Steve Ross, the billionaire focused on turning West Palm Beach into a financial and tech business mecca, scored a record $772 million construction financing package for two office projects.
The deal is the biggest known construction loan ever in South Florida, and likely statewide. It comes amid looming questions about the long-term health and success of the tri-county region’s office market.
Ross, through his Related Ross, is developing the 23-story 10 CityPlace and 26-story 15 CityPlace on a portion of the CityPlace mixed-use retail complex in downtown West Palm. Ares Real Estate funds, part of Los Angeles-based Ares Management, led the lenders providing the financing package, according to a Related Ross news release.
Others partnering on the projects’ financing package are Monarch Alternative Capital and HPS Investment Partners, Related Ross’ Jordan Rathlev said in the release.
10 and 15 CityPlace are emblematic of Ross’ investment in West Palm, where he is the king of offices and has about a dozen buildings, including those purchased, developed, under construction and planned.
Although the influx of new-to-market companies to South Florida has calmed compared with the pandemic-induced boom, raising doubts about pre-leasing success of many of the planned offices across the region, Ross isolated his West Palm investments from the slowdown largely by tapping his New York network to secure tenants.
Last year, Ross, 85, stepped back from the New York-based Related Companies, which he founded over 50 years ago, to start his West Palm-based Related Ross. The firm primarily focuses on West Palm, where aside from offices, it also has apartment and condo projects, as well as investments in the rest of Palm Beach County and South Florida.
Ross is nonexecutive chairman of Related Companies and its single biggest shareholder.
The 470,000-square-foot 10 CityPlace was designed by Kohn Pedersen Fox, and the 490,000-square-foot 15 CityPlace was designed by Arquitectonica, with interiors by Fogerty Finger. Construction of the towers started in March and completion is expected in 2027.
The buildings are under construction roughly on the northeast corner of South Rosemary Avenue and Hibiscus Street, replacing a former AMC theater and restaurant space. Ross, through his Related Companies, completed the CityPlace complex in 2000 as his first project in West Palm.
Cloud computing firm ServiceNow, which helps businesses automate tasks by using AI, will be an anchor tenant at 10 CityPlace. The firm is expected to establish an innovation hub and AI institute in West Palm, which aligns with Ross’ push to make the city into a tech hub.
Cleveland Clinic will anchor 15 CityPlace with a 120,000-square-foot outpatient center that will offer chemotherapy, imaging, outpatient surgery and a concierge medicine program. The facility will be connected to Cleveland Clinic’s planned 150-bed hospital campus nearby that will have an emergency department, an ambulatory surgery center and a medical office building.
Others pre-leasing at 15 CityPlace include assurance, tax and advisory services firm BDO, law firm Shutts & Bowen and private investment firm Inclenberg Investments.
Ross’ other West Palm office projects include the 25-story One Flagler, completed this year at the foot of the Royal Park bridge, and the 25-story 515 Fern, under development on the northwest corner of Fern Street and the Florida East Coast Railway tracks.
In other massive South Florida loans, Whitman Family Development scored $740 million last year to refinance a $550 million debt on the luxury Bal Harbour Shops and finance a planned 250,000-square-foot expansion of the retail center.
Last month, Dezer Development landed a $630 million construction loan for the oceanfront 61-story, 216-unit Bentley Residences condo tower at tower 18401 Collins Avenue in Sunny Isles Beach. Yamal Yidios’ Ytech landed $565 million in financing last month for the 70-story, 195-unit The Residences at 1428 Brickell condo tower in Miami.
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