Positive fundamentals boost office market in Palm Beach County
The office real estate market continues to heat up in Palm Beach County amid buoyant fundamentals, experts say.
“It’s definitely strong,” said Bill Reichel, president of Reichel Realty & Investments, a commercial real estate services firm in Palm Beach Gardens. “It’s a matter of supply-demand and the strong economy. It’s pretty simple,” he told The Real Deal.
The strong economy is lifting demand, and no new Class A product has been built in the central and northern parts of the county since West Palm Beach’s CityPlace Tower opened in 2008. “Everything is getting filled up,” Reichel said.
The direct vacancy rate for Class A buildings in Palm Beach County stood at 14.5 percent in the third quarter, according to preliminary data from CBRE, down from 16.2 percent in the second quarter. Class A triple-net rent rose to $23.21 per square foot from $22.66 during that time.
“Businesses are doing well here, whether it’s law firms, financial services, etc.,” Anthony Librizzi, a vice president at CBRE in Boca Raton, told TRD. “They’re growing, and they need more office space.”
In addition, plenty of companies are setting up offices here. He cited:
- United Technologies, which is awaiting approval from Palm Beach Gardens for its 265,000-square foot, six-story tower in the city’s Briger tract near Interstate 95 and Donald Ross Road in Palm Beach Gardens. The building, which United Technologies hopes to finish next year, will be a showcase facility for the company’s building technologies. “That’s a game-changer for northern county,” Librizzi said. “It will mean high paying jobs, not just at United Technologies, but there will be ancillary businesses that want to be next to United Technologies.”
- Cancer Treatment Centers of America, which has moved its headquarters to 5900 Broken Sound Parkway NW in Boca Raton, leasing 77,340 square feet of space.
- Tudor Investments, the hedge fund firm led by industry star (and billionaire) Paul Tudor Jones, which is leasing 10,800 square feet at 109 Royal Palm Way in Palm Beach. Jones bought a home at 1300 South Ocean Boulevard in Palm Beach for $71 million earlier this year.
The county’s Business Development Board is working hard to convince CEOs with homes in the county to locate their businesses here, Librizzi and Reichel note.
They also say the county could benefit from more Class A office space. “We don’t have significant enough supply to draw major companies,” Reichel said. “If we have a tenant who wants 25,000 square feet, there’s not much for them in Class A. There’s a need for more building.”
Projects have been hatched for new buildings, such as billionaire investor Jeff Greene’s plan for twin 30-story towers with 829,000 square feet of space at 550 North Quadrille Boulevard in West Palm Beach.
“It’s a matter of which developer has the risk tolerance,” Librizzi said. “Can they get 50-percent pre-leasing in this market? It’s tough, because there aren’t a lot of new-to-the-market tenants.”