Two commercial buildings at the Renaissance Commons development in Boynton Beach slipped into foreclosure last month, but the property’s owners say they’re worked out a deal with the lender in a “friendly foreclosure.”
The signature project on Congress Avenue and Gateway Boulevard was the start of a major development of land formerly occupied by Motorola and cows grazing on an adjacent pasture.
A decade ago, Boca Raton developer James Comparato and his Compson Associates purchased the land along Congress Avenue, across from the Boynton Beach Mall, turning the prime property into a bustling mix of offices, shops and multi-family homes.
But two office/retail complexes at the corner of Gateway and Congress were the subject of a foreclosure lawsuit last month by Wells Fargo, in Palm Beach County Circuit Court. One property is at 1880 North Congress Avenue and the other is 1500 West Gateway Boulevard.
The $56.6 million loan was originated by Wachovia Bank in 2004 and later modified. Named in the lawsuit is Boynton Development Associates II and principals James Comparato, Anthony Comparato, Carl Klepper Jr. and Robert D’Angelo.
James Comparato, manager of Boynton Development Associates, said last week that an agreement has been reached with Wells Fargo. He said the agreement is confidential, but court documents show a final judgment of $52.6 million was entered Aug. 12.
Comparato isn’t walking away from the property, however: “It is our intention to reacquire the property from the lender once the foreclosure is completed.” A foreclosure sale is set for Sept. 18, court records show.
Comparato would not discuss why the buildings fell into foreclosure. An attorney for Wells Fargo could not be reached for comment.
The two buildings total nearly 300,000 square feet and include numerous retail tenants on the ground floor, such as the Lemon Grass Asian Bistro and Starbucks. Comparato said his firm is operating the property during the foreclosure.
Among the building’s office tenants: The Greater Boynton Beach Chamber of Commerce.
The downstairs retail space continues to be a hot spot for retailers. An empty restaurant space was just leased by Hurricane Wings, the popular chain based in West Palm Beach. Hurricane Wings will be taking space formerly occupied by Margarita’s and Caliente Kitchen.
Tom Prakas of Boca Raton-based Prakas Group, brokered the deal and said the 6,000 square foot restaurant will likely open in about four months.
One of the most sought-after office tenants in West Palm Beach is making a move — to a rival office building across the street. Akerman Senterfitt, a leading Florida law firm with an office at the Esperante Corporate Center on Lakeview Avenue, is moving to Phillips Point’s west tower. Together with the east tower, Phillips Point has 460,000 square feet.
The firm will lease 40,000 square feet, about the same amount of space that it had at Esperante and is expected to move Sept. 1, 2014, bringing the complex’s occupancy up to more than 90 percent.
“It’s more efficient space, will accommodate more lawyers and also will allow for future expansion,” firm spokeswoman Marlisa Serrano said. Akerman’s West Palm Beach office has quadrupled in size since it opened with 10 lawyers in 1995. There now are 48 attorneys in the office, including three new hires.
The Phillips Point space, on the 10th and 11th and part of the 9th floor, also has water views that the firm doesn’t enjoy at Esperante, where it is on the 4th floor and part of the 3rd floor.
In commercial real estate circles, the Akerman Senterfitt move is a very big deal.
There simply aren’t very many users of large space in downtown West Palm Beach. And Akerman, which is ranked among the top 100 firms in the U.S. by the National Law Journal, is considered a big catch. The lease is said to be for more than 10 years.
West Palm Beach has been described as a “move-around” market, with tenants shifting from one building to the next, instead of a steady demand for space from new companies moving into town.
“It’s another perfect example of the West Palm Beach shuffle,” said Peter Reed, managing principal of Commercial Florida Realty Services in Boca Raton.
Akerman was said to be heavily courted by CityPlace Tower and, of course, Esperante, where it has had an office since October 2000.
With Akerman’s departure next year, occupancy at Esperante will dip significantly. Real estate sources say the occupancy rate, now at about 72 percent, could decline to under 60 percent with the law firm’s departure and the departure of two banking offices in the tower. An official with CBRE, which owns and manages the building, declined comment. Esperante has 246,000 square feet and was sold to a CBRE fund for $67.55 million in January 2009.
The timing isn’t great for Esperante, which happens to be for sale.
Parkway Properties of Orlando had been eying a purchase of the building for a sum said to be around $80 million, but the firm’s interest waned when it became clear Akerman was walking, sources said. (In 2005, during the real estate heyday, Esperante traded hands for $105 million.)
Reed said the pending vacancy of 40,000 square feet is an opportunity for Esperante, which can now offer space to a larger user. Of course, “the problem is that large users are few and far between,” Reed added.
Akerman follows Ackerman, Link & Sartory and Schwarzberg & Associates law firms, which during the past 12 months left Esperante for Phillips Point as well.
The big vacancy at Esperante begs the question: Is there a need for new office space in downtown West Palm Beach?
Brokerage firm Cushman & Wakefield has been busy trying to pre-lease space at a planned office tower, the 12-story Gateway Tower. The office building is set to be built on land The Related Cos. owns in the median of Okeechobee Boulevard, informally known as the “triangle.”
The land sits across from the CityPlace Tower building, which Related built and sold.
The Gateway Tower would dump another 200,000 square feet of space on the West Palm Beach market.
But not to worry: About half the building already is committed, Mark Pateman, a Cushman & Wakefield brokerage director, said last week.
Pateman said an unidentified law firm and bank are negotiating leases, and two unidentified headquarters companies from outside the area are talking with him about taking the remaining space.
Word is that Bank of America will occupy the building, but Pateman would not divulge the bank’s name.
He did say, however, that the vacancies at Esperante will have no effect on Gateway Tower, which is new, has better floor plate configurations and offers hurricane-resistant glass and back-up power. “It’s a different animal,” Pateman said.
Alexandra Clough writes about the economy, real estate and the law.