Builder of Rosemary Square buying Phillips Point office complex in West Palm Beach

The following is an excerpt from the original article written by Alexandra Clough from the Palm Beach Post. View Article | View PDF

The Phillips Point office complex, a longtime trophy property in West Palm Beach, is under contract to be sold to an affiliate of New York-based Related Cos., according to a top Related official.

The Class A complex at 777 S. Flagler Drive went up for sale last year and will trade for $282 million, a source close to the deal confirmed. Current owner AEW Capital Management bought the property for $245 million in 2015.

The Related affiliate buying Phillips Point is said to be personally owned in large part by Stephen Ross, Related’s chairman, three real estate sources told The Palm Beach Post. Ross also owns the Miami Dolphins.

In recent years, Related has been keen to build office space in West Palm Beach. The company built and then sold CityPlace Tower, an 18-story, 300,000-square-foot office tower.

Currently, Related is building 360 Rosemary, a 20-story, 300,000-square-foot office tower next to Rosemary Square.

And Related plans to start construction later this year on another office tower: One Flagler, a 25-story, 270,000-square-foot tower planned for Flagler Drive and Okeechobee Boulevard.

But the grand dame of the West Palm Beach office market is and always has been Phillips Point.

The Class A, twin-tower complex, built in 1985, has always housed the city’s top tenants. The property’s location — at Flagler Drive and Lakeview Avenue, just over the Royal Palm Bridge from Palm Beach — offers tenants water views amid luxury finishes.

Phillips Point features financial firms Morgan Stanley and Goldman Sachs. The complex also counts top law firms as tenants, including Greenberg Traurig, Gunster and Akerman, and Senterfitt & Eidson.

The Phillips Point purchase gives Ross dominance in the West Palm Beach office market as well as ownership of a longtime premier property, said Neil Merin, chairman of NAI/Merin Hunter Codman in West Palm Beach.

Merin said the acquisition “means Mr. Ross will be controlling the Class A space downtown, which will give some stability to pricing and could lead to an upward movement in rental rates.”

Merin added that Phillips Point has shown strong economic performance “and will do very well with the continued (movement) of financial service firms here.”

Thanks to the pandemic, coupled with high taxes in other states, a number of financial firms are looking for space in South Florida, particularly in Palm Beach County.

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Frenzied Palm Beach Home Market Has Buyers Bidding Sight Unseen

The following is an excerpt from the original article written by Amanda L Gordon on Bloomberg.com: View Link | View PDF

101 Palmetto Lane in West Palm Beach sold for $6.1 million. Sabra Kirkpatrick represented the seller.
  • Prices in Florida enclave are soaring with limited offerings
  • ‘A seller’s market like I’ve never experienced,’ an agent says

“Anyone with money is fleeing New York and coming here,” said Guy Clark, an agent with Douglas Elliman Real Estate. “It’s a seller’s market like I’ve never experienced.”

Some of the migration is paired with job relocation, as Wall Street firms and hedge funds set up bases in the Sunshine State. Others are pandemic refugees looking to flee Covid hotspots or take advantage of Florida’s lack of a state income tax. And some are billionaires increasing their footprints, such as Steve Wynn’s purchase of an additional Palm Beach home for $18.4 million last month, or Robert F. Smith’s $48.2 million acquisition of two properties in North Palm Beach.

The Palm Beach County Clerk’s office recorded more than 20 home sales last year exceeding $20 million, compared with 10 in 2019, according to the Palm Beach Daily News. Early next month, a home on North Ocean Boulevard is scheduled to go on the market for $75 million, fully furnished by designer Sara McCann with everything from chaise lounges to frying pans.

Unlike the aftermath of the 2008 financial crisis, which brought a glut of supply and sharp price decreases, there’s now very little in the way of offerings to show potential buyers.

“We’ve gone from anxiety buying to there’s no inventory and what am I going do?” said Liza Pulitzer, senior associate at Brown Harris Stevens. “We’ve even had people buy an interim house when they couldn’t find a rental.”

As for changes in residency, Florida makes it easy to domicile, while New York has a high bar to let people depart. Lawyer Paul Comeau of Hodgson Russ expects plenty of tax audits by New York state for the pandemic year of 2020. New York also issued guidance that employees working remotely outside the state would still be on the hook for city taxes unless the employer has local offices.

Esperante Corporate Center: 222 Lakeview Avenue, West Palm Beach, FL

Migrants have started to look at renting office space, according to Lesley Sheinberg and Barbara LeBrun of NAI/Merin Hunter Codman, who represent the Esperante building in downtown West Palm Beach.

