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Happy Friday Highest & Best! Today’s edition is packed with BIG things:

🎓 West Palm Beach gets a big-name university (Vanderbilt)
🏗 Miami’s new office tower by Spain’s biggest bank
😲 A large office foreclosure in Fort Lauderdale
📈 Florida’s condo owners have the steepest HOA fee hikes

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Let’s get to it!

It’s a Go: Vanderbilt University Plans West Palm Campus

Nashville’s Vanderbilt University, the so-called “Harvard of the South” is making a big push ever more southward.

This week, the university unveiled plans to build a $520 million graduate school campus in the heart of downtown West Palm Beach. The school presented the idea to city officials, who agreed to donate two acres of city land (valued at $12.8 million) toward Vanderbilt’s plan. Palm Beach County is now discussing a donation of five more acres towards the proposed 300,000-square foot campus.

Vanderbilt’s chancellor, with the backing of West Palm Beach’s mayor and billionaire Stephen Ross (the city’s biggest commercial property owner), made a bullish case for the new school at a public hearing this week.

Their take: It’s a huge win for West Palm Beach. Do it.

Here are the highlights from Vanderbilt’s Florida plan:

👩‍🎓The campus, focused on business and AI programs, will generate $7.1 billion in economic activity for West Palm over 25 years and create 35,000 jobs in that time period.

💰Vanderbilt will spend $267.7 million on academic buildings, $217.4 million on student housing and $34.6 million on parking — with an estimated construction total of nearly $520 million.

⏳ Graduate school programs could start as early as 2026.

🤗 “It’s not a satellite campus, it’s a second campus,” Nathan Green, Vanderbilt’s vice chancellor for public affairs, told city officials.

Stephen Ross, whose Related Ross is landlord to the nation’s largest financial firms located in West Palm Beach, said that Vanderbilt would have the same impact on the city’s financial industry that Stanford University had to Silicon Valley’s tech industry.

“There’s no place that’s ever grown that doesn’t have great universities, great schools,” Ross said at the meeting.

⏪ Catch up on recent Highest & Best issues:

• It’s Raining Rentals!, August 9, 2024

• The Office Quarterback, August 2, 2024

• Florida’s Cold Feet Wave, July 26, 2024

Get Knocked Down, Then Get Up Again

Sometimes it pays to be your own tenant.

Ask Banco Santander. The Madrid-based bank intends to raze its current 14-story Miami office building…..and build a 41-story tower in its place.

Unlike other proposed but not-yet-built office projects in Miami’s Brickell neighborhood, Santander is moving forward with its construction plans— without the bother of securing tenant commitments first.

That’s because Santander employees will be the primary occupants in the future 765-foot Santander Tower, at 1401 Brickell Ave.

The bank plans to demolish the 14-story building currently on the site “in the next few weeks,” it said in a statement Wednesday. More than 650 Santander employees who work at the soon-to-be-gone building will move to temporary office space on Brickell Avenue (in Miami’s financial district) and to Santander’s Coconut Grove office. The development will take “several years” to complete, the bank said.

When done, Santander Tower will have 1.6 million square feet of space, with roughly half it being offices. Santander will be the prime tenant — with its name in lights on top— and will lease out what remains to others, the bank said. Restaurants, including on the ground floor, will fill in about 100,000 square feet of the building.

The future “prime office space” will include stuff that blue-chip Miami tenants clamor for: views of Biscayne Bay, terraces with gardens, and amenities like a daycare, or possibly an “urban club,” the bank said.

Class A offices in the Brickell neighborhood command the highest rents in Miami, with average asking rates of $99.40 per square foot in the second quarter, according to brokerage CBRE. That’s a 5.8% increase from a year earlier.

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This Downtown Fort Lauderdale Office Faces Foreclosure

Not everything is rosy in the South Florida office market.

The lender to this 28-story office building in downtown Fort Lauderdale is seeking to foreclose on it after the owner defaulted on the mortgage—- AND failed to sell the property as a way of satisfying the debt.

The office building’s owner, Pennsylavnia-based Alliance HP, failed to repay the balance of a $61.5 million mortgage when the loan came due last October, according to a foreclosure lawsuit filed by the lender and flagged by intel firm Vizzda.

The lender, VMC Finance, and the owner of the building known as One Financial Plaza, agreed to several forbearance agreements, which extended the loan repayment deadline several times throughout 2024. Alliance, the property owner, had also listed the building for sale in 2023 but found no takers, Bisnow reported earlier this year.

The lender, through foreclosure, is seeking to recover the remaining principal balance of $59.2 million, plus default interest. It said in court filings that the value of the property may not be sufficient to satisfy the debt.

At the request of the lender, the court appointed a receiver to manage the property pending any foreclosure ruling. The receiver will collect rents from the office’s tenants and use that revenue to pay real estate taxes and otherwise maintain the building until the property changes hands, according to filings.

Alliance HP, a real estate investment firm, acquired One Financial Plaza in 2019 for $82 million, plus a separate $35 million deal for the land beneath the office tower.

The 52-year-old tower, at 100 SE Third Ave., underwent a multi-million dollar renovation that included an overhaul of the lobby and the addition of a fitness center. The property had tenant commitments for over 90% of its space, drawing an assortment of both legal and investment firms.

Florida’s Number One! (In Rising HOA Fees)

Florida leads the nation…..in the surging monthly costs of owning a condo.

Sunshine State condo owners saw the biggest jumps in homeowner association fees, as buildings shoulder the twin burdens of skyrocketing property insurance AND a new state safety law that requires setting aside funds for major capital repairs.

In Tampa, the median monthly HOA fee jumped 17.2% in the three months through July 31 from the same period a year earlier, according to a study by brokerage Redfin. That’s the steepest increase among the 43 U.S. metropolitan areas that Redfin analyzed — and far higher than the U.S. average increase of 5.7%.

Second and third place were also locales in Florida: Orlando saw HOA fees jump 16.7% in a year, while Fort Lauderdale fees climbed 16.2%.

“Many buildings—even those without amenities—now have HOA dues north of $1,000 a month,” Rafael Corrales, a Redfin broker in Miami, said in the report. “And with special assessments getting tacked on, a lot of condo owners who are retired and/or on a fixed income are being forced to sell and relocate because they can’t keep up with the payments.”

Florida’s Building Safety Act, passed after the deadly 2021 collapse of Champlain Towers in Surfside, requires all buildings over 30 years old to complete an assessment of their structural integrity by Dec 31. Those studies will likely unveil some major problems— and hefty price tags to fix them that owners of those old condos will have to bear.

Miami condo owners paid the highest HOA fees of all the cities in the study— with their median costs at $835 per month.

The silver lining of sorts is that Miami HOA fees ‘only' climbed by 5.7% annually. But that’s because they’re already so high, Redfin said.

Below is Redfin’s analysis of Florida’s rising HOA fees from a report released this week:

That’s it for today!

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