Downtown West Palm Beach Development
By Mark Pateman
Hosted by ULI and the West Pam Beach Downtown Development Authority, the annual West Palm Beach Development & Investment Forum was held last month at the Hilton West Palm Beach to welcome la crème de la crème of West Palm Beach real estate society. I represented Cushman & Wakefield, opening the event with a West Palm Beach Market Overview, talking to the most significant projects happening in our city. In addition to highlighting what’s poppin’ in CRE in WPB, the program explored real estate investment trends, creative development strategies and projections on the opportunities ahead.
The Class A Office Market in WPB right now is limited, to say the least, with a single digit vacancy rate in our top Class A buildings – Phillips Point, Esperante Corporate Center, Flagler Center, Cityplace Tower, One North Clematis, and 101 North Clematis. New deals are coming from 1) organic expansion as the largest source of absorption, 2) local market relocations – from the town of Palm Beach and other markets within Palm Beach County, and 3) New To Market – the smallest group, but gets the most attention and is crucial to the success of our office towers and the economic health of our downtown.
West Palm Beach is in the midst of an economic and development boom with over $2.5 billion in construction projects proposed or currently under construction. The current pipeline includes over 3,000 residential units, over 1,000 new hotel keys and several exciting mixed-use developments. The downtown is well positioned to capitalize on the significant growth currently taking place throughout South Florida.
As for lifestyle, West Palm Beach has some of the most trendy and highly- rated restaurants, lounges and coffee houses serving up unique food & beverages. My personal favorites are Grato, The Regional, Bowery, Subculture, Johan’s Joe, and Meraki Juice Kitchen.
As for trends we are seeing, there are four key trends in the WPB market that are driving commercial real estate:
- Adaptive reuse of our older building stock
- Executive health providers opting for the central business district
- TAMI companies (technology, advertising, media and information business) taking a serious look at WPB
- Dead department and big box re-tenanting – urban distribution for small consumables
Lastly, Palm Beach County is in the midst of some unique attention due to President Trump’s visits to the White House of the South, Trump’s Mar-A-Lago estate. Palm Beach County is taking advantage of this attention and actively pursuing financial institutions from New York and the Northeast, recruiting them to move to South Florida. The City of West Palm Beach has put together an incentives package, offering property tax breaks for more than 10 years for companies bringing in new, high-paying jobs. Our Florida research team is currently tracking this trend of high rents and little Class A space, showing that aggressive hikes in rents across the region haven’t discouraged the phalanx of financial companies moving in. These businesses absorbed up hundreds of thousands of square feet of commercial space last year, even as rents leapt by more than 21 percent. Palm Beach County is no longer “God’s Waiting Room” in South Florida. People are coming down here with their families and settling here permanently, bringing their own companies and their own capital and investing in the community.
In short, Palm Beach County is hot right now. Come for a visit, check us out and see what all the fuss is about – socks optional.
Mark Pateman, ESQ., SIOR
Managing Principal – Palm Beach
Cushman & Wakefield
Mark currently manages the West Palm Beach and Boca Raton office with 30 brokers, 3.5M SF of Agency leasing portfolio, an average of 350,000 SF of occupier representation per year, and an average of $100M of investment sales in any given year.