'A new model for city living'

CityPlace will alter the course of downtown West Palm Beach when it opens in the fall. Retailers and mall builders are watching closely to see if its style of city life is the latest redevelopment trend.

By MARK ALBRIGHT

© St. Petersburg Times, published July 17, 2000

WEST PALM BEACH -- Few cities have embraced the resuscitation of their sleepy downtowns with the zeal of West Palm Beach.

Thanks to a $20-million dose of tax money, a development-minded mayor and $90-million in private capital spent renovating old buildings, Clematis Street blossomed in five years into a trendy main drag. Lined with a dozen restaurants, discos for the club set and a few of the chain retailers that downtowns clamor for -- Gap, Starbucks and Banana Republic -- Clematis is on a roll.

But that's not the half of it. A massive government-backed redevelopment project called CityPlace is taking shape, and it's the biggest construction project in Florida this year. The price tag: $550-million, including $80-million courtesy of West Palm Beach taxpayers. When CityPlace opens Oct. 27, the city will have a new downtown built in one fell swoop just a half-mile walk from the original. In what was 11 blocks on the downtown's western fringe, CityPlace will open almost fully leased with 80 flashy stores, 10 sit-down restaurants and a new idea in downtown redevelopment.

With its red tile roofs and outdoor shopping streets, CityPlace bears a striking resemblance to Bay Plaza, a downtown redevelopment plan that collapsed years ago in St. Petersburg. There's a town square mimicking the community gathering places of Italy. It will come complete with a renovated 1927 church building and a $3-million Las Vegas-style fountain.

CityPlace is being created by New York megabuilders searching for a new formula for malls where people live, work and entertain themselves as well as shop. Macy's was so sold on the vision that it's building Florida's first new downtown department store since the 1950s.

"People will still go to malls for serious shopping," said Bruce MacLeod, chief operating officer of Palladium Co., the project's lead developer. "People will come here to hang out." The developers expect that those hanging out also will spend $280-million a year.

"This is a new model for city living," MacLeod said. There's doubtless a dose of self-promotion in that assessment, but CityPlace is being closely watched by retailers and mall builders who wonder if this could become the next big thing.

In size and ambition, CityPlace dwarfs the entertainment-retail projects rising in the Tampa Bay area. BayWalk in St. Petersburg and Centro Ybor and Channelside in Tampa use CityPlace's formula of movie multiplexes and restaurants to draw a crowd. But the project in West Palm Beach has three times the retail space plus 600 condos, townhouse and rental apartments, many of them built above the retail shops. To meet resident needs, there will be a health club and a Wild Oats natural foods supermarket.

"There is anecdotal evidence people are moving back downtown," said Dean Schwanke, vice president of development trend analysis at the Urban Land Institute. "But this is among the first build-it-all-at-once downtowns. Over time people will feel CityPlace is downtown West Palm Beach."

But this Disneyesque downtown will be set against the backdrop of the real thing. It pits the old against the new. Along Clematis Street, the anxiety among merchants is palpable.

"CityPlace is going to stun Clematis," said Jerry McManus, who works at Dax Bar and Grill. "Nobody's going to walk down here anymore. They won't cross the railroad tracks."

While it's hard to imagine a city the size of West Palm Beach (population 80,000) pouring more than $100-million in tax money into downtown redevelopment, it would have seemed impossible 10 years ago when the city's downtown was near death.

Clematis Street storefronts were 60 percent empty. The downtown's western flank, the area that is becoming CityPlace, was 77 barren acres abandoned by a privately financed redevelopment that went bust after leveling hundreds of homes.

Downtown West Palm, however, is surrounded by one of the fastest-growing and most affluent counties in the United States. It's a short bridge across the Intracoastal Waterway from Palm Beach (although residents of the exclusive old money enclave long made it a point of telling friends they rarely set foot in the mostly middle-class county seat).

Palm Beach County has the nation's fifth-highest per-capita personal income, falling between San Francisco and Bergen County, N.J., according to 1998 Census Bureau estimates. Per-capita restaurant sales are comparable with San Francisco, New Orleans and Miami, and exceed Chicago, Washington, Dallas and New York, according to research commissioned by the city government.

Thanks to a building binge of gated subdivisions, the county's population of 1.04-million ranks as Florida's third-largest behind Miami-Dade and Broward.

The lightning rod for downtown's renaissance was Nancy Graham, a zoning lawyer who didn't mind stepping on civic toes as the city's first strong mayor in 1992. "I can get pretty pushy,' said Graham, who stepped down in 1999, still a firm believer that Americans are tired of long commutes and will return downtown when offered "decent options."

For Clematis Street, Graham personally set off the dynamite to blow up a derelict waterfront hotel the city bought for $1,000 at a foreclosure auction. In its place the city built an amphitheater for free concerts. Next came the $1-million Centennial Fountain that coaxes children of all ages to splash and play. Both were put at the foot of Clematis.

An active Downtown Development Authority, armed with $700,000 annually in marketing money from a property tax levied downtown, used a revolving low-interest loan fund to recruit businesses. A few bars began serving food. The offerings got more sophisticated as gourmet cooks and bar operators descended on West Palm, some of them successful restaurateurs from Miami Beach who had branched into downtown Fort Lauderdale, Delray Beach and Boca Raton's Mizner Park.

Renaissance Partners, the developer whose plans for downtown Clearwater were rejected by voters there last week, restored 10 historic buildings for restaurants and stores, converting the upper floors to offices and spacious loft apartments.

