CityPlace foreclosure brings troubles for tenants
Trouble rarely travels alone, they say and they are right. The Related Companies’ mixed-use mall located at 460 South Rosemary Avenue in West Palm Beach or better known as CityPlace was recently hit with foreclosure. But this isn’t enough, now the procedure affected both the development’s current tenants and South Florida retail real estate as a whole.
According to the Palm Beach Post, the lawsuit put a freeze on lease negotiations, so current tenants are operating under a shadow of doubt and current vacancies are not landing tenants because of the center’s foggy future.
Foreclosure proceedings were initiated by LNR Partners and entity which sued an affiliate of Related Companies last month as it stopped making payments on a $150 million loan several months ago. The property’s current appraised value is $143 million, which is $90 million less than its peak appraised value. Furthermore, the company reported a net operating income falling with more than 40%.
“It’s taking a major commercial property with a lot of tenants and casting a big shadow of doubt. Nobody knows what it means,” said David Manero, who was in negotiations to open a BurgerFi franchise in the center before the foreclosure suit was filed.
Traffic to the center is up 7% the past two years, but the loan terms are the ones negotiated during the housing bubble. Moreover, the struggles cast skepticism on future ambitious urban retail development, the Palm Beach Post said, as Related has shifted away from its initial goal of landing high-end tenants. While CityPlace initially opened to much fanfare and expected to attract visitors from all over Florida, malls have sprouted across the state in recent years, leaving CityPlace to rely solely on local shoppers.