West Palm Beach downtown office tower, real estate development
New and already completed office towers in downtown West Palm Beach, such as 360 Rosemary, have attracted about 100 companies to Palm Beach County since 2019.
Greg Lovett, Palm Beach Post
After two years of construction, New York-based Related recently began leasing apartments at The Laurel, the company’s first luxury rental property in Florida.
The 21-story tower, built on the site of the former Macy’s department store at 575 Rosemary Ave., offers a different level of amenities and starts at about $1,000 more per month than other apartment rentals downtown. I promise you that. Rent at The Laurel ranges from $3,400 per month for a studio to an astonishing $20,000 for a fully furnished three-bedroom unit.
For this amount, residents can enjoy Bosch kitchen appliances, a resort-style pool, an outdoor fitness pavilion, a Pilates studio, an indoor fitness center, and many fitness extras such as fitness classes with top trainers.
But will this expensive new apartment tower be able to offer renters the touted fitness perks when the building opens in May?
LA Fitness claims Related is in breach of 12-year contract
That’s the question now for Related Company and LA Fitness, a tenant at The Square who is suing Related Company over things like fitness amenities planned for The Laurel.
LA Fitness alleges in a 2023 lawsuit that The Laurel and its new office tower’s fitness facilities violate a 2012 lease agreement that gave LA Fitness exclusive rights to conduct fitness-related operations at The Square. insisted.
The fitness chain said the fitness facility created by The Laurel’s landlord is in competition with LA Fitness and is not allowed under the lease. LA Fitness recently asked a Palm Beach County Circuit Court judge to block the opening of The Laurel fitness facility.
If approved, tenants at the 322-unit apartment complex could be unable to use the facility, at least not immediately.
The legal dispute is a top concern for Related Chairman Stephen Ross, a Palm Beach billionaire and owner of the Miami Dolphins who has poured billions of dollars worth of investments into West Palm Beach.
The Feb. 29 court hearing was held via Zoom, with Ross watching from his company’s conference room in West Palm Beach. Also in the room were Related Urban Chief Executive Officer Kenneth Himmel and Senior Vice President of Relationships Jordan Raslev.
Related executives did not speak at the hearing.
But the company and attorney John Shubin argued in court filings that the in-building fitness facility is merely an amenity of the building, not a commercial fitness center or operation covered by the lease.
Related: Double your investment in West Palm Beach
The Laurel apartment tower is a big bet for Related, which hopes to attract high-paid professionals to its rental site.
The company also wants to attract people who are wealthy enough to buy a second home in Palm Beach County but prefer the flexibility of renting, said Brian Cho, executive vice president of related divisions.
“This is an attractive solution for luxury rental customers who have traditionally not had access to professional-quality buildings,” Cho said.
Laurel apartments offer views of the city, the Intracoastal Waterway, and, from the fifth floor up, the ocean. The resort-style building has plenty of perks, including cabanas, men’s and women’s spas, and an outdoor bar and grill.
In addition to regular apartments ranging from 636 square feet to 1,825 square feet, The Laurel’s Premium Penthouse Collection includes apartments ranging from 1,505 square feet to 2,487 square feet, with rents starting at $9,600 per month.
Cho said there is a big demand for large rental apartments, and The Laurel offers 24 three-bedroom units.
All apartments feature open kitchens with 9-foot ceilings, floor-to-ceiling windows, custom Italian cabinetry, Carrara marble tile backsplashes, and quartz countertops.
Residents also have access to three rentable, furnished guest suites designed by Restoration Hardware, a perk often found in ultra-luxury condos. These will be available to visitors and family members, Cho said.
Laurel is Related’s third new residential building planned for West Palm Beach.
The company sells condominiums with South Flagler Houses planned on South Flagler Drive and Shorecrest Condominiums planned on North Flagler Drive. Both condos offer views of the Intracoastal, Palm Beach, and ocean.
Fitness Amenities vs. Fitness Centers: What’s the Difference?
Before Related can lock out The Laurel’s wealthy tenants, the global real estate company must overcome a fitness center turmoil with tenacious tenant LA Fitness.
The LA Fitness lawsuit was first filed in April 2023 in the Palm Beach County Circuit against CityPlace Retail, an affiliate of Related Companies, which built The Square, The Laurel and 360 Rosemary office towers. It is part of a court action.