“Every single showing this week we have there is from people up north or different states, either wanting to have a presence here, so they don’t have to commute back and forth, or wanting to get out and move their firm here,” Sheinberg said.

“The residential market is driving this,” LeBrun said.

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2020 SFBJ Market Review Panel featuring Neil E. Merin, SIOR, CCIM

The following is an excerpt of the article originally posted by the South Florida Business Journal by Brian Bandell. View Full Article: PDF | Link

There were many frightening months in the South Florida real estate sector in 2020 amid the Covid-19 pandemic, but experts expect the market to bounce back.

Just how quickly that recovery occurs depends on the type of real estate.

Single-family homes and industrial properties are already thriving. Office and retail space have a cloudy outlook, depending on how much the trends of remote work and e-commerce, respectively, impact business. The fate of hotels depends on the type of visitor they serve, and how quickly they’re likely to resume traveling.

Those were some of the takeaways from the Business Journal’s seventh annual Market Review panel, held virtually and broadcast online Dec. 15

Berkowitz Pollack Brant Advisors + CPAs and First Horizon Bank sponsored the discussion, which was moderated by Senior Reporter Brian Bandell.

Some of South Florida’s top players in the areas of retail, industrial, office and residential real estate recently gathered for the Business Journal’s seventh annual Market Review panel, a virtual affair where the experts reviewed some of the current – and future – trends impacting the tri-county region.

The spirited conversation highlighted how the Covid-19 pandemic is fueling certain real estate sectors while hurting others, and what the region’s top industry could experience in 2021.

MEET THE PANEL:

Art Lieberman, Director of tax services, Berkowitz Pollack Brant Advisors + CPAs

Neil E. Merin, SIOR, CCIM, Chairman, NAI/Merin Hunter Codman

Dev Motwani, President and CEO, Merrimac Ventures

Peggy Olin, CEO, OneWorld Properties

Stephanie Rodriguez, Senior VP, Florida region, Duke Realty

Andrew Zidar, VP of development and acquisition, RK Centers

QUOTABLLES

What South Florida real estate sectors will have a really bright outlook for 2021?

Neil Merin, NAI/Merin Hunter Codman: “The brightest outlook is single-family housing. Housing sales right now are running 125% ahead of the same time last year.”

Peggy Olin, OneWorld Properties: “Single-family homes. Everyone had the dream of being in South Florida and this [Covid-19] has really accelerated that decision. The level of prices we are seeing trading on the single-family home side and some of the high-end condos, as well, are amazing to see, and I think we will continue to see it.”

Stephanie Rodriguez, Duke Realty: “On the industrial side, institutional developers put a pause on spec development [in the first quarter]. But there was a shift in our business and an acceleration in demand, and we are pulling off that band-aid and going full throttle.”

Dev Motwani, Merrimac Ventures: “With Elliot [Management], and Blackstone and Goldman [Sachs] announcing moves here, the rest will follow because they realize this is a great place to do business. That will benefit the residential market. That will benefit the office market. That’s going to benefit retail, and certainly industrial.”

Art Lieberman, Berkowitz Pollack Brant Advisors + CPAs: “You are seeing a lot of opportunity zone projects starting to come online. Leasing to businesses looking for opportunity zone tax benefits will start to trend.”

What sectors of real estate are probably going to struggle in 2021?

Neil Merin, NAI/Merin Hunter Codman: “Hospitality and retail. There will be a permanent impairment to hospitality in the business travel sector. Retail is a reimagining.”

Andrew Zidar, RK Centers: “It’s survival of the fittest on the retail side. There will continue to be fallout over the next year or two. There will be names in retail we have known for a long time that cease to exist.”

Dev Motwani, Merrimac Ventures: “We’ve always been a great hospitality and cruise market, and those markets are going to take a little longer to rebound in 2021 as people get comfortable traveling again.”

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PRESS RELEASE: Esperante Office Building Hires Dynamic and Diverse Leasing Team in Downtown West Palm Beach

NAI/Merin Hunter Codman tapped to lease iconic Esperante Corporate Center.

West Palm Beach, Fla. – NAI/Merin Hunter Codman, Palm Beach County’s leading commercial real estate firm, is proud to announce that it has been retained to oversee all leasing for the iconic 20-story, 256,000 square-foot, Esperante Corporate Center located in the heart of downtown West Palm Beach at 222 Lakeview Avenue.

RedSky Capital, who purchased this premier trophy property in 2016 and recently completed over $8 million in property renovations, awarded the leasing assignment to one of NAI/Merin Hunter Codman’s most diverse, experienced and productive leasing teams. The office leasing for Esperante Corporate Center will be led by Managing Directors Lesley Sheinberg and Barbara LeBrun, SIOR who will be supported by Commercial Associate Alexandra Bazo with the retail portion of the property being handled by NAI/Merin Hunter Codman’s long-time Retail Service Group Managing Director Bruce Corn.

