Water Tower Commons Developer Talking to Related Group, Others on Taking Role in Stalled Project
Originally Planned to Open by End of 2017, Mixed-Use Project in Lantana, FL Still on Drawing Board
Water Tower Commons Developer Rendering
The master developer of the mixed-use Water Tower Commons project in Lantana, FL is in talks with other builders, including multifamily powerhouse Related Group of Miami, CoStar News has learned.
Lantana Development is looking to sell part of the 73-acre site just east of Interstate 95 to Related or another group for 360 apartments, according to project manager Mike Langolf.
"That's a fair statement," he said. "We're talking to a lot of people."
Related officials could not be reached for comment through a publicist. The firm, led by billionaire Jorge Perez, is one of the largest multifamily builders in the country.
Its portfolio includes another project in Lantana, a small, working-class suburb in central Palm Beach County. A decade ago, Related built the Moorings, a condo along the Intracoastal Waterway about a mile from Water Tower Commons.
Lantana Development, an entity tied to homebuilder Kenco Communities of Boca Raton, FL, originally announced that the first phase of Water Tower Commons at 1199 W. Lantana Road would be ready by the end of 2017, but construction hasn't started.
Langolf said the developer is about a year behind schedule, in part because of the challenging retail environment. He said he now expects construction to start in January or February.
Lantana Development's partner is Wexford Capital Management of Greenwich, Conn.
Water Tower Commons has been described by local officials as the biggest development in the 96-year history of Lantana. It will bring shops, restaurants, offices and up to 1,100 residential units to the town of more than 10,000 residents.
Two years ago, Lantana commissioners approved more than 300,000 square feet of commercial space and up to 1,100 residential units. But Lantana Development has since scaled back on the commercial and now plans to build closer to 200,000 square feet. So far, a Wal-Mart grocery store is the only announced tenant.
Lantana is best known as the former headquarters for the National Enquirer tabloid and its "World's Tallest Christmas Tree" holiday display in the 1980s and '90s.
For decades, Lantana also was home to a nondescript tuberculosis hospital on the Water Tower Commons site. The state of Florida closed the hospital in 2012, and Lantana Development demolished the property after buying it for $15.6 million in 2014, property records show.
Mayor Dave Stewart said he hears whispers from residents, speculating that the developer won't be able to follow through on the project. But he insists that Kenco is a reputable builder, and the developer has spent millions of dollars on infrastructure, so he's confident Water Tower Commons eventually will happen.
"Where else can you find (73) acres east of I-95 and have approvals where you can build what you want as long as it meets the code?" he said. "I'm not worried about it. The way I look at it is, that land has sat there for close to 65 years, unproductive for the town. If it takes another one or two years -- or three or four -- we can wait.
"Let's make sure that what happens there is great for the town of Lantana," Stewart added. "If it takes a couple of swings at bat, it takes a couple of swings."
But Alan Bush, a South Florida retail analyst based in West Palm Beach, said it's a difficult climate for developers of shopping centers as consumers in greater numbers prefer to shop online rather than at brick-and-mortar stores. Sears, JC Penny and Kmart are among the retailing giants to announce widespread store closures in recent years.
"Buying an existing property and renovating it might be a better model than building a new retail center," Bush said. "It might not be as glamorous, but it might be better financially."
Water Tower Commons will be just east of the aging Lantana Shopping Center that's anchored by Palm Beach County's oldest Publix Super Markets, which opened in 1959. Publix is known as the best grocery anchor in the business, said Rafael Romero, a vice president of the CREC real estate firm in South Florida.
"It'll be an interesting dynamic," he said. "But if anyone can compete with Publix, it's Wal-Mart. It will be challenging, but it's not something that should stop the developer from building the center."
While retailers and shopping center developers have obstacles to overcome, the outlook for the industry is far better than what most people believe, Romero added.
"Traditional retail is alive and well," he said. "We don't see the kind of staggering vacancy that should prudently stop developers from building additional retail. It's tough to get over the idea that all retailers are losing their business, but it's just not so."