College approves deal with Stiles to build Las Olas tower
Posted on 3/1/2017The Broward College Board of Trustees unanimously approved on Tuesday a lease and pre-development agreement with Stiles Corp. for a new office building on Las Olas Boulevard in downtown Fort Lauderdale.
The Fort Lauderdale-based developer plans to build 14 stories of "Class A" office of 401,857 square feet, 17,500 square feet of ground-floor retail and restaurants, and an undetermined number of parking spaces at 225 E. Las Olas Blvd. The project would include a 5,400-square-foot public plaza with event space, a multimedia screen and a community room.
Stiles Corp. has branded the building as Two Zero One Las Olas. It would also have a Broward College sign near a fountain on the street level.
This would be a major addition to the office market on Las Olas, which has the most expensive office space in Broward County and among the lowest vacancy rates. The company has built over 4 million square feet of buildings on Las Olas. The last office Stiles Corp. built on Las Olas was the AutoNation Building nearly 10 years ago.
There are only three "Class A" office buildings on Las Olas built to recent hurricane codes and this would be the fourth, said Stiles Corp. Chairman Terry Stiles. Economic conditions have finally improved so that the area is ready for a new office building, as rents have increased and the "Class A" office vacancy on Las Olas is around 94 percent, he said.
Stiles Corp. still needs city approval for the project.
The company also owns the 1.45-acre site directly on the north side of the BC property and that could be incorporated into this development, potentially with a residential component. Stiles said that would be developed as a 350-unit luxury apartment tower under a separate development application. He hopes to build the neighboring towers at roughly the same time, although one would not be dependent on the other.
"We want to develop an iconic office building here," Stiles said. "This will be the catalyst to move the epicenter of Las Olas to the west with completion of this project and the [residential] project to the north, Kolter [condo/hotel] project to the southwest and the Residences of Las Olas behind the old Sun Sentinel building."
The college decided it no longer needs its two Willis Holcombe Center buildings on the 1.4-acre site, so it has agreed to demolish them. BC would maintain the rest of its downtown Fort Lauderdale campus. BC President J. David Armstrong Jr. said the classes currently held in Buildings 31 and 32, which would be torn down, would move to Building 33 and college staff would be relocated to other campuses.
BC Trustee David R. Maymon said the college has an infrastructure maintenance and improvement deficit of nearly $100 million so the funds from this deal could improve conditions on its other campuses.
"There is less money coming out of Tallahassee so the purpose of this deal is to provide some additional resources for the college," Armstrong said. "This will bring more options for food services, including some more affordable options as well."
The process started when BC issued an Invitation to Negotiate in February 2016. Three developments were submitted proposals and the college board decided to negotiate with Stiles Corp.
The architects on the project are Cooper Carry and Cartaya & Associates. Stiles Corp. is also working with D. Stephenson Construction. BC consulted with KPMG and Bryant Miller Olive on the agreement. KPMG determined the net present value of the property was $22 million. The net present value of Stiles Corp.'s deal was $23.6 million, KPMG said.
Under the approved ground leases, Stiles Corp. would pay BC $150,000 as soon as BC vacates the building, which is expected to occur between Sept. 1 and Dec. 1, 2017. No additional rent would be due for the next 39 months. At that point, Stiles Corp. would pay $2.03 in both years four and five and $912,848 annually in years six through 10. Starting in year 11, the developer would pay $939,822 with an annual increase of 1.75 percent for the rest of the lease term.
In addition, BC would receive 6 percent of the project's net revenue, but only if that total exceeds the annual base rent.
At the meeting, Stiles announced that he would provide four full scholarships to BC student interns to work with him on the project.
"We are your partner," Stiles said. "We will encourage occupants to work with the college and its interns."
BC will require Stiles Corp. to provide a $2.25 million development security during construction in case the project falls through.
The college has no out-of-pocket costs in the deal. Armstrong admitted that Terry Stiles is his friend, but Armstrong said he was not personally involved in the negotiations and Stiles respected the "cone of silence" about not contacting him about the project.