LA Fitness claims that its 2012 lease with Related includes an exclusive use clause stating that “Landlord does not permit any other fitness business to operate within the project.”
According to the lease agreement, these prohibited businesses include health clubs, aerobics, yoga, pilates, fitness classes, spinning/cycling, circuit training, personal training, basketball, boxing, cardiovascular, or jazzercise operations. It is said to be included.
The LA Fitness exclusive services are very wide and open-ended, the fitness company says. No exceptions are made for other businesses, including landlords. It does not explain whether or how users can be charged for prohibited operations.
Until The Laurel and 360 Rosemary came along, the deal was between Related and LA Fitness.
LA Fitness then said in court records that it began to learn that in-house gyms were being built and advertised in both buildings.
LA Fitness sues related companies over plans to move Equinox gym to The Square in West Palm
more: Related to LA Fitness: Playing ball with a change at The Square — or otherwise
Officials repeatedly argued in court documents that apartment buildings and office towers only provide fitness equipment and are not the same as fitness centers.
LA Fitness called the difference “fanciful.”
LA Fitness pointed out in a Feb. 6 deposition that Gopal Rajegowda, a related partner who signed the LA Fitness lease on behalf of Related, also failed to explain the differences between the two.
“Is there a difference between fitness amenities and a fitness center? I don’t think so. I don’t know,” Rajegowda said. “For me, I don’t think so.”
Affiliate marketing and advertising materials repeatedly refer to these building perks as fitness centers.
This includes marketing materials for The Laurel, 360 Rosemary Office Tower, and The Flats Apartments. In these apartments, potential residents are encouraged to rent The Flats to take advantage of our state-of-the-art 24-hour fitness club, allowing you to say goodbye to expensive gym memberships. ”
Also, although Affiliated maintained that building amenities is not a paid business, unlike LA Fitness, which charges monthly membership fees, Affiliated’s Rajegowda said the company does not charge perks on top of monthly rent. Scott Atherton, an attorney for LA Fitness, noted in a February article. 29 Public hearing.
LA Fitness says only current rent-paying apartment residents or employees of current rent-paying office tower tenants at 360 Rosemary are allowed to use the fitness center. These are not available to the public and are not free.
LA Fitness said in court documents that the new apartment and office tower at The Square could house about 3,500 residents and office workers. The fitness company says these are all new potential customers for LA Fitness.
But rather than drive these customers to its fitness chain, Related wants to “steal” these customers to its own fitness centers in order to charge higher rents, increase profits, and increase the value of the building. LA Fitness said in a court filing.
Judge Jamie Goodman had a mostly poker face during the February 29 hearing. However, he questioned both parties about the meaning of “fitness-related work,” which is not defined in the lease agreement.
Regardless of his ruling on the fitness exclusivity issue, other litigation issues remain.
LA Fitness is also challenging the changes that Relations is making to parts of The Square (550 S. Rosemary Ave. and 545 Hibiscus St.) formerly occupied by retailers.
LA Fitness said the conversion to a mixed-use center violates a 2012 lease that prevents Related from converting existing retail space to other uses.
It recently demolished the retail space that once housed Brio Tuscany Restaurant, AMC West Palm Beach 12 Movie Theater, Copper Blues Rock Pub & Kitchen, and Palm Beach Improv.
Associated Companies instead wants to build two office high-rises on the land.
The goal is to attract new businesses planning to relocate or expand to West Palm Beach, a trend that has occurred slowly over the past decade but has been dramatically accelerated by the COVID-19 pandemic. accelerated to.
According to court records, Mr. Related disputed LA Fitness. The property developer said the lease made it clear that the shopping center portion of the development could be reduced.
An aggrieved affiliated company is also countersuing LA Fitness for breach of contract.
Related says it doesn’t need LA Fitness’ permission to make changes to The Square, but the lease says LA Fitness is cooperating and should “unreasonably” withhold approval or consent. It is said that it is not.
Mr. Relation’s attorney sent a letter to LA Fitness warning that its intervention could result in “tens of millions of dollars (or more) in damages,” the company’s court records state.
Goodman is expected to rule on the fitness facility issue in the coming weeks.
Alexandra Clough is a business writer for The Palm Beach Post. Contact us at [email protected]. X: @acloughpbp. Please support our journalism. Subscribe now.