For the first time in more than 20 years, a new oceanfront condo project is proposed for the island of Palm Beach.
Vlad Doronin’s OKO Group and Cain International presented plans for an Aman Resort-branded, three-building, 49-unit complex during the Palm Beach Town Council’s Development Review meeting on Wednesday. The proposal offers a sleek reimagination of 4.9 acres on the town’s South End, by a design team that includes Pritzker Prize-winning OMA, Spina O’Rourke and landscape firm Nievera Williams Design.
“I’ve heard some of the pricing,” said Gary Pohrer, a top Douglas Elliman agent on the island. “Wow.”
The partners bought the site for $146.6 million in 2022. The proposal requires demolishing two existing condos, Ambassador Palm Beach Hotel & Residences at 2730 South Ocean Boulevard, and Edgewater at 2720 South Ocean Boulevard.
Both are more than 30 years old and therefore subject to Florida’s new condo safety laws.
These regulations are squeezing the market for Palm Beach’s aging condos, at precisely the same time that buildings face rising insurance costs and competition from a wave of new development in West Palm Beach, with highly amenitized towers promising all the accoutrements of modern luxury living. Agents say these pressures, coupled with recent market volatility, are hurting the resale market for units on the island.
“It’s like the perfect storm, going from something that was not inexpensive, but affordable for a lot of people, to unaffordable for a lot of people who are considering this market for a part-time residence,” said Scott Gordon, an Elliman agent specializing in condos.
In March, across Palm Beach County, condo sales dropped 4 percent, year-over-year, and the median price fell 6 percent, year-over-year, according to the Miami Association of Realtors.
The new condo safety laws, which came about as a response to the deadly Champlain Towers collapse in Surfside in 2021, require that residential buildings 30 years or older with three stories or more complete milestone inspections and reserve studies. The Phase One deadline for these was Dec. 31, 2024, and nearly one in five condo buildings in Palm Beach County missed that deadline, according to the Palm Beach Post. The challenges are less pronounced for buildings in Palm Beach proper, where residents tend to be wealthier.
Gordon estimated special assessments are costing Palm Beach condo owners an average of $75 per square foot, which would work out to $150,000 for a 2,000-square-foot unit.
“They’re all getting their act together for the most part,” Corcoran Group agent Dana Koch said of the island’s older condo buildings.
Palm Beach is better known for its mansions and historic estates, homes behind high hedges with perfectly manicured landscaping. But the island has dozens of condo buildings, the majority built in the latter half of the 20th century. Within Palm Beach’s condo market lie two sub-markets: in-town, and South End.
In-town buildings cluster in the center of the island. The units are more expensive than on the South End, and they trade less frequently, agents say. In 2022, billionaire Patriots owner Robert Kraft dropped a record $24 million on a penthouse at Leverett House, a condo building at 110 Sunset Avenue.
Palm Beach doesn’t really have an “affordable” neighborhood, but the South End comes closest. Stretching from Sloan’s Curve at 2000 South Ocean Boulevard to the intersection with Lake Worth Road, the South End has 24 condominiums. Prices for current listings range from $199,000 to $9 million.
All the South End buildings are old enough to be subject to the new condo safety laws, which have precipitated a statewide condo crisis as owners grapple with exorbitant costs of reserve studies and maintenance. Developers have swooped in to offer buyouts in other parts of South Florida. Gordon said developers shopped around in Palm Beach, and some even made offers, but residents didn’t bite.
“A lot of these condominium associations, once these offers were made, [they] went out and had valuations done,” he said. “Instead of their lot being worth $100 million, they’re getting assessments saying their lot is worth $210 million.”
Yet, these valuations were often based on projects in other markets with less stringent building codes that allowed for high-rise development, he said. It gave owners a false impression of their units’ value.
“You have to base your valuation on what you’re able to build,” Gordon said. He estimates four buildings in the South End are potential sites for redevelopment “if all the stars were aligned.” But that has yet to happen, partly because Palm Beach design standards are particularly difficult to meet.
“If I were a developer, Palm Beach would be a very challenging place,” Pohrer said. “Just because of all of the hoops you’ve got to go through. You’ve got to plan on it taking two years just to get the thing approved.”
So, OKO and Cain’s Aman is the only new project on the horizon. At least in Palm Beach.
Across the water in West Palm Beach, dozens of projects and thousands of luxury condo units are in development. Among them are Related Ross’ planned 28-story, 108-unit South Flagler House, Related Group’s planned 26-story, 138-unit Ritz-Carlton Residences, West Palm Beach and Terra and Sympatico Real Estate’s planned 25-story Mr. C Hotel & Residences West Palm Beach with 146 condos and 110 hotel keys. This new batch of condos offer extras like spa facilities, pickleball courts, guest suites and private dining.
While these towers remain to be completed, they are proving more appealing to buyers who don’t want to deal with the headache and uncertainty of Florida’s new condo laws, agents say. Also, homeowners association dues and insurance are factoring into their decisions.
“If you’re in West Palm Beach in a brand new high-rise, most of your HOA dues go toward amenities you’re going to enjoy,” said Senada Adzem, an Elliman agent. “When you’re on the island, your HOA dues are going to insurance.”
Agents say money is no problem for their buyers; they can afford the updates needed in these older buildings. They also expect a stabilizing economy will boost the market later in the year. But so far, too many unknowns are deterring their interest.
“They don’t like uncertainty,” Adzem said. “They want to know what they’re getting themselves into.”
