The city of West Palm Beach is not worried about the future of office space in the city’s downtown. This is despite a glut of new space about to hit the market, an unsightly half-finished office complex and a lingering pandemic that has kept most workers at home for months.
In West Palm Beach, only about 20% of workers are coming in to the office, brokers said. Other workers are coming in on staggered days so as not to crowd interior spaces and risk spreading the airborne COVID-19 virus.
As a result, a number of companies are paying for leased space that is mostly empty, prompting questions about the future of office space. Some national companies, such as Twitter, have told employees they can work from home forever.
But West Palm Beach officials remain upbeat that people will return to the office, and the market will return.
“Though there is current uncertainty due to the upcoming presidential election and COVID-19, all indications suggest the office market will rebound,” said Kathleen Walter, a city spokeswoman.
Last December, prior to the pandemic, commercial real estate brokers warned there was a sizable shadow market of empty space downtown.
Neil Merin, chairman of NAI/Merin Hunter Codman, said that with two new office towers under construction, the amount of vacant space would rise to 35% from about 17%. Other brokers said leasing activity was very slow, and no large tenants were even making inquiries about office space.
This year, a report by PFM Financial Advisors confirmed that the city’s office market is in trouble.
The report, prepared for Greene’s One West Palm complex, found there was no net new office space absorption downtown during the past three years. According to CoStar, the office vacancy rate today exceeds 20%, the report said.
But the city was dismissive of the report, which it said is not in line with “many experts’ projections,” Walter said.
Walter also voiced optimism that Florida, in general, and West Palm Beach in particular, will benefit from the exodus of individuals and businesses from the Northeast.
One other office tower is under construction in downtown West Palm Beach. 360 Rosemary, a 300,000-square-foot tower by the Related Cos., is set to be completed in early 2021. But the tower remains only 40% leased, a figure that hasn’t budged in months.
In addition, Related Cos. has approval to build One Flagler, a 276,000-square-foot tower on Flagler Drive and Lakeview Avenue.
One additional complex is in the works: A tall office tower on the city-owned “tent site” at Okeechobee Boulevard and South Dixie Highway. The tower would be built by New York real estate developer Charles Cohen.