1. REE 5878, Real Estate Development Process: Part 1 Case Study Project: West Palm Beach Mixed-Used Development  Group 3: Claudius Carnegie, Jeff Heard, Marianela Pimentel, Kyle Thompson, Paul Tocci Lakeview Centre Nova Southeastern University H. Wayne Huizenga College Of Business & Entrepreneurship

2. Site Analysis (Google Maps)

3. The subject parcel of land, Lakeview Centre, is located on the north side of Lakeview Avenue, between Quadrille Boulevard and S. Dixie Highway; specifically Section 21, Township 43, Range 43, Block 057, on lot 0010. (City of West Palm Beach eGovPlus) The property is strategically positioned at the entrance to downtown West Palm Beach in one of the most heavily traveled and visible locations in the city, located near City Place in Downtown West Palm Beach. Downtown West Palm Beach offers a unique development opportunity due to appealing market drivers; such as City Place, a mixed-use residential/lifestyle center with popular entertainment and dining, as well as a campus for Palm Beach Atlantic University. The street address of the land is 419 Lakeview Avenue West Palm Beach, Florida. (Capas, 2014) Land

4. Land: Continued (Capas, 2014)

5. DirectionLand Use West City Place Parking Garage/Class-A Office Building North Mixed-Use development (City Palms Luxury Apartments) East Mixed-Use developments South Car Dealership (Jaguar/Aston Martin Palm Beach) Southwest Mixed-Use development (South Tower City Place) Southeast Palm Beach Atlantic University Physical Characteristics and Surrounding Neighborhood All of the surround structures around the parcel of land are upscale developments. With a number of luxury mixed-use developments, along with a Lexus car dealership, a Class-A office building and four-story parking garage. This neighborhood is in the expansion stage of its lifecycle, with all the new developments occurring in the hotel, retail, and residential sectors According to Downtown Development Authority there is 1.3 billion dollars’ worth of new development in the downtown development district.

6. Physical Characteristics: Continued

7. The subject project sits on Lakeview Avenue, which runs adjacent to Highway 704 leading out to Palm Beach. This highway will provide reasonable vehicle access to the development. Vehicular ingress is restricted to the entrance on Iris Street. Vehicular egress will lead out to the East and West on Quadrille Blvd and Dixie Highway Vehicular Access

8. Primary regional access will be done through two major highways running parallel to the site, I-95 and A1A. I-95 to the west of the subject site provides access to major cities in the south Florida area Although most of the proposed property’s market will come from local routes, these regional access roads will assist in getting not only local business but business from the south Florida region. Regional Access (Division, P. 2015)

9. The subject parcel of land is easily visible from Highway 704 and Lakeview Avenue. Visibility will be high for shoppers, tourist, employees, and college students. Walkability of the subject site is a 93 out of 100 on the Walkscore Metric Scale, or a “walker’s paradise” (http://www.walkscore.com). Local Access and Walkability (Opra Place, P. 2015)

10. Fire District: 1 Flood District: C Future Land Use District: CityPlace District Easements and Encroachments: There are no known easements or encroachments Soil Conditions: Soil reports have not been made available, we are not qualified to evaluate soil conditions. However no extraordinary conditions were apparent. Nuisances: We have not been informed of any site-specific nuisances or hazards. Flood Zone: Zone X, subject land is located in a moderate flooding area, with a 0.2% chance of flooding annually, as defined by the City. Site Characteristics (City of West Palm Beach eGovPlus)

11. The subject land is zoned by the City as Commercial Planned Development (CPD). This zoning designation allows for select uses to support the mixed- use development being proposed. The mission of the Planning Division is to steer the City toward a sustainable, livable, and economically successful future through every means available to it. (Municode Library, 2015) City Place DRI DRI stands for the Developments of Regional Impacts; like all projects in the DRI, the approvals are for saleable/leasable square footage and numbers of total units. The CityPlace DRI establishes maximum density guidelines for the property. (Municode Library, 2015) The Planning Division provides for the comprehensive review and approval of all development within the City of West Palm Beach. The CityPlace DRI shall govern the CityPlace district (CPD). CityPlace is characterized as a mixed-used district, with a primary emphasis on retail along Rosemary Avenue (Municode Library, 2015) Zoning

12. Zoning: Continued (Division, P. 2015)

13. Lakeview Centre is approved for the uses summarized below through until April 11, 2016: 317,179 sf of Office 57,710 sf of Retail 350 Residential Units 250 Hotel Rooms 23,475 sf Back of House 149,856 sf Circulation 39,917 sf Arcade, Recreation Deck, etc. All the information above was obtained from the Selling Broker and is approved for future development. (Capas, 2014) Project

