Beachside tower could tie up land for ages
Development would skirt height restrictions, could lock Hollywood into a bad deal
HOLLYWOOD — A swank 30-story luxury condo could be coming to Hollywood beach, joining a parade of soaring high-rises in a town known for its beachy vibe. Only this one would skirt height restrictions and could lock the city into a bad deal for practically a century.
The 4-acre parcel, currently valued at $35 million, would be transformed into a posh new destination under a proposal masterminded by one of South Florida’s most prolific developers, the Related Group.
Related would build a new park and community center right next to primo condos that would sell for up to $2 million. Details are still being worked out, but the developer is proposing to lease the cityowned property for 99 years, and the development would revert to the city after that.
Critics say the new 365-foot condo — seven times the height allowed on private property — would tower over beachfront land that’s now home to a small park and community center less than a mile south of Hollywood Boulevard. After the South Florida Sun Sentinel raised questions about the financing, city officials are analyzing whether Related should pay more.
Eric Fordin, senior vice president at the Miami-based company, said the project could break ground as soon as next year and be finished by 2024.
A longtime resident of Hollywood, Fordin said he’s had his eye on the site at 1301 South Ocean Drive for a while now.
“I knew it wasn’t in great shape and I thought we could build them a new commu
nity center, a new park, and from the private side we could build an amazing development,” said Fordin, who is spearheading the project with Nick Perez, company vice president and son of founder Jorge Perez. “All the stars aligned.”
The new development would bring a new energy to a quiet section of Hollywood’s beach without destroying its chill vibe, Mayor Josh Levy says.
“A new park and play area and a new fresh ambiance for those who use the center,” Levy said. “And they’d have a gathering place that would include a restaurant. That’s something they don’t have right now.”
The project is not without critics, however.
Hollywood resident Geoffrey Pearson, a kayaker who frequently launches from that beach, worries about losing a public parcel of land to a private developer for the better part of a century.
“Once you give up a piece of property, you’re never going to get it back,” he said. “If it’s developed it’s going to be developed forever.”
At the end of the lease, Hollywood taxpayers will inherit the condo building.
As part of the deal, Related plans to replace Harry Berry Park and the Hollywood Beach Culture & Community Center with a new park closer to the ocean and an updated two-story community center. Also in the plans: A 5,000-square-foot restaurant; an extension of the beachfront Broadwalk pathway by another block and half; and a three-story parking garage with 109 public spaces on the ground floor. When 49 street spaces are included, the project will add 37 spaces to what is there now, city officials say.
Watching the money
Details of the deal will be hammered out behind the scenes over the next several weeks, with commission approval still probably months away.
Some activists remain wary that worried city officials may give away the farm.
“It’s a good vision, but the devil is in the details,” said Peter Hernandez, a former city commissioner who was still in office when Related Group floated the plan.
“As long as the powers that be don’t give away the house, the city can benefit from it,” he said. “I don’t like 99-year leases. I don’t think the city should be giving away or selling beachfront property for 99 years.”
Hernandez urged city officials to negotiate the best deal they can.
“If the developer is going to be the only one making money 50 years from now, we should not be doing that deal.”
The financial pitfalls
As far as the terms of the lease, here’s what we know so far: Related plans to give Hollywood up to $35 million upfront, a mix of cash and public improvements.
The developer has proposed paying Hollywood the same $400,000 in annual rent for the entire 99 years of the lease — a proposal experts say is unusual because it lacks the traditional bump in rent based on benchmark interest rates. The city also would collect 30% in gross revenues from the restaurant as “participation rent.”
The payments would equal $40 million in base rent and another $44 million in participation rent over the life of the 99-year lease, assuming a 3% annual increase in participation rent, Hollywood spokeswoman Raelin Storey said.
But those numbers don’t account for inflation, says Adam Von Romer, a senior investment associate with the Fort Lauderdale-based real estate firm Fitzgerald Group. “It could potentially be a great deal for Hollywood,” he said. “But the numbers have to be right.”
You can’t use simple arithmetic to figure the value of the lease, Von Romer said.
Over 99 years, the $400,000 base rent payment would be the equivalent of $3,193.89, he said. The lease would be worth just short of $8 million in cash today.
Storey says the terms of the lease are not final and still subject to negotiation. But Levy said he thought the developer planned to pay escalated rent. When told otherwise, he said he planned to request accelerated payments to keep pace with inflation.
“Acceleration of rent is something I am certainly going to look for,” Mayor Levy said.
Steven Naron, who lives next door in the Summit Towers condo, is chairing a neighborhood committee that has been working with the developer to address concerns on everything from dune preservation to construction noise and traffic.
“This is one of the most amazing pieces of property on the beach,” he said. “It would be a shame if the city didn’t get a good deal on this.”
Hollywood would be paid 12.5% in condo sales, after the developer shaves off the $10 million in public improvements from an estimated $280 million in sales. That amounts to another $3.375 million.
The city also would collect $1.7 million in yearly property taxes after the project is built.
“They don’t have any taxes on the property right now,” Fordin said.
Hollywood would collect an estimated $400,000 a year from the public parking spaces, nearly double the $230,000 it collects now, Storey said.
Hollywood has been working on the deal since June 2020, when Related submitted an unsolicited proposal to develop the beachfront parcel. As required under state law, the city opened up the bidding process to other developers. In the end, Related got the top ranking over three other bids.
Tall and wet?
Real estate expert Jack McCabe warned that sea level rise could eventually threaten the new tower along with those already built.
“There could be 20 feet of water in that area 99 years from now,” he said. “The first four floors you’re going to need a scuba tank to live there. It will be like living in an aquarium. People still clamor for oceanfront property even knowing that 10 years from now many of these buildings can be severely affected by sea level rise.”
Hollywood resident Cat Uden questioned the wisdom of building another tower when that section of the beach is projected to be under water by 2040 due to sea level rise.
“I have not heard one resident say a 30-story condo tower is a good idea on the barrier island,” Uden said.
Others remain worried about noise, traffic and long shadows on the beach.
That includes Mary Alex, a Hollywood mom who has fond memories raising her three children at the Summit Towers just north of the site.
“The beach was our backyard, and that’s still the beach I go to,” she said. “I will be heartbroken if this happens.”
Alex is not the only one worried the tall tower will shade the beach and block the view.
But if something’s going to get built, most of the neighbors prefer a tall and slender tower like this one because it won’t block their view like one that’s short and squat, Fordin says.
Related will build the tower as close to A1A as possible to help prevent shading on the sand, he said.
“A lot of people have said they don’t want to be the next Sunny Isles — and I’ve told them you’re not going to be the next Sunny Isles,” Fordin said.
In Sunny Isles, developers can build up to 750 feet and 100 units to the acre, Fordin said.