The Old Kmart Lot in Neptune Beach Finally Has a Plan. The Pipes Underneath Might Not Cooperate.

Carmi Canipe Soares has run Belmarmi next to the old Kmart at 500 Atlantic Boulevard long enough to remember when the parking lot actually had cars in it. The store closed for good in July 2016, one of the last casualties of a nationwide liquidation that emptied Kmarts across the country, and the building has sat there since: 84,900 square feet of retail space and a parking field big enough to swallow a small stadium, doing nothing for a decade, as Hoodline reported.

"It's time," Canipe Soares told First Coast News when city leaders reviewed the latest plan for the site this month. "We need something."

That something has a name now: Town Center West, a proposed 150-room, three-story hotel paired with a 90,000-square-foot shopping plaza split into two sections. It follows a 2017 apartment proposal for the same 17-acre parcel that the City Council declined in 2018. The schedule for this one depends heavily on water infrastructure, specifically the volume and pressure the city's system can deliver to a hotel-sized project.

What Actually Killed the Last Two Plans

The lot has been owned by TLM Realty Corp., a New York firm that manages roughly 1.5 million square feet of shopping centers nationwide, since 1983, when it paid $5.15 million for the property. For most of the years since Kmart closed, TLM sat on the site without a public plan. Then, in late 2017, it partnered with TriBridge Residential on something bigger: a mixed-use complex with up to 313 apartment units and 10,000 square feet of retail, which would have meant razing the entire Kmart building.

Residents pushed back hard on traffic and density concerns, and in August 2018 the Neptune Beach City Council voted 6-0 to deny the special zoning exception the project needed. The apartment plan was dead.

What happened next mattered more than the vote itself. In March 2021, the City Council went further and voted 4-0 to strip every reference permitting residential development from commercial zones out of its draft Comprehensive Vision Plan. Public opposition voiced during community vision workshops drove the change. The vote set the direction for the city's commercial zones, which means any plan for this site now takes a commercial form.

That policy history frames the current proposal, which pairs a hotel with retail and includes no housing.

The Water Infrastructure Constraint

With housing off the table, a hotel became one of the few uses that pencils out on a 17-acre commercial lot this close to the ocean. But a 150-room hotel needs something a strip mall never did: enough water pressure to meet fire suppression codes.

Engineering evaluations found that Neptune Beach's municipal water system lacked the volume and pressure a project of this size would require. That is not a paperwork problem. It is a physical one, and it forced the city to negotiate with neighboring Atlantic Beach to extend water main lines into the property, according to city records.

This is the mechanism that actually explains the fall timeline, more than any zoning fight left over from 2018. A City Manager report issued in July put a Development Order review for 500 Atlantic Boulevard on the Neptune Beach Community Development Board's agenda for September 9. Developers are set to return to that board in October, and if that goes well, the full plan could reach the City Council in November. Every one of those dates depends on infrastructure conversations that are happening alongside public hearings.

What Town Center West Actually Has to Solve

Parking is the other unresolved piece, and Neptune Beach Community Development Director Heather Whitmore laid out the math plainly at the same meeting. The current site plan includes 140 spaces on the north side of the property and 138 on the south, plus 100 spaces the developer would draw from the neighboring Publix, putting the total at 378. Whitmore said the site technically needs 463 spaces to meet code.

That gap of 85 spaces is not disqualifying on its own. Whitmore noted that off-site parking arrangements, double-counting some spaces for off-peak use, and valet service could close it, but she was clear there is still a lot to work through before the numbers satisfy the city.

Mayor Cori Bylund has been careful to frame this as a conversation rather than a done deal, saying community input will matter as the plan moves forward. The City Council's 6-0 vote on the 2017 proposal shows how much weight community input carries on this site.

The Corridor Around It Is Already Moving

None of this is happening in isolation. Atlantic Boulevard in and around Neptune Beach has picked up hospitality investment from multiple directions this year. Jacksonville Jaguars owner Shad Khan's firm has acquired the nearby Seahorse Oceanfront Inn and Lemon Bar for a luxury resort redevelopment along the same Beaches Town Center corridor. A few blocks over, Atlantic Beach is converting the former One Ocean Resort into the Dune House Hotel.

Seen against that backdrop, Town Center West looks less like an isolated bet on one dead lot and more like a piece of a broader pattern along this corridor: money moving into hospitality projects that would have been hard to imagine here even five years ago. Whether the old Kmart site becomes part of that pattern or stays the exception depends on decisions that will not be public until the October board meeting and, if it clears that, the November council vote.

For now, the lot looks the same as it has for ten years: a shuttered big-box store and a parking lot with more cracks in the asphalt than cars parked on it. What changed this September is that, for the first time since the 2018 rejection, there is a specific plan on a specific calendar, tied to a specific set of engineering problems the city is working to solve.

If you want to keep an eye on how the October board meeting or a possible November council vote plays out, Mandy Morrow Group is watching this one too, and happy to talk through what it might mean for the block whenever you're ready.

This article is general information, not legal, tax or financial advice. Consult a qualified professional about your situation.