Third Tower Planned For Palisade Palms

Galveston County Daily News, April 23, 2008
by Laura Elder

GALVESTON — Development firm Falcon Group says it plans to add a twin-peaked, 300-unit tower to a project that already boasts the island’s tallest building — the $170 million East Beach residential high-rise Palisade Palms.

Word came as the developer said it would begin next month closing sales on units in the two existing 27-story towers on East Beach.

The addition will be designed as a single tower through the 20th floor, then split into two sections to its full height of about 27 stories.

Falcon Group’s plan to build a third tower comes as condominium developers across the nation, particularly in Florida, take huge financial hits in glutted markets where prices are plummeting.

But Richard G. Anderson, vice president of development for Falcon Group, said there was strong demand at Palisade Palms and a healthy thirst for beach-front properties along the Texas Coast.

Falcon Group reports that buyers have plunked down earnest money contracts on 92 percent of the 288-unit Palisade Palms, where prices range from $400,000 to $1.6 million. Sales are measured by actual closings, a process that will begin in early May, Anderson said.

About 20 percent of the condo buyers will make Palisade Palms their primary home, he said. That amount could increase as those who bought units as second homes retire and move to the island, which would boost the city’s economy, he said.

Falcon Group sought to discourage flippers — speculators buying during construction with the intention of flipping the property for profit — by requiring an earnest money deposit of 15 percent of a unit’s price.

Buyers aren’t as likely to walk away from earnest money deposits of, say, $150,000, Anderson said.

Some industry observers have estimated that flippers represented about 10 percent of the Texas coastal market.

Anderson said he’d have a better idea by August about how much demand for Palisade Palms was generated by speculators.

Falcon Group isn’t shrugging off a housing slow down caused partly by tightening credit. The firm is eyeing the economy closely before it moves forward with construction of the new tower.

Tightening credit, however, hasn’t been a big issue for the luxury development, where 20 percent of prospective buyers are paying cash, Anderson said.

The challenge to high-end buyers isn’t whether they can afford a condominium at Palisade Palms, but rather where the economy is headed and whether they should part with their cash, he said.

Although Palisade Palms is the island’s tallest building, Falcon Group has managed to stay out of the height and development debate lately consuming island residents and putting politicians in the hot seat.

At an anxiously awaited meeting Thursday, the city council will vote on whether to approve a set of guidelines and restrictions on high-rise development after months of emotional debate.

Anderson and other Falcon Group principals have stayed out of the fray. Their project isn’t affected by the fight, nor is it in a zone where heights might be limited.

In city-conducted surveys, residents have said East Beach, away from neighborhoods, is one of the most suitable places on the island for high-rise development.

But it’s vital that the city offer clear rules that strike a balance, Anderson said.

“The city needs to create a well thought out plan based not on the political winds of the day, but one that balances social, financial and environmental issues,” he said.

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High-rise Amenities

Falcon Group, developer of Palisade Palms, offered a sneak peak of the two 27-story, curvilinear condominium towers at 801 East Beach Drive.

Amenities and features include:

• 20-foot water wall;

• Expansive balconies allowing all 288 residents a panoramic view of the Gulf of Mexico and/or Galveston Bay;

• Units range in size from 1,044 square-foot, one-bedroom to 3,000-square feet penthouses;

• Separate adult and children’ pool area;

• Beachcomber’s Kids’ Club with an enclosed jungle gym;

• Terrace level Lanai Lounge, offering 360-degree view of the bay and gulf;

• Morning Lounge and Cafe Bar; offering free coffee 6 a.m. to 10 a.m.;

• A 3,500-square-foot fitness center, including elliptical machines, treadmills and recumbent bicycles;

• Outdoor tennis and sport courts; and

• Bark Park, outdoor dog park.