Real Estate Journal: Kolter taps into urban development with condos, hotels

Real Estate Journal: Kolter taps into urban development with condos, hotels

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By Brian Bandell, South Florida Business Journal

Kolter Group has been planting roots in urban centers across Florida with its condo and hotel projects, and soon it’ll have a new headquarters in a trendy South Florida downtown.

The developer has made a big splash in Florida since moving its headquarters from Toronto to West Palm Beach 12 years ago. Led by CEO and majority owner Bobby Julien – the second generation of his family business – Kolter is currently constructing what will become the tallest buildings in both Fort Lauderdale and St. Petersburg.

The company’s Kolter Homes division is building the Alton community in Palm Beach Gardens, but it’s largely focusing on less dense markets in other regions because land for single-family homes in South Florida is expensive and scarce, said James Hansen, VP of sales and marketing for Kolter Hospitality. For Broward and Palm Beach counties, Kolter has deployed its hospitality and condo divisions.

Coming out of the Great Recession, Kolter was one of the first condo developers to pursue a new project in South Florida, coming to market in 2011 with a 39-unit project in Gulf Stream, said Bob Vail, president of the Kolter Urban condo division. The relatively quick sellout of the beachfront project gave the company confidence that it could still sell condos in prime locations in South Florida.

“We have always expanded and contracted in response to market activity, and made decisions fairly quickly,” Vail said. “That’s what kept us alive through the downturn.”

That launched what’s been Kolter’s main strategy. It targets mostly second homeowners, people moving from the Northeast or Midwest, or empty-nesters in large South Florida homes looking to downsize into a condo, Vail said. Unlike in Miami, Kolter has few international buyers and it doesn’t require 50 percent deposits. It asks for 25 to 30 percent down, usually in three phases.

It’s easier to obtain a lower deposit from people, especially when they’re counting on the sale of their existing home to provide much of the closing funds, Vail said. The sweet spot for Kolter Urban is condos priced from $750,000 to $1.5 million.
Since Kolter takes less money up front from buyers, it places more equity into its projects and breaks ground relatively early in the pre-sales process, Vail said. This shortens the time pre-sale buyers must wait for their units and increases buyer confidence, he said.

“Until you start construction, there’s a lot of uncertainty,” Vail said. “[Developers] would like to start earlier, but not everybody has the financial strength and feels confident the project will succeed in the marketplace.”

AfterGulf Stream, Kolter went bigger with the Water Club North Palm Beach condos. Situated on a property it owned for about 10 years, Kolter has sold most of the 162 units in the first two towers, and it’s currently building the 30-unit third phase.
In addition to landing coastal locations, Kolter Urban went into downtowns in a handful of Florida cities. Vail said they targeted cities with many restaurants and cultural attractions within walking distance.

With nearly 10 years of no condos delivered, downtown Fort Lauderdale was ready for a new building, and the lifestyle of the city has become more attractive for residents, Vail said. It obtained a site with both riverfront and space on Las Olas Boulevard, the city’s most high-profile street.

At 499 feet, its 46-story 100 Las Olas will be the tallest building in Fort Lauderdale when it’s completed around the fourth quarter of 2019, Vail said. The 121 condos, which start in the $800,000s, are about 25 percent, presold, he said. The building will also have a 238-room Hyatt Centric hotel and 8,500 square feet of retail/restaurant space.

Other condo projects by Kolter include:

R5000 North Ocean on Singer Island, which is under construction with about half of the 48 units presold.

RModerne Boca, a collection of 75 townhouses that are mostly completed.

R300 Alhambra, a site on Fort Lauderdale beach where Kolter is seeking approval for 311 condos and 15,000 square feet of retail/restaurant space. Vail said it’s early in the approval process.

R One St. Petersburg, a 253-unit condo that will rise 41 stories. It’s under construction.

RThe Mark Sarasota, with 157 units in the city’s downtown district.

RThe Ritz-Carlton Residences, Sarasota, which will have 73 condos next to an existing hotel and is close to breaking ground, Vail said.

Including a hotel in the condo tower is a relatively new concept for Kolter. At 100 Las Olas, residents will have access to hotel services and amenities, Vail said. Or, they could choose to live completely separate from the hotel spaces and not have any financial commitments to it, he added.

Fort Lauderdale doesn’t have enough downtown hotels, even though it has many Class A office buildings and a vibrant nightlife, Hansen said. Many of the guests staying at Kolter Hospitality’s Hyatt Place on 17th Street in Fort Lauderdale go downtown for business or dining, he said.

“Fort Lauderdale has such a unique set of demand drivers that no other city I’ve done business in can compete with,” Hansen said. “Fort Lauderdale has arts and culture, one of the greatest cruise ports in the world, and the easiest airport to access in town.”

Kolter built its first hotel in 2008, as it looked to diversify its business lines amid the Great Recession, said Hansen, who joined the company that year. It later formed the hospitality division to acquire and manage hotels. The company owns eight hotels throughout Florida, with four to six more expected to open within two years, Hansen said.

Kolter Hospitality likes downtown locations, including larger cities such as West Palm Beach and Fort Lauderdale or smaller cities like Delray Beach and Sarasota. The key is having great attractions within walking distance of the hotel, Hansen said.
Miami-Dade has many of those characteristics, but land and hotels there are too expensive to generate a favorable return, he said.

Kolter is working on plans to build a hotel within its Alton community in Palm Beach Gardens, although the size and the branding haven’t been determined, Hansen said. That area has many business travelers for the large aerospace industry and the new United Technologies Corp. Center for Intelligent Buildings, he said.

Kolter Hospitality also plans to deliver an AC Hotel by in downtown Orlando in 2020.

In Delray Beach, Kolter is building a hotel and its new headquarters on neighboring lots. The 150-room Courtyard by Marriott should be completed in fall 2019 along Federal Highway, a block south of the popular Atlantic Avenue restaurant and shopping district.

The company previously developed the Hyatt Place in the city’s Pineapple Grove neighborhood, so it sees a strong demand spurred by visitors to Delray Beach, Hansen said.

Kolter’s new headquarters will be in a three-story, 20,000-square-foot building at 105 N.E. First St. After it opens in summer 2019, the building will move 150 employees there, Hansen said.

“It’s a great central location as we continue to grow,” Hansen said. “It’s easier to recruit in Broward, and even in the north end of Miami-Dade. There’s something to be said about the character and charm of Delray Beach. If you like nightlife or fine dining, it’s readily available in Delray Beach.