

The six warehouses in the deal were built between 1925 and 1974 — ancient for industrial space in the Amazon age, but ideal for a collection of independent retailers and eateries.

Johnstone Capital Partners, headed by Hunter Beebe of Palm Beach, paid $5.46 million for the six buildings over the past few years, according to property records. Johnstone flipped the properties in late 2018 to Asana Partners of Charlotte, which paid $18.5 million.

 

Source: Palm Beach Post

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Seven CRE Investment Strategies For 2020

cash

With the Thanksgiving holiday weekend behind, it is not too soon to look at what will be the top investment strategies for next year.

Seven top CRE investment strategies for 2020 include:

1. Sell Overpriced Industrial Assets

The industrial market has been booming for the last few years and is the favored asset class among institutional investors. The market is “hot” because of the strong economy, increased demand for warehouse and distribution space due to rising Internet sales and last-mile same- day delivery of online goods. Cap rates for industrial properties have compressed 1.5% to 2.0% during the last 18 months and we would be net sellers of industrial assets in this market.

2. Acquire Beaten Up Retail Assets

Many shopping center and mall real estate assets are selling at 7.0% to 10.0%+ cap rates and some of these assets should be bought. Retail assets have been out of favor for the last few years and although there are tenant risks, with bankruptcies and store closures, they can still provide a higher risk-adjusted return than other CRE assets. A number of the public retail malls are also selling at deep 50%+ discounts to net asset value and are also ripe for a buyout or being taken private. These distressed retail deals are opportunistic investments and need significant renovation and releasing.

3. Invest In Data Analytics Companies

One of the key growth areas of CRE is in data analytics. Data analytics encompasses all aspects of big data for CRE including; demographics, ownership data, property data, historical value information, sales/lease data and financial analysis. The data analytics space is very fragmented with a few large companies like CoStar, RealPage, REIS (a unit of Moody’s) and many local and start-up companies. These larger firms have been acquiring smaller competitors to expand their service offerings and customer base. Recently, CoStar acquired Smith Travel Research, the leading hotel/lodging consulting firm, for $450 million and RealPage acquired Buildium, a property management software firm, for $580 million. As the industry grows, there will be more consolidation and an opportunity to acquire these smaller private firms and even establish a platform to consolidate these entities.

4. Sell Overpriced Core Assets and Reinvest In Opportunistic Assets

The risk and return for various CRE investment strategies range from the lowest risk, core investments, which are typically fully leased, institutional quality, Class A properties with little or no leverage, to value-added strategies which are higher risk strategies that involve some property redevelopment, tenant adjustment or leasing or with operational problems to opportunistic strategies, which are the highest risk category that involve a high degree of redevelopment, leasing, tenant relocation or change or may be in financial distress. Many core properties are still trading at 3.0% to 4.5% cap rates and should be sold. The proceeds should be reinvested in higher return opportunistic strategies, as discussed in #2 above, buying beaten up retail assets.

5. Provide Participating Mezzanine Loans

Even though there is a lot of capital sloshing around chasing deals, there is a dearth of debt/equity capital for the portion of the capital stack above the first mortgage at about 65%-70% and below the minimum owners’ equity investment of 10.0%. This slice of 20% of the capital stack is ideal for a participating mezzanine loan. The participating mezzanine loan may have terms as follow; interest rate at LIBOR plus 4.0%+, loan fees of 1.0%-3.0%+ and 20.0% to 30.0%+ ownership of the deal. The mezzanine lender will typically not be secured by a second lien on the property but by an ownership guarantee and assignment of the owner’s interest in the property. The lender is entitled to the equity kicker because it is taking some of the equity risk of the project. Internal rates of return of 12.0%-15.0%+ can be delivered with this strategy, which is very attractive for a fixed income investment.

6. Perform A Systematic Review and Analysis Of The 15 CRE Risks

As we have discussed before, there are 15 risks inherent in CRE investment as follows:

  • Cash Flow Risk-volatility in the property’s net operating income or cash flow.
  • Property Value Risk-a reduction in a property’s value.
  • Tenant Risk-loss or bankruptcy of a major tenant.
  • Market Risk-negative changes in the local real estate market or metropolitan statistical area.
  • Economic Risk-negative changes in the macroeconomy.
  • Interest Rate Risk-an increase in interest rates.
  • Inflation Risk-an increase in inflation.
  • Leasing Risk-inability to lease vacant space or a drop in lease rates.
  • Management Risk-poor management policy and operations.
  • Ownership Risk-loss of critical personnel of owner or sponsor.
  • Legal, Title, Tax and Political Risk-averse legal, tax and political issues and claims on title.
  • Construction Risk-development delays, cessation of construction, financial distress of general contractor or sub-contractors and payment defaults.
  • Entitlement Risk-inability or delay in obtaining project entitlements.
  • Liquidity Risk-inability to sell the property or convert equity value into cash.
  • Refinancing Risk-inability to refinance the property.

