Palm Beach playbook: brokerage edition

Worth Avenue emerged from the pandemic with a magnetic pull. 

Cutting across Palm Beach from east to west, the popular promenade is lined with Bentleys, Bugattis, Rolls Royces and designer shops from end to end. At the opening reception for Compass’ new office on the popular artery, CEO Robert Reffkin acknowledged the address offers his brokerage some cache in a market where that matters.  

“Some markets, where people are more set in their ways, require more investment, a better office on a better street,” he said.

His strategy for Compass’ storefront in the insular market is one component of a Palm Beach playbook top national brokerages are testing out as they move into the once-quiet island. 

The pandemic awoke the sleeping giant that was Palm Beach’s luxury real estate market, where a frenzy of wealthy buyers sought a tropical escape and sent prices to the moon. 

Records were broken, and then broken again. It is now the nation’s top trophy market, with more sales and listings over $50 million than anywhere else. 

The new heights caught the attention of brokerages and agents alike. 

The Agency planted a flag on Royal Palm Way last year. Miami condo sales powerhouse Cervera Real Estate opened an office on the island this month. Douglas Elliman’s Michael Lorber hopped on the Palm Beach bandwagon shortly after the new year. Official, fresh off an expansion into Aspen, is eyeing the island next, co-founder Oren Alexander confirmed. Serhant is looking to edge its way in, but can only claim it’s arrived in Palm Beach County, by way of its office in Delray Beach.

Brokerages eyeing the market have to do more than set up staff in a new zip code: To reference Lord of the Rings, “One does not simply walk into Mordor.” Not that the 16-mile barrier island is anything like that dark, fictional land, but by the way agents talk, it is about as welcoming. 

For more than a century, Palm Beach has been the winter home for old money. It’s the kind of beach town that considers a dress code. The enclave, first developed by Standard Oil baron Henry Flagler, was designed with exclusivity and privacy in mind and those remain its defining characteristics. 

Jay Parker, Elliman’s Florida CEO, said he’s seen agents from his brokerage’s other markets try their hand at Palm Beach.

“We’ve seen pretty distinctly that it’s not welcomed,” he said. “It’s small, it’s tight, it’s organized –– it’s very, very organized. The players in that market are very protective of their territory.”

A handful of Palm Beach agents control most of the ultra-luxury end of the market, where nine-digit deals close without ever hitting the MLS. The insular group includes the independent superbrokers Christian Angle and Lawrence Moens, both of whom have closed billions in deals since the island’s boom kicked off four years ago.

Elliman and Corcoran are national players that have cornered the market on the island’s other top agents. 

To play the game of real estate in Palm Beach requires a level of politicking that few other markets do — on top of the right relationships and long-standing reputation. 

“Just because you make it in another market doesn’t mean you’re going to make it here,” said Dana Koch, a top agent with the Corcoran Group. “[Newcomers] don’t have the market knowledge or the insight into this market. That takes decades.”

Among Palm Beach’s established players, there is a shared sentiment that the new arrivals don’t understand the social rules of the community, and are underestimating what it will take to break in. 

How you win the game 

One thing everyone seems to be on the same page about is what any Palm Beach brokerage needs to be taken seriously: a big-name agent. It buys the brand credibility with both agents and clients on the island, which takes years to build otherwise.

“Anyone can plant their flag in Palm Beach,” Koch said. “The reality is if you don’t have the talent, you’re not going to be successful. None of the companies who have planted their flag here have hired talent.”

That’s not for lack of trying –– the top agents in Palm Beach’s ultra-luxury echelon are difficult to win over for a bevy of reasons. 

“The financials in Florida are different than other markets, in the way brokers are compensated,” said Corcoran CEO Pam Liebman. Some brokerages came in thinking “they could just buy everybody off,” she said. “That doesn’t work in Palm Beach.”

Firms have to prove their worth before they can turn any heads, according to local brokerage heads. Even then, they rarely budge. 

“We have a very, very powerful leadership team that has remained unified and committed. I don’t think our agents are going to be prey to the offers of competitors,” said Parker, comparing Elliman’s office on the island to a well-trained battle regiment. “We have managed to withstand the efforts of competitors to attack our infrastructure.” 

Approaching a top agent can be like “asking the pretty girl to the dance,” Koch said. It requires incessant ego-stroking on discreet lunch and coffee dates, but well-played brown-nosing always comes face to face with the real Goliath: contracts.

Breaking the “golden handcuffs” can come down to careful timing. 

“[Brokerages] make it expensive to leave,” Alexander said. “You have to know what deals they have in play to understand when is the right time.”

Seeing other people

The island isn’t the only area ripe for brokerages interested in expansion. Prices are surging across the county, including in Boca Raton, Wellington, and the gated golf communities in Palm Beach Gardens and Jupiter, which continue to welcome new billionaire residents. 

West Palm Beach’s development cup runneth over with hundreds of luxury condo units in the pipeline, where Elliman and Corcoran claim the lion’s share. 

“Palm Beach and West Palm are almost blending at this point,” said Jeff Dono, who runs the Compass office on Worth Avenue. 

Along with slipping outside of the confines of Palm Beach proper, the desirable luxury market has seen a seismic shift in the demographics. Inbound residents from the Northeast and California are much younger, and fewer of them have family ties to the community than has historically been the case.

“Someone from tech in Silicon Valley who’s moving his family and business here, he might not know to contact one of the huge names,” Dono said. But, “They know Compass.”

Drawing swords

What the new arrivals lack in legacy, they make up for in professed ambition. 

Santiago Arana, who partnered with CEO Mauricio Umansky on the Agency’s South Florida franchise, said he’s working on securing an eight-figure listing for the Palm Beach office — while trying to recruit some big guns.

“We’re not necessarily going after the number one agent, a $50 million producer a year is the sweet spot,” he said. “If I zoom out, what I see is in the next two years being one of the three big players in Palm Beach.”

Alexander is prioritizing landing his top agent before Official opens up shop on the island.  

“There’s really five agents that control the top end of the market in Palm Beach, and we want to land one of them,” he said. 

But the broker is aiming to lock down his big name within the year, betting the Official brand — with outposts in Miami, New York City, the Hamptons and Aspen — will click with Palm Beach’s posh crowd.

After all, he said, “You can’t expect to get top dollar selling your handbag at Walmart.”

Katherine Kallergis contributed reporting.

Correction: An earlier version of this story incorrectly said The Agency opened an office on Royal Poinciana Way. It is on Royal Palm Way.