Sizzling Residential Real Estate Market Has Builders Thinking Twice About Commercial Projects
How hot is the residential real estate market in parts of western Palm Beach County?
Hot enough that builders are seeking zoning changes to permit them to abandon already approved commercial projects and convert them into high-density residential developments with limited commercial parts.
“The shift shows that builders can get a greater return on their investment by going residential,” said Jesse Saginor, a Florida Atlantic University professor who monitors real estate trends in South Florida. “There is not much of a wait to find buyers, regardless of the price point, for new homes in Palm Beach County.”
The latest example involves the vacant northwest corner of Hypoluxo and Lyons roads in suburban Lake Worth. It may soon be the site of Windsor Place, a 393-unit development that calls for 157 townhomes, 236 rental units and 30,192 square feet of commercial space, including a grocery store and a drive-through restaurant.
In 2005, previous owners obtained approval for 115,078 square feet of commercial space that included a 41,000-square-foot anchor store along with 184 townhouses. The new proposal seeks to more than double the number of residential units and represents a significant decrease in the amount of commercial space. The parcel is one of the last remaining, sizeable, undeveloped tracts west of Lake Worth Beach.
The development company behind the project is Hatzlacha WP Holdings, founded by Charles M. Scardina, once a senior vice president of Ansca Homes. Scardina was involved in a lengthy legal battle with his former partners, which settled in late 2017. Shortly after that, he bought the 40-acre parcel for $15.2 million.
But Scardina now says in a report filed with the county that the initial plan will result in “an improper use of the site” as there is too much other commercial development in the area. The report noted the changes were necessary because the original project “too closely mirrored” the adjacent Town Commons shopping center on the east side of Lyons Road.
Earlier this year, another company owned by Scardina made similar arguments for his Terra Nova project at Hagen Ranch Road and Atlantic Avenue west of Delray Beach.
Scardina’s Principal Development Group proposed a change from a mostly commercial project to one with 275 rental units and a drive-through restaurant. A group of area homeowner associations banded together to create the Common Sense Development Coalition to fight the plan on the grounds that the residential density is too intense. Scardina is working with coalition members to see if he can address their concerns.
And recently, another commercially approved project at Jog Road and Boynton Beach Boulevard is undergoing a change as the new owners seek permission to build an assisted living facility, which will reduce land devoted to commercial uses by 4 acres.
“There is little land left in Palm Beach County to build homes,” said residential builder Alex Akel. “It is possible that residential builders may even buy up existing shopping centers and convert them into project that would include housing.”
Much has been written about how the tax law changes have fueled a luxury-home boom in South Florida but Saginor said the impact has been felt across all price points. Saginor of FAU said there is just as much a demand for homes between $300,000 and $800,000 as there are for luxury homes.
Additionally, with the rise of online shopping, brick and mortar stores are in decline. Strip center stalwarts Toys R Us and Sports Authority are gone. Booksellers, video stores and record shops are nearly extinct. Macy’s, Sears, JCPenney and Office Depot are shrinking.
Meanwhile, it is not clear whether Scardina will face the kind of fierce opposition for Windsor Place that he faces at Terra Nova west of Delray Beach. Plans call for Windsor Place to abut the 1,100-plus unit development at Bellagaio, which is northwest of the proposed development. The project calls for apartments in seven three-story buildings with each building containing 32 or 34 units.
A 4-acre lake separates the two developments. Access will be from both Lyons and Hypoluxo roads. The grocery store will be at the intersection. According to the builder’s traffic study, the development will generate an additional 3,738 trips a day on the already heavily congested Hypoluxo-Lyons road intersection.
“Bellagio and other area HOAs are in active discussions with the developer,” said Pam Rothman, president of the Bellagio Homeowners Association. She declined further comment.
Repeated efforts to obtain comment from Scardina and his consultants were unsuccessful. Scardina asked the county Planning Division on June 18 for more time to submit detailed plans as he seeks the support of Bellagio and other nearby developments — Valencia Shores, Savannah Estates and Villagio.
The zoning changes would result in:
- A significant increase in housing density.
- New zoning classifications for both residential and commercial parts of the development.
- Elimination of 59 guest parking spaces for the rental units.
If approved, the builder expects Windsor Place to be completed in 2023.
Source: Palm Beach Post
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