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Former Mayor Bets on the Power of a Major Makeover for One-Time Office Depot Headquarters

January 11th, 2019

Nearly 13 years ago, Jeff Perlman, then the mayor of Delray Beach, Florida, picked up his phone to find out that Office Depot, a Fortune 500 company and the city’s largest private employer, was staying in Palm Beach County but moving its world headquarters three miles south to Boca Raton.

“That’s the call you don’t want to get,” Perlman recalled in an interview.

When Office Depot bolted for Boca in early 2009, the housing meltdown and Great Recession were in full swing. The retailer’s old offices sat empty – and still do today, except for the occasional firefighter training.

But Perlman, now a vice president of an investment firm, is a key player in the campus’ redevelopment. He and two other groups paid $33 million for more than 42 acres at 2100 S. Congress Ave ., with plans to build more than 600 apartments and a commercial component that Delray Beach officials hope will transform a major corridor lagging behind other areas of the city.

These days, the site provides a glimpse into how former headquarters sites around the country can be transformed to ignite overlooked areas.

“For me, it’s kind of cool because it’s coming full circle, and I can be a catalyst for Congress Avenue,” Perlman said.

The buyer, Centerpointe Delray Holdings, is a partnership among Perlman’s CDS International Holdings, 13th Floor Investments and Key International. The seller was Investors Warranty of America, which lost roughly half its investment after buying the land for $61.3 million in 2010, CoStar data show.

Delray Beach is a coastal community of almost 70,000 residents between West Palm Beach and Fort Lauderdale. Over the past decade, Delray’s downtown has become one of the most vibrant in the region, with quaint shops, trendy restaurants and new apartments and condominiums.

New projects also have been popping up along Federal Highway in Delray, a major north-south thoroughfare.

West of Federal Highway and downtown is Congress Avenue, which hasn’t received the same attention, according to Delray Beach Mayor Shelly Petrolia. That’s why she’s looking forward to the redevelopment.

“It’s a great opportunity for us,” Petrolia said. “This could be an igniter for that whole Congress Avenue corridor.”

The Delray Beach City Commission has approved a master plan, but Centerpointe still must obtain other approvals before construction can begin.

Perlman, who hopes to start building by the end of the year, said making residential part of the redevelopment was an easy decision, given the continued-strong demand for apartments across South Florida. But he added that the developers are still deciding what kind of commercial projects to bring to the site.

He envisions a food hall concept , with different restaurant vendors under one roof. There also might be retail, restaurants and offices, including coworking space.

Richard Lackey, a retail and restaurant consultant in Palm Beach Gardens, Florida, said the site could be a successful destination for a mix of fast-casual and sit-down restaurants. But the developers must first analyze the expected clientele, he added.

“The restaurants have to be in relationship to the demographics,” Lackey said. “Just because you have a nice site, it doesn’t mean you can put a Morton’s Steakhouse there.”

Perlman made one thing clear: The development won’t feature a traditional shopping center. In an age of e-commerce, many existing centers across the country are being forced to adapt as more consumers shop online.

“It’s riskier to do the same-old, same-old,” Perlman said. “We’ve got to create a sense of place. It’s a good location, but it’s undiscovered. We’ve got to put it on the map.”

For the record: Avison Young broker Keith O’Donnell represented seller Investors Warranty of America. The buyer did not have representation.

 

Source: Costar

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