Flagler Sky View should be tall enough to live up to its name. The 30-story apartment tower planned in the Flagler Village area would offer enviable upper-floor views of the downtown skyline and river to the south and the ocean to the east. Harder to see is when, if ever, Fort Lauderdale’s wave of urban-living development will crest.
A company controlled by Paul J. Kilgallon, president of Fort Lauderdale-based Mainstreet Capital Partners, bought the 0.7-acre development site of Flagler Sky View for $3.25 million in December 2021, according to Broward property records. The site address is 501 NE 4th St., about a block from a Fresh Market grocery store on Federal Highway just north of downtown. It is one of a dwindling number of vacant or sparsely developed parcels in a neighborhood bulging with new buildings.
If approved by the city and built, it would be part of a Broward apartment building boom centered largely on Fort Lauderdale and the eastside. But with Broward’s population growing and local rents spiraling upwards, real estate experts say all the building is necessary – and that even with all the planned new construction, there won’t be enough units.
Kilgallon, who was unavailable for comment, has launched the latest in a long series of major apartment developments in Flagler Village and the downtown area. The 30-story tower Flagler Sky View will have 270 apartments, 322 parking spaces, nearly 2,700 square feet of commercial space, and a swimming pool on the seventh floor. Apart from structural specifics, of course, urban location is central to the appeal of Flagler Sky View and other residential developments in Flagler Village, which provides proximity to downtown employers and such community amenities as the Brightline train station and the Broward Center for the Performing Arts. Popular Flagler Village has enlivened the downtown area as it has attracted a larger population.
“Growing neighborhoods like Flagler Village allow downtown Fort Lauderdale to thrive with a mix of restaurants, entertainment options, and a concentration of public art,” according to the 2022 annual report by the city’s Downtown Development Authority. The DDA annual report also noted that more than 10,000 residential units in the downtown area have been built or approved in the last five years.
There are obstacles. If interest rates keep rising, apartment construction financing eventually could become unaffordable for some developers. But the high cost of labor and construction materials has been a bigger challenge for developers than the cost of borrowed money, says Michael Denberg, a partner at law firm Saul Ewing Arnstein & Lehr, which represents investors in rental housing. “Development doesn’t seem to be slowing down because of interest rates,” he says. The increased cost of borrowing may not stop the developer of Flagler Sky View from building the 30-story tower, but it could slow any plan to sell the property. This year’s rise in interest rates has cut the number of apartment building sales, which buyers often finance with borrowed money, says Calum Weaver, executive managing director of real estate brokerage firm Cushman & Wakefield. “Interest rates are higher, and it’s harder to get deals done. No doubt, the second half of this year is going to have fewer sales than the first half of this year. It’s still going to be a robust year overall. But the reality is, it’s not at the same pace.”
Lofty rents, meanwhile, are encouraging development even as interest expenses rise. The average apartment rent in Fort Lauderdale will jump 20 percent to $2,560 this year after soaring 28 percent last year, according to a 2022 market forecast by brokerage firm Marcus & Millichap. High rents reflect low apartment vacancy rates, which dipped below 3 percent this year in Broward County. Population growth has also been a powerful propellant behind rental developments. The population of Broward County increased by 14,483 in the first six months of 2022, according to a multifamily market research report by Cushman & Wakefield. The first-half growth in population was part of a larger increase since 2018 totaling 47,901.
More developments are on the way. This year, prior to its June review of the Flagler Sky View project, the city’s Development Review Committee vetted six nearby developments that would put almost 3,000 new apartments in and around downtown and Flagler Village. The biggest residential project that DRC reviewed in the first five months of the year was Ombelle, a two-tower, 1,100-unit development planned at 300 NE 3rd Ave. – just three blocks from the Flagler Sky View site on NE 4th St. Cushman Wakefield reported that developers had 9,747 apartments under construction at the end of June across Broward County, 24 percent of them in Fort Lauderdale, and 23 percent in Dania Beach and Hollywood. Countywide, developers are expected to finish 1,670 new rental units this year, another 4,592 next year, and 3,485 in 2024. “Even with all the new construction that is going on, it’s needed and not enough,” Weaver says.
Like any large-scale development, of course, Flagler Sky View needs the city’s sign-off before construction can start. The entitlement process began with a submission of plans and drawings to the city’s Development Review Committee. DRC responded with a list of comments in a June 14 report, including a note that the initial design for Flagler Sky View deviates from design standards in a zone that encompasses Flagler Sky View – and such deviations could be subject to approval by the Fort Lauderdale City Commission. For example, the initial plan for Flagler Sky View set the podium of the building back 35 feet from the centerline of the street, as local design rules require, but proposed balconies and architectural elements extended five feet into the required setback.
The Development Review Committee praised the architecture of Flagler Sky View for “creative façade composition” and “original, self-confident design.” But DRC also said in its June report that it needed more information about various parts of the project, including a planned amenity deck on the seventh floor, lighting to illuminate the façade and architectural elements on the rooftop, and the quality and durability of building materials, with a special emphasis on the first two floors.