Tuesday, July 9, 2019
|Dull Ray no more|
|Published Friday, April 12, 2019|
The town that was once derided as “Dull Ray” has been anything but that as of late, particularly when it comes to commercial development.
Sandwiched between Boca Raton and West Palm Beach, Delray Beach earned that boorish nickname due to how few nightlife options it had on offer. But today, the East Atlantic Avenue corridor of downtown Delray Beach is a hot spot for shops, restaurants and bars that some real estate pros compare to Lincoln Road in South Beach. And denser development is on the way, both downtown and in areas that fall within the city’s federal Opportunity Zones.
Thanks to the program, which launched with the signing of the 2017 tax law, investors who develop real estate in such zones, designated as distressed areas, can defer capital gains taxes. Delray Beach’s zones lie west along Atlantic Avenue toward I-95 — a sparsely developed corridor within a two-square-mile area.
Combining retail and offices with residential units and a hotel, the Midtown Delray Beach development on West Atlantic Avenue falls within an Opportunity Zone. The local developer of the project, Hudson Holdings, has attracted private equity firms that raised Opportunity Zone investment funds and want to park capital.
“A number of them have contacted us. I can’t name names. But I can tell you, there is a lot of interest,” said Hudson Holdings principal Steven Michael. He expects the Opportunity Zone designation to spur increased development throughout Delray Beach’s West Atlantic Avenue corridor. “That would have happened with or without the Opportunity Zone, but I think it will accelerate that investment,” Michael said.
In January, Delray Beach’s Community Redevelopment Agency chose Aventura-based BH3’s mixed-use project AltaWest as the winning proposal among six submitted by firms bidding to develop the land at the 600, 700, 800 and 900 blocks on the south side of West Atlantic Avenue.
The project will contain a grocery store, 165 residential units, 21,600 square feet of office space and 43,000 square feet of ground-floor retail space, all on about six acres of city-owned land within the Opportunity Zone.
“There’s a lot of infrastructure that hasn’t been touched in decades that needs to be upgraded, and those are things we believe the municipality is well-suited to do,” said BH3 principal Daniel Lebensohn.
He added that he has discussed financing for AltaWest with potential investors, including a real estate-oriented private equity fund with $100 million to invest in Opportunity Zones.
Six blocks east of AltaWest is Hudson Holdings’ mixed-use Midtown Delray Beach development, a seven-acre site at West Atlantic Avenue and Swinton Avenue. Midtown hopes to deliver 47,000 square feet of restaurant and retail, 93,000 square feet of office space and 100,000 square feet of housing and hotel space.
Delray Beach Mayor Shelly Petrolia said she believes Midtown Delray Beach “is going to be that spark that gets us on the path of development on West Atlantic,” and, like East Atlantic, “it can have its own vibe and become its own destination.”
Over in no-longer-dull downtown Delray Beach, big development projects are underway, though they may not appear so large at first. The four-story limit on building height west of the Intracoastal Waterway is the essence of “that charm that people get and sense when they drive into Delray,” Mayor Petrolia told TRD.
In 2018, the limit was raised from three stories to four on just four parcels along Atlantic Avenue, a rezoning action by the city to settle a lawsuit by the landowners. Although the low sight lines are charming, Petrolia cautioned that some residents are unprepared for the scale of several new developments: “As things come out of the ground, there’s going to be some shell shock,” she said. “A lot of the development is going to come in much bigger and oversized than most people are even aware.”
Few developments will redefine downtown Delray Beach more than Atlantic Crossing, with 82 condos, 261 rental apartments,
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