Today Clematis is teeming Thursdays, Fridays and Saturdays. The restaurant look is red brick walls and dark mahogany-stained woodwork. Dinner entrees fetch $15 to $25. At My Martini, a sidecar goes for $13.50. One club features VIP tables that go for $350 including a quart of Absolut. At Liquid, opened by South Beach nightclub king Chris Paciello (who is facing a trial in Staten Island, N.Y., on charges he assisted in a Mob killing), bouncers work the door in tourist season, picking who is cool enough to get in.

The rebirth has been a success: Were it not for the empty old Burdines that closed in 1978, the office and retail space on Clematis has a vacancy rate of only 6 percent. The value of the downtown property has jumped 34 percent since 1996.

Graham's grand vision began on Clematis. Next she turned to the vast abandoned area at the gateway to downtown, assembling the land and putting it up for bid.

The only lasting improvement the previous developer could pull off was getting the Kravis Performing Arts Center, one of Florida's busiest concert halls, built on 20 donated acres. Now CityPlace will be across the street, a convention center is about to built by the county government, CityPlace's developers are planning to build a 375-room headquarters hotel and the opera guild paid $4-million for land to build a hall.

While CityPlace was beset by a series of controversies, no organized opposition rose to stop it.

"That moonscape next to Kravis helped," Graham said. "My message was that downtown is your city's living room. Investors, relatives and tourists all judge your city by it. Our downtown said this city was a loser."

Despite the clubby ways of West Palm politics, the city passed over well-connected favorites to select the Palladium Co. It's a venture of Ken Himmel, developer of such complex projects as Back Bay Boston's Copley Place; New York mall owner Jeremiah O'Connor; and Stephen Ross and Jorge Perez, whose Related Cos. is among the more prolific condominium and apartment building developers in South Florida.

They persuaded lenders that CityPlace will draw shoppers from as far as 40 miles north and south into Martin and Broward counties.

The developers ignored the old mall-building formula that provides free stores to department stores as "anchor tenants." They added housing (condos priced at $300,000 and up and apartments in the $600- to $1,200-a-month range) and a hotel to the mix.

Gathering tenants was a tough sell that went on for 18 months. Once the developers, who had spent $12-million up to that point, signed half the tenants, they secured a 10 percent equity partner in the Ohio State Teachers Pension Fund and a construction loan. The city agreed to build the parking garages, drainage, streets and the collection of public artwork, fountains and landscaping that make CityPlace stand apart from a mall.

Not that CityPlace has developed without controversy. There were complaints when Graham took the architects and developers on a junket of 16 Italian downtowns to gather ideas for its European motif at city expense.

The results of that grand tour: The sidewalks are covered arcades with ceiling fans like in Bologna. The Spanish Steps in Rome inspired a monumental staircase that doubles as a place to sit for events and people watching. One 16-foot plaza fountain is a copy of one in Villa de Est.

The developers, however, insisted as well on a mini version of the "dancing waters" fountain that draws huge crowds to the Bellagio hotel in Las Vegas, with towering sprays set to music sung by Italian tenor Andre Bocelli.

"Unfortunately the contractor thought we were on a Bellagio budget," MacLeod said. The $7-million fountain budget was cut in half.

Among the stores are Barnes & Noble, Restoration Hardware, FAO Schwarz, Cheesecake Factory, Kenneth Cole, Legal Seafood, Pottery Barn, Smith & Hawken and Ann Taylor. Muvico Theaters Inc. is replicating an opera house with a marble lobby and a huge chandelier.

Nordstrom and Nieman Marcus were interested. But Palladium refused to spend up to $20-million required to give them each a free store. Macy's wanted a small home-furnishings store, but got so caught up in the prospects that it opted for something closer to a full-line department store, all without the usual subsidy. The 110,000-square-foot layout, a Macy's experiment for resort areas, will be about two-thirds the size of a mall Macy's.

"CityPlace is really a different concept that may take us down some new avenues," said Lou Mastrogiacomo, Macy's regional senior vice president of merchandising.

Palladium was unsure of the demand for townhouses that back up to a parking garage. It offered 10 for sale. When all 10 sold at an average price of $310,000 in six days, the developer chose to build 51 more.

Clashes with Clematis Street interests have been frequent, with developers fighting over the same tenants. Clematis merchants protested that CityPlace will have free parking in taxpayer-financed garages while the City Commission recently raised the rates in the garages that serve Clematis Street shoppers.

"Supporting both Clematis and CityPlace has made my life a real balancing act," said Bill Fountain, director of the Downtown Development Authority.

Graham did not seek re-election, giving way to new Mayor Joe Daves, a 71-year-old retiree who lives in an 88-year-old pioneer home on the edge of downtown. He voted against CityPlace as a commissioner "because it was just unreal in scope" but now thinks "it was the best project. We used to call it a threat to Clematis. Now it's just more a challenge."

City officials, Clematis merchants and CityPlace developers are trying to paper over their differences.

The city spent $3.5-million more to gussy up the half-mile walk between CityPlace and Clematis. It's helping pay for a free rubber-tire trolley that links the two locations.

"People say that it's over for the old downtown," said George Greenberg, the 85-year-old president of Pioneer Linens, which sells upscale linen such as bath towels costing as much as $150. "I don't think so. It's going to bring new business. We're going to try selling this all as one downtown. Will that work? I don't know."

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