Planned train station in Fort Lauderdale encourages investment
Investors and developers, including Lennar Corp., are buying up properties nearby
September 25, 2015 11:15AMBy Mike Seemuth
Rendering of an All Aboard Florida train
Early signs of development are emerging in downtown Fort Lauderdale, near where Coral Gables-based Florida East Coast Industries is planning to introduce in 2017 its All Aboard Florida daily passenger train service that will extend through the city on its route from Miami to Orlando.
In effort to figure if train station plans are yet having an effect on Fort Lauderdale, The Real Deal reached out to four property owners nearby or their broker representatives.
Richard Mercedes of Fort Lauderdale last year paid $450,0000 for a former nightclub on the south side of Northwest Second Street next to the Florida East Coast Railroad, about one block north of Broward Boulevard.
Mercedes bought the two-story property after Florida East Coast Industries’ 2012 announcement of plans for All Aboard Florida rail service. “We bought that property not knowing exactly what was happening but in hopes that the train will come,” Mercedes said. “And now, the train is coming.”
The state announced in August critical financial backing for the rail service in the form of bonds it will issue. Florida East Coast began the station construction project on Oct. 29, 2014.
Site to be developed
Mercedes has gutted his new property and wrapped it in plastic fencing. He even bought an adjacent property that could serve as parking. He has received inquiries about the space from prospective buyers eyeing it for use as a cafe or luncheonette and from lawyers who would convert it into an office building. “All of a sudden, we’re getting a lot of calls from law firms that have an office in Miami and also in Palm Beach,” Mercedes said.
“The city is trying to get people to buy into these types of neighborhoods and to revamp them. That just wasn’t happening,” he said. “This train station’s going to do it.”
Florida East Coast Industries plans to develop land it owns near its Fort Lauderdale train station. The company will build a 600-space parking garage at the corner of Northwest Third Avenue and Northwest Second Street for use by train passengers and users of other structures.
“Additional uses are still under consideration as we closely study the market, but the development footprint will total about 1 million square feet,” an All Aboard Florida spokeswoman Ali Soule said in an email. “We’re still working on the development plans, but I can tell you about three-fourths of the space will be developed as mixed use property.”
New construction in the All Aboard rail corridor may encourage the development of nearby properties in the downtown Fort Lauderdale area. The All Aboard service may share the downtown Fort Lauderdale station with the commuter rail service known as Tri-Rail, which runs on a suburban line west of I-95, if Tri-Rail can fund the cost of extending lines eastward across the interstate. Expected to become operational by late 2017, the Wave is a streetcar system under development, designed to traverse a 2.7-mile embedded line in the streets of downtown Fort Lauderdale and an adjacent employment center just south of the New River.
About a month ago, Jim Ellis sold 2.2 vacant acres in downtown Fort Lauderdale, which is about seven blocks from the planned Aboard station and approved for a 386-unit apartment building, to national home builder Lennar Corp. for $12.5 million. He had held the land at 120 Northeast Fourth Street for about 10 years.
Ellis said “there’s no question” the site’s proximity to the Fort Lauderdale All Aboard station is an important lure for Miami-based Lennar. He said he worked with Lennar’s multifamily division in Atlanta on the sale of the land, which is approved for development of two apartment buildings: one with 25 stories, the other 15, and a seven-level garage.
Some real estate professionals expressed doubt, however, that All Aboard Florida will trigger a wave of development in Fort Lauderdale.
Consider bids for the City OK Tire store at 404 Northwest First Avenue, a 4,300-square-foot building on a 24,249-square-foot lot near the site of the All Aboard Florida train station. None of the bidders was looking to tap into a future flow of mass transit passengers in the vicinity of the tire store, located about four blocks northeast of the train station location.
“The offers we’ve had are geared more toward the neighborhood than the transit,” said Joseph Byrnes, vice president of Berger Commercial Realty, which has the listing for the tire store. Several inquiries have come from restaurant operators.
Until the All Aboard Florida passenger train service begins operating, it is unlikely to become a major catalyst for real estate development in Fort Lauderdale, Byrnes said. “They’re going to have to start kicking up some dust first and demonstrating that people are going to use the train.”
Yet a vacant warehouse near the tire store is attracting interest from restaurateurs as far away as California, Pennsylvania and Texas, said Shari Olefson, whose family owns and leases the 8,000-square-foot property. Its proximity to the site of the All Aboard Florida train station “is an interesting new development,” she said.
“I think it’s more important that there has been residential development in that area,” she added. “People who are coming and going from a train station aren’t necessarily sticking around to pay for products or services, whereas residents do.”
Source: The Real Deal