Purchases in tens of millions of dollars aren’t immune from the wrecker’s ball
David MacNeil paid $38.5 million for an oceanfront house in Manalapan only to raze it, leaving the empty lot to the left. Now, he plans to buy the partially completed house on the right and raze it, too, to make way for a single home on a combined lot. Both lots are ocean to Intracoastal. Jerry Lower/The Coastal Star
By Jane Musgrave
Those looking for evidence that the luxury real estate market is hot in coastal Palm Beach County should start their search in Manalapan.
A year after car accessories magnate David MacNeil paid $38.5 million for an oceanfront house south of Town Hall only to tear it down, he’s poised to do the same thing on the lot next door.
This stunned builder Robert Farrell, who has spent a year rebuilding the 14,000-square-foot house with plans to expand it and put it on the market for $95 million. But MacNeil made him an offer he couldn’t refuse.
If all goes as planned, MacNeil in late May will pay Farrell’s company $55.5 million for the house that is basically a shell and the adjacent guest quarters and level them.
The combined $94 million land buy will give MacNeil, founder of Chicago-based WeatherTech, roughly 340 feet of beachfront on a nearly four-acre parcel that extends from the ocean to the Intracoastal Waterway.
To builders and real estate agents who have watched the stratospheric rise in coastal home prices, MacNeil’s buy-and-bulldoze approach was greeted with yawns.
“I wasn’t surprised,” said Christian Prakas, who specializes in high-end real estate as founding agent of Serhant in Delray Beach.
“It’s where everybody wants to be,” agreed Dorian Hayes, a luxury home specialist with Coldwell Banker Realty in Delray Beach. “Palm Beach County is on fire.”
Hayes said some of her wealthy clients have paid top dollar for adjacent lots just to have bigger yards or to protect their privacy.
Prakas said one of his clients recently scored a record for the most ever paid for a vacant lot in Florida.
Oracle co-founder Larry Ellison’s $173 million purchase of the 16-acre former Ziff estate at the south end of Manalapan in 2022 still holds the record for most ever paid for residential real estate in Florida. But, Prakas said, his client’s purchase was noteworthy as well.
While he declined to divulge the exact amount that was paid, Prakas said a company plunked down somewhat less than Ellison’s eye-popping price for roughly two acres in Palm Beach that was once home to a 36,000-square-foot mansion owned by Estée Lauder heir William Lauder.
When the French Normandy-style house that Lauder paid $110 million for in 2021 was reduced to rubble in 2022, it was the most expensive teardown in town history.
Since then, teardowns of multimillion-dollar mansions have become ubiquitous.
Gulf Stream demolition
In Gulf Stream for instance, billionaire Robert Sands and his wife, Pamela, recently got the go-ahead to demolish a 30-year-old, 17,000-square-foot house to build a new home.
When the couple, through RSPS 3223 North Ocean LLC (presumably their initials), spent $39 million last year for the home, it was the most expensive residential sale in Gulf Stream history.
Sands is executive chair and former CEO of Constellation Brands, a beer, wine and spirits company founded by his father in upstate New York.
Like MacNeil, Sands also owns the house next door. In 2016, he paid $16.34 million for the 11,000-square-foot, four-bedroom house on roughly an acre.
But, unlike MacNeil, he doesn’t plan to tear down both houses to build an even bigger one. Only the house the couple purchased last year will be demolished. And, according to plans approved by the Gulf Stream Town Commission in February, at 14,642 square feet the new house will be about 2,400 square feet smaller and have one fewer story than the existing one.
How high will prices go?
Former Manalapan Mayor Stewart Satter, who surprised the real estate world in January by announcing he was asking $285 million for a 55,000-square-foot home that could be built on the four acres he owns next to Ellison’s estate, acknowledged that the recent price tags shock many.
But, having spent 20 years developing real estate in Manalapan, a pursuit he laughingly describes as a hobby, he said he has learned a few lessons.
While the thought of buying a $40 million house to tear it down sounds crazy, many home buyers make similar decisions.
He likened it to people who buy an average priced house and immediately renovate the kitchen. People have specific expectations of what they want when they buy a home. If a house doesn’t meet them, they act.
Like homes in other coastal areas and beyond, many of the homes in Manalapan are old.
“They’re OK houses but they aren’t up to the standards most people expect today,” Satter said.
Take the house MacNeil tore down. Built in 1955, it was dated. At 10,000 square feet with six bedrooms, it was relatively small. It had low ceilings. It didn’t have a palatial entryway, a master bedroom suite or other features that have become must-haves in estate homes.
“It was not a house you would have on a $30 million piece of dirt,” Satter said.
MacNeil’s plans to buy the lot next door, tear down the half-built house and combine it with his existing holdings is wise from both a personal and business standpoint, Satter said.
MacNeil can build the house he wants. And the two lots, once combined, will be worth far more than what he paid for them individually, Satter said.
“It’s hard to find a lot with more than 150 feet of oceanfront,” he said. “It’s a rarity.”
And as with all things rare, that means the value skyrockets.
Satter noted that New Jersey lawyer and real estate investor Nathan Silverstein is asking $200 million for two acres of vacant land he has owned for decades along Sloan’s Curve in Palm Beach. The ocean-to-Intracoastal lot includes 155 feet of beachfront, but it’s across South Ocean Boulevard from the main property.
MacNeil’s soon-to-be new homesite, which also extends from the ocean to the Intracoastal, is directly on the ocean and will have more than double the amount of oceanfront footage.
“I thought it was a great acquisition,” Satter said. “I thought it was very smart.”
Limited supply of lots
Satter and Prakas said there are various reasons the luxury home market has exploded in recent years.
The effects of the COVID-19 pandemic are well known. Tired of lockdowns and mask-wearing mandates, wealthy people from New York to California flocked to the state where Gov. Ron DeSantis eschewed such health restrictions.
With no income tax and relatively low property and sales taxes, it became a magnet. The state’s weather didn’t hurt.
“There was a huge migration of wealth,” Prakas said, noting that Amazon founder Jeff Bezos was one of them when he moved in 2023 from Seattle to his hometown of Miami. At the time, he said the move would save him $600 million in taxes.
Scarcity is also a factor, Prakas said. There’s a limited number of oceanfront lots, so when one becomes available it commands a very high price.
“There are no comps for these houses,” Prakas said. “It becomes a matter of how much do you want it and how much are you willing to pay.”
Satter agreed. “It’s simple,” he said. “Demand is high, supply is low, so prices go up.”
The Ellison effect
Satter said another force contributed to rising prices in Manalapan: the Ellison effect.
When the man who is the fourth-richest person in the world, according to Bloomberg’s Billionaire Index, bought the Ziff estate in 2022, people took notice. Ellison doubled down last year by paying $277 million for the Eau Palm Beach Resort & Spa at the north end of Manalapan.
Long in the shadow of Palm Beach, Manalapan was suddenly on the map, Satter said. People who had never heard of the tiny town began looking into it and liked what they found, he said.
How long the boom will last is unknown.
Both Satter and Prakas said they suspect luxury housing prices are at or very near their peak and will begin leveling off.
But Satter, who hopes they stay strong enough long enough for him to sell his proposed $285 million spec house — with its 350 feet along both the ocean and Intracoastal — for close to his asking price, said crystal balls are hard to come by in the real estate business.
When he began buying lots in Manalapan in 2005, he said people thought he was crazy.
“If I had known what the marketplace was going to do, I would have bought the whole town,” he said.
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