The South Florida developer who won approval early this year for a mixed-use residential tower next to the federal courthouse in downtown Orlando is now looking to swap out two floors of office space for a hotel use.
Baco Raton-based Deerfield Investments was previously approved for the 15-story DXV Central tower at the northwest corner of Division Avenue and W. Central Boulevard, north of the proposed Orlando Magic Sports & Entertainment District. The original plans called for 2 levels of office space with outdoor terraces topped by seven stories of residential apartments and amenities.
Deerfield owner David Hirschfeld told GrowthSpotter the project stalled earlier this year when construction financing dried up as a result of the coronavirus pandemic. “There was a decision among many financial institutions to hold back any type of construction lending, and specifically construction lending within the office market,” he said.
Without having at least 10% of the mixed-use project dedicated to commercial use, Deerfield wouldn’t qualify for the density bonus on the residential side. Hirschfeld said he was approached by a national hotel operator about opening one of its flags in the DXV tower, and he has an LOI from the company. He had a pre-application meeting with city planners in October to discuss the change in use, and he expects to file a PD amendment in early 2021.
“The city was receptive in allowing the change from office to hotel, provided we stayed within the guidelines of the FAR requirements for the PD,” he said. “So the city’s position is any commercial use, as long as it’s provided for in the code, would be acceptable in that mixed-use development, provided you adhere to what was approved in the PD, and so that’s what we’re trying to do.”
The challenge is fitting everything required under the hotel brand standard within the allotted space without adding any height. In a pre-application meeting, submitted a conceptual plan that substitutes four floors of hotel uses in lieu of the proposed 50,000 square feet of office space. That design would have brought the project height back to 17 stories, which was the original concept for the tower. Hirschfeld had agreed to reduce the height to 15 stories, at Commissioner Regina Hill’s request, during the final hearing.
“She felt that the building was still too massive for that area, so it was agreed to,” Hirschfeld said.
He told GrowthSpotter he could eliminate one level of parking, if necessary, to reduce the height to 16 stories. The original concept included excess parking that could be monetized by providing valet parking for events at the Amway Center and Exploria Stadium, so he would be sacrificing a potential revenue stream to come closer to height requirement in the PD.
“There’s no question that you’re trading parking revenue and other ancillary revenue streams for hotel use,” Hirschfeld said. “That’s what we’re trying to determine is the most economic and efficient way to develop the property and maximize its own income.”
The hope is that city officials will compromise on the height in order to bring the first national hotel flag to Parramore. “I think, first of all, by having that in Parramore, where a national brand is willing to relocate, shows the strength and shows the up and coming nature of the Parramore community. And that’s one of the reasons why we were interested in doing it. We think it will benefit the overall community and spur additional development.”
The ground level floorplan would maintain the retail component fronting on Central, but a proposed coffee shop and residential storage area were replaced with a hotel lobby and back of house services. The new plan also adds a mezzanine level overlooking the lobby with twp meeting rooms, a breakfast area and kitchen. Hirschfeld said his goal would be to land a restaurant tenant on the ground floor, since the hotel brand does not have a full service restaurant.
The residential component of the mixed-use development would have a total of 189 units consisting of 158 studio “work force” units ranging from 402 to 582 square feet and 31 one- and two-bedroom units ranging from 582 to 891 square feet.
Most of the 11th floor would be dedicated to building’s 15,000-square feet of amenity space. Highlights include a fitness center with lockers and dry sauna, entertaining space, a coffee bar, gaming lounge and business center. There’s also a rooftop pool with private cabanas and a 3,500-square-foot terrace with a yoga lawn and dog park with grooming station.
Hirschfeld said the DXV Central construction timeline will depend on his ability to execute the hotel agreement and obtain financing. News this month of two successful COVID vaccines is a positive development toward an economic recovery next year. “The vaccine, I think it’s going to give comfort to a lot of businesses and financial institutions that sometime in the future, things will return back to normal — and whether that’s six months or 12 months is a positive factor,” he said. “This has been a very long haul with many ups and downs and struggles along the way. And I can always say that I am cautiously optimistic that the project will move forward and build in 2021.”
Deerfield isn’t the only developer with a mixed-use project downtown looking to reduce or eliminate the planned office space.
Last month, Property Markets Group filed revised plans for the Society Orlando tower that eliminates the 35,000 square feet of office space and slashed the proposed retail space by more than half. The new, scaled down project at 233 N. Orange Ave. also would go from three residential towers to two, a net loss of 190 dwelling units. That project is no longer seeking a density bonus.
Other projects with large office components, like the Orlando Magic S+ED and T2 at Church Street Station, are on hold until developers can secure anchor tenants, according to JLL’s Third Quarter Office Market Report. “With the market still down by over 100,000 jobs in key industries and the future of tourism unclear, the negative impact on the office market is likely to continue for the next several quarters,” JLL predicts.
The Magic amended their master plan a year ago — pre-COVID — to more than double the amount of office space, from 200,000 to 420,000 square feet, citing high demand for Class A offices in the downtown market. At the time, the Magic said they would complete the buildout of the entire district by 2022. Now the team has shifted its focus to the new training facility next door.
Lincoln Property Services has an approved plan for Church Street Station Phase 2, a 32-story mixed-use tower that would deliver over 200,000 square feet of office space and a 209-key full service hotel.