14. PrimarySecondary Market Area Definition The market area for the mixed-use subject property demands the defining of a primary and secondary market area Downtown West Palm Beach is evolving into one of South Florida’s most exciting urban communities. Downtown West Palm Beach has produced strong market fundamentals and is introducing new development in downtown with a wide variety of categories such as office, hotel, residential, and retail. Market Analysis

15. Convention Center - The Palm Beach County Convention Center presents a spectacular setting for conventions, trade shows, meetings and social events. All Aboard Florida Passenger Rail Service  An overview and detailed description of local demand generators are included by the broker Capas Group Realty Advisors. City Place - a mixed-use residential/lifestyle center development located in the heart of downtown West Palm Beach is a popular entertainment and dining venue. Clemantis Street - The award-winning Clematis Street Entertainment District features local boutiques, nightclubs, live music, restaurants, antique shops and historical landmarks.  A demand generator can be defined as any facility, activity or event that brings customers or guests into the market and produces demand for specific products or services Local Demand Generators Future Demand Generators:  Restoration Hardware the home furnishings store is in the process of finalizing plans with the city for a 51,000 square foot gallery store to be located in the median on a 2 acre site across from the subject site.

16. City Place (Lou, 2015) Convention Center (Baltimore Arts, 2015) All Aboard Florida Passenger Rail Service (penneyvanderbilt.wordpress., 2015) Restoration Hardware the home furnishings store Rendering of Restoration Hardware in West Palm Beach (Weil, 2015)

17. Palm Beach County vs. South Florida Higher that average Household income, and educational levels. Highly educated white-collar component with substantial high technology and defense connections a robust bio-science sector. Economic and Demographic Analysis: EconomyWest Palm BeachUnited States Unemployment Rate5.00%6.30% Recent Job Growth3.93%1.18% Future Job Growth42.90%36.10% West Palm Beach Unemployment and Job Growth (Start Class, 2015) Palm Beach Unemployment 1990 – 2015

18. The overall view of the office real estate market is optimistic due to drop of vacancy rate from the first quarter of 2015 at 17.4% to the last quarter at 16.5%. This is causing an increase of approximately 100,000 Sq. ft. office space. For the remainder of the year. (REIS Observer, 2015 pp 9) Office Trends Current Metro Rent Retail: - Asking rent by age after 2009: $34.53 - Asking Rent Distribution: low $15.56 – high $52.38 - Asking rate growth rate distribution: High %3.6 Current Metro Vacancy detail: - After 2009: %25.9 - Vacancy rate distribution: high %98.0 Market date by building class - Class “A” Properties - 2015 Q1 total inventory: 8,119,000 Sq. Ft - Vacancy: % 16.5 - Net absorption: - 86,000 - Asking Rents: $36.03 Submarket overview- Class A: -West Palm Beach W of 95 : $26.25 – Asking rent -North Palm Beach: $22.50 – Asking rent New construction listing: - West Palm Beach downtown: 400,000 Sq. Ft (proposed)

19. These Trend lines show a relatively flat period through this Project development timeline of late 2015 through early 2017, followed by a decline. These Trend lines show a relatively flat period through this Project development timeline of late 2015 through early 2017, followed by a decline. Although, the local Market is showing a better expected performance over the South Atlantic and National USA. These Trend lines show a forecasted fairly robust and increasing performance, during and after this Project development timeline of late 2015 through early 2017, and relatively flat or slightly declining performance in the foreseeable future

20. With such high increase in the unit numbers in Palm Beach county vacancy rate are expected to also increase. Special with the class “A” sector with a 5.9% vacancy rate when comparing to a 4.9 % vacancy rate with the other sector. (REIS obverse, 2015 pp 10) Rent average increased 1.3% and 1.4% for the first quarter 2015, which is a good indicator by REIS when compared to 2014’s 3.7% and 4.4% total average Apartment Trends Current Metro Vacancy detail: - After 2009: % 9.6 - Vacancy rate distribution: high % 14.6 Inventory by building age: - After 2009: 12% Market date by building class - Class “A” Properties - 2015 Q1 total inventory: 28,146 Sq. Ft - Vacancy: % 6.5 - Net absorption: 175 - Asking Rents: $1,530.00 Submarket overview- Class A: - West Palm Beach/ Palm Beach : $1,172.00 – Asking rent - North Palm Beach: $1,248.00– Asking rent New construction listing: - West Palm Beach (North): 1,276 Total Units (Under Construction)

21. These Trend lines show a relatively flat period through this Project development timeline of late 2015 through early 2017, followed by a relatively flat or slightly declining performance, in the foreseeable future. These Trend lines show a relatively flat or slightly peaking period through this Project development timeline of late 2015 through early 2017, followed by a precipitous decline, in the foreseeable future. These Trend lines show a forecasted fairly robust and increasing performance, during and after this Project development timeline of late 2015 through early 2017, and relatively flat or slightly declining performance in the foreseeable future.

