Date: September 13, 2002
By: Darcie Lunsford
Of: The South Florida Business Journal
In a sign that Boca Raton’s vacancy-plagued commercial market may have hit bottom, deals have been signed for the remaining vacant land at the former IBM hub, the renamed T-Rex Corporate Center @ Boca Raton. A pair of Broward County office developers and a Palm Beach County retail operator have inked deals to buy the remaining acreage at the former IBM hub in Boca Raton all at once.
Deerfield Beach-based developer Malcolm Butters is swallowing the largest chunk, signing an Aug. 23 contract for 55 acres.
The sudden rush of land deals, industry insiders say, signal that development interest is returning to Boca Raton’s vacancy-plagued commercial market.
T-Rex hired CB Richard Ellis this year to market the site.
“It is still very slow, but it seems that we are starting to see some activity,” said Peter Reed. VP of office properties at the Boca Raton office of Grubb & Ellis. “The T-Rex deals are an indication that we are starting to see an upturn in the market and that the more experienced, local developers are seeing opportunities.”
The 550-acre campus on Yamato Road just west of I-95 is best known as the 1980’s birthplace of IBM’s personal computer. IBM sold the property in 1997.
Fort Lauderdale developer Stiles Corp. inked a contract to buy 23 acres at T-Rex earlier in the summer.
Boca Raton retail developer Principle Properties has seven acres there under contract. Collectively, the deals soak up the remaining 85 acres of developable land at the center. Until this summer, the land – which holds 1.4 million square feet of office, industrial and retail entitlements – failed to attract serious commercial suitors.
The land is now controlled by an out-of-state partnership, which is holding onto the 1.5 million square feet of existing office and warehouses. The owners, T-Rex Developers, paid $142 million for the IBM-built building and surrounding acreage in 2000. They bought the building and campus from another investment group, which paid IBM $46.1 million three years earlier.
Shortly after closing the sale, T-Rex sold a piece of the vacant land to the city. It has been trying to sell the vacant commercial land since.
Butlers declined to disclose financial details of his deal, but said the price is below the land’s $15 million asking price. He plans to sell off a portion of it to other developers to lower his own land costs.
Retail, restaurant and hotel developers are among the field of potential buyers and occupants, he said.
Butters said he plans to build office and flexible space on the balance of the parcel, but added: “Office is not our first priority.”
The city’s office market is among the region’s harder hit areas.
The washout of many of the high-tech firms that once populated Boca Raton has left the city’s 809 million square feet of offices sitting 19 percent vacant, according to Cushman & Wakefield market data.
But Butters and the other T-Rex land buyers are bullish about a speedy recovery. “It is a great play,” Butters said. “Boca is Boca. The fact is that the market is slow now, but it’s going to come back.”
Stiles Corp., which had looked and passed on the land several times in recent years, decided that the timing was now right, said Tom Kates, president of Stiles Realty. “There is no land near I-95 from Miami all the way up to Palm Beach Gardens,” he said. Unlike other land sales, the price is based on buildable space as opposed to land. Both Butters and Stiles can build up to 600,000 square feet on their respective sites. The asking price is $25 a square foot.
Kates denied rumors that Stiles has a large tenant on the hook, saying only that the company was talking to several potential takers.
Butters also said he was talking, but didn’t have committed buyers or tenants lined up. “One would think that Stiles and/or Butters are pretty confident that they have some end user for the space they intend to build,” Reed said. “I still don’t think we are in an environment where they would build spec space.”
Retail operator Principle Properties of Boca Raton is also buying its seven-acre sliver without a committed user, according to partner Martin Heise.
Its plan is more modest, calling for 50,000 square feet of neighborhood retail and up to 20,000 square feet of offices.
The neighborhood retail market – which includes dry cleaners, banks, restaurants and other uses catering to local residents – remains fairly strong, market watchers say. “At this point, we are still examining what we can put up on that site,” Heise said. “We just thought it was a good retail location.”
But all these deals hinge on T-Rex’s ability to deliver a bevy of pricey road improvements, including the widening of Yamato Road, Spanish River Boulevard and Congress Avenue. Nothing new can be built without roadwork, government officials said. T-Rex is gearing up to begin construction on the $8 million widening of Yamato Road, the first and largest phase of the road improvements. Palm Beach County Engineer George Webb said.
The county was planning a less extensive Yamato improvement project and pledged its $3.6 million allocation to T-Rex for its improvements, he said. of Yamato Road, the first and largest phase of the road improvements. Palm Beach County Engineer George Webb said.
The county was planning a less extensive Yamato improvement project and pledged its $3.6 million allocation to T-Rex for its improvements, he said.