“Esperante Corporate Center has been an iconic part of the West Palm Beach skyline since 1989. NAI/Merin Hunter Codman has been a force in the Palm Beach County commercial real estate marketplace just as long, if not longer. Their long-term local market leadership, local and global connections, and proven track record made them a perfect fit to represent Esperante,” cited Ben Stokes, Principal of RedSky Capital.

NAI/Merin Hunter Codman’s Lesley Sheinberg added, “Esperante is a premier commercial property, offering an array of first-class amenities and services. The stunning renovations combined with the exciting retail aspect of the property makes it a highly competitive prospect for out-of-state firms coming to South Florida to take advantage of our favorable and tax-friendly business climate along with our incomparable lifestyle. We are seeing more and more businesses leaving large metropolitan areas and relocating to West Palm Beach in response to the challenges posed by the coronavirus. Esperante’s owners and our team welcome the opportunity to introduce this one-of-a-kind downtown West Palm Beach jewel to office and retail users across the country.”

Esperante Corporate Center offers a variety of floor plans to suit multiple needs, including build-to-suit and move-in ready options for boutique and corporate headquarter users alike. The building is currently offering ±600-35,000 square feet of office space with full floor opportunities and retail space from ±600-2,400 square feet, including high-visibility café opportunities. To learn more please visit EsperanteWPB.com or call 561-471-8000.

CLICK HERE to view the full Press Release.

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Major hedge fund moving to West Palm Beach from New York

View the original article by Alexandra Clough, Palm Beach Post | View PDF of article

A $41 billion hedge fund based in New York plans to temporarily lease space in the Phillips Point office complex as part of a larger move to bring its headquarters to West Palm Beach, three real estate sources said on Thursday.

Phillips Pointe in Downtown West Palm Beach

Paul Singer’s Elliott Management Corp. also will open an office in Greenwich, Ct., as well as keep a presence in Manhattan, according to Bloomberg News, which first reported Elliott’s move to West Palm Beach but did not identify a location.

Real estate experts familiar with Elliott’s search said the firm will sublease 7,600 square feet of space belonging to the Arnold and Porter law firm at Phillips Point, a twin-tower office complex at 777 S. Flagler Drive, overlooking the Intracoastal Waterway.

The short-term lease is temporary space until Elliott can open more permanent offices of at least 25,000 square feet. The likely landing spot: 360 Rosemary, the new office building under construction by Related Cos. at Rosemary Square, according to two real estate sources.

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WPB Isn’t Worried About Downtown Office Space

The following is an excerpt from an article originally published in The Palm Beach Post by Alexandra Clough. VIEW LINK | VIEW PDF

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.

Lannis Waters, The Palm Beach Post

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.

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The Future of Office Space

The following article was published in the Fall 2020 Palm Beach County Quarterly Economic Development Magazine from the Business Development Board of Palm Beach County.

Palm Beach County’s office market may wind up benefiting from the changing national work-from-anywhere landscape. “I believe our market will be more attractive to companies from the crowded Northeast seeking to relocate here,” said Jeffrey M. Kelly, executive vice president, CBRE in Boca Raton. “But in the short-term, availabilities will increase. I believe this is a hiccup and am optimistic that we will recover.”

Neil Merin, Chairman, NAI/Merin Hunter Codman in West Palm Beach, says the work-from-home trend due to the COVID-19 health threat has shown that people don’t have to be in a large office to stay connected. “Owners and executives with small offices in Palm Beach County are finding they can spend more time here,” Merin said. “That portends more movement away from the big Northeast cities to offices here.”

Meanwhile, the need for social distancing at work may change the size and configuration of office spaces, added Merin. While some businesses may downsize and try to sublet their current space, others will retain their current footprints, even if there are fewer employees on the premises at any one time.

“There will be lower demand for co-working spaces until the pandemic has receded,” Merin said.

Another trend will be the need to provide healthy office workspaces, including stepped-up sanitation and ventilation systems. “When employees are spending eight or 10 hours a day in an office, they want to feel safe,” he added. Common areas like kitchens and lounges may also need to be reconfigured for employees taking a break during the day.

Jeff Kelly expects a lower employee headcount in office spaces to drive down the need for on-site parking. “That’s a positive because land in Palm Beach County is so valuable,” he said. “It may lead to some creative uses of that extra space.”

As for new construction, Jeff Kelly said