22. Another real estate market that has also has a high flow of activity has been the retail market with New England Development opening a 300,000 Sq. Ft. Market Place at the Outlets in West Palm Beach completed in October of last year. This outlet mall is 79.7% of the entire retail space. In the community neighbor shopping center marker it was a creased of 144,400 Sq. Ft. of this year first quarter. In addition two more project totaling 184,410 Sq. Ft. are currently active in this county. Retail Trends Future projects around with in a few miles from (main project) are already set for development which include Brock Development Corporation’s 350,000 Sq. Ft. box center in Palm Beach Garden and John Green’s 19 acres residential tower with retails components. (REIS obverse, 2015 pp 11)

23. These Trend lines show a relatively flat or slightly peaking period through this Project development timeline of late 2015 through early 2017, followed by a slight decline, in the foreseeable future. These Trend lines show a relatively flat or slightly peaking period through this Project development timeline of late 2015 through early 2017, followed by a precipitous decline, in the foreseeable future. These Trend lines show a relatively flat period through this Project development timeline of late 2015 through early 2017, followed by a relatively flat or slightly declining performance, in the foreseeable future.

24. Palm Beach County is experiencing a rapid increase in hotel room inventory in the next three years as rising room rates and occupancies have induced new developments. Proposed Hotels Palm Harbor Marina Marriott Hotel 302 Datura Street Convention Center Hilton Competitive Set Residence Inn West Palm Beach Downtown Hyatt Place West Palm Beach Downtown Marriott West Palm Beach Hotel The Chesterfield Palm Beach Hotel Trends  Considering the rapid expansion being experienced in downtown West Palm Beach, the affluent clientele generated by nearby Palm Beach and the limited availability of luxury lodging alternatives, the downtown market offers an excellent opportunity for a high-end, full-service hotel. (Capas, 2014)  The subject site is ideally-suited for a full-service, luxury hotel similar in concept to JW Marriott.  According to the Palm Beach Post, more than 1,000 rooms are currently under construction, with close to 800 rooms awaiting approval in various cities. The rooms are anticipated to be in use by the end of 2015. (Palm Beach Hotel, 2015)

25. (Hotel Palm Beach September 2015 Trends and Trades, 2015) Palm Beach Hotel Sales (2012 – 2015) Sales by Total $ (mil) Palm Beach Hotel Sales 2012 – 2015 (Hotel Palm Beach September 2015 Trends and Trades, 2015)

26. Buyer Types Palm Beach Hotel Capital Flows (Hotel Palm Beach September 2015 Trends and Trades, 2015) User/OtherPrivatePublic Listed/REITsCross- BorderInstitutional 20120%59%0%9%31% 20130%77%0%0%23% 20140%72%12%11%6% 2015 (YTD) 0%56%0%4%40% 2015 (YTD) 2%29%19%15%34% (Hotel Palm Beach September 2015 Trends and Trades, 2015) Buyer Types

27. The site plan design is two 300 foot towers on the southern end of the property. 30- stories hotel and residential units west tower 26-stories of office east tower Two 12-story parking garages with an additional shared gym/pool/amenity deck Residential liner units on the east and west sides Primary vehicular entrance from north side Sub grade loading/delivery/mechanical/waste services Design Proposed Facility Summary Rendering (Capas, 2014) 1,442 Parking Spots Recreation Deck, etc. 149,856 sf Circulation Valet Service 23,475 sf Back of House 39,917 sf Arcade The subject site includes the following features:

28. Ground Floor Plan Mix and Uses Ground Floor Plan (Capas, 2014)

29. Strengths  Extraordinary visibility & location  Local business demand generators  Strong office demand  Fully entitled and Approved City Block in Downtown West Palm Beach  High Walkability, Transit, and Bike Scores  Accessibility to major Transportation facilities (Airport, Sea-ports, Highways, etc.)  International Business Centers SWOT Analysis Weaknesses  Inadequate parking  Vehicular traffic circulation  Short due diligence and Feasibility Study period Opportunities  Aging Class A Office supply and inventory  Medical and Financial Office demand  Proximity to Convention Center and the CBD  Pedestrian Bridge and walkability Threats  City owned “Tent City” for Medical Office Complex  Rising Interest Rates  Business and Economy declining trends  Rising construction costs