Article Courtesy of The Sun Sentinel
By Paul Owers
Published April 29, 2017
Nearly two years ago, a developer started building H3
Hollywood, a downtown project billed as one of the most affordably priced
condominiums in a region dominated by million-dollar high-rises.
But work stopped last year, and the general contractor, LB Construction of
South Florida, eventually won a $15.8 million judgment against the
developer, Hollywood Station Investments. LB submitted the winning bid of
$250,200 at a foreclosure auction Tuesday.
LB has completed a deal with an investor group to resume construction of the
15-story property at 2165 Van Buren St., but it’s unclear whether H3 will go
forward as a condo or as a rental, said Michael Greene and Peter E. Berlowe,
attorneys for the general contractor.
“Given the current state of the real estate market, and the softness of the
condo market in particular, it may not make business sense to drop a bunch
of empty condos onto the market,” Berlowe said. “There is high demand for
Shortly after Hollywood Station broke ground in 2015, principal Diego Besga
said the $270,000-to-$450,000 price range would be ideal for primary
residents and investors.
But LB stopped building when Hollywood Station missed payments, Berlowe
said. In a letter to buyers, the developer wrote that “general market
conditions have deteriorated” and the company was trying to get additional
Hollywood Station pointed out in the letter that more than 60 percent of the
247 units had been presold, making it likely that it could get another loan
to finish construction. That never happened.
Hollywood Station officials could not be reached for comment Tuesday.
The Hollywood and Hallandale Beach market accounts for more than half of
Broward County’s condo pipeline of 9,300 new units east of Interstate 95,
according to Cranespotters.com, a database operated by the Condo Vultures
What’s more, Hollywood-Hallandale Beach has about a 15-month supply of
existing condo units, Cranespotters data show. Six months is considered
Peter Zalewski, principal of Condo Vultures, said H3 would do best as a
rental for the next few years, until the next condo development cycle begins
and Tri-Rail develops a coastal link in South Florida.
“That suddenly turns H3 into a home run,” Zalewski said of Tri-Rail service
along the coast. “Unfortunately, that’s years away.”
Meanwhile, six buyers have filed lawsuits seeking refunds of their deposits,
court records show.
Attorney George Harder said he represents three buyers, all sisters, who put
down more than $100,000 each for units at H3.
“Two of them live overseas, and this was a place for them to all meet, and
now all of a sudden this falls through,” said Harder, of Lutz, Fla. “I would
say they’re very upset.”