All investors that own CRE should perform a detailed and systematic review of the above risks and their potential effect on an asset or portfolio.

7. Acquire Small Capitalization Public And Private REITs

There are more than 30 public REITs with market capitalizations less than $1 billion that are trading at or less than their net asset value. These REITs are ripe to be acquired or taken private by other REITs, real estate private equity firms or other institutional investors. It also may be possible to get control of the board of directors of some of these REITs via a proxy contest.

Any acquisition or merger opportunity will have to comply with the REIT tax rules including, the 5 or 50 rule which states that 5 or fewer individuals cannot own more than 50% of the value of a REIT during the last half of the year. Also, more than two-thirds of REITs are incorporated in the state of Maryland which has broader liability protection, more flexible voting provisions for stockholders, easier Bylaw amendment provisions, better protection against hostile takeovers and easier stock issuance procedures. Notwithstanding a Maryland incorporation, there are still opportunities via a friendly acquisition or proxy contest.

 

Source: GlobeSt.

Virgin Trains’ Progress On Track With Its $4B West Palm Beach-To-Orlando Route

brightline train

Virgin Trains is on track for its expansion into Orlando as the scale of work continues to grow across Central Florida.

The $4 billion West Palm Beach-to-Orlando expansion, which includes 170 miles of new and existing track, is set to be completed in 2022 after starting work this past May. Since that point, crews along the corridor have been clearing space for new tracks among other work.

As construction has expanded, one of the challenges is coordinating with area stakeholders on the project, Michael Cegelis, Virgin Trains executive vice president of infrastructure, said during a Nov. 21 media preview of the track. Those stakeholders include the Greater Orlando Aviation Authority, Central Florida Expressway Authority and the Florida Department of Transportation.

“We have lots of stakeholders — that’s where the challenges come,” Cegelis said. “Typically, we are a private sector company looking to make decisions and move fast, and the challenge is sometimes these entities are not used to moving at the same speed we are. But, we have a good relationship that helps prevent some issues.”

Work on the route will include:

  • Zone 1 vehicle maintenance facility and station at Orlando International Airport: The Vehicle Maintenance Facility will be a $70 million, 138,000-square-foot facility that will employ 160 people in high-skill jobs, including train engineers, conductors, technicians and inspectors. Construction of the building structure is set to begin in February.
  • Zones 2 and 3 include 40 miles of new rail from Cocoa to Orlando International Airport: Work on this corridor includes 30 bridges for the rail line, along with three underpasses going toward Cocoa. Currently clearing work is continuing across the zones to make way for track work.
  • Zone 4 reconstruction of 129 miles of track and infrastructure from West Palm Beach to Cocoa: The existing track in the area will be reinforced to allow for higher speeds of rail travel. Clearing work is underway in the area and materials are being stationed on the corridor.

The project is expected to create more than 10,000 temporary construction jobs over the life of the project and generate $653 million in federal, state and local tax revenue. The project will create more than 2,000 permanent jobs post-construction.

Progress on the Orlando route comes as a Jan. 1 deadline was set for right-of-way negotiations for the proposed Tampa route between Virgin Trains, the Central Florida Expressway Authority and the Florida Department of Transportation. This gives the parties another 90 days to reach an agreement that would allow for construction to begin on a $1.7 billion expansion of the intercity passenger rail system.

The company also still is evaluating train station sites in the area that may serve one or more local theme parks, something it is targeting for fourth-quarter this year.

“Virgin Trains is in discussions with Walt Disney World Resort and others on that potential,” said Patrick Goddard, president of Miami-based Virgin Trains USA.

Virgin Trains also is in discussions on a possible station at the Treasure Coast and Space Coast, and is evaluating the potential to connect with SunRail at its Meadow Woods station or another location.

“The train line is considering connections to boost area mobility,” Goddard said. “As we take care of that medium haul trip, we are looking at groups from the public and private sector to pick it up from there. There’s a phenomenal opportunity there and that’s part of the dialogue we are having with the various agencies involved.”

Check out the SFBJ photo slideshow on the progress of the Virgin Trains’ progress by clicking here.

 

Source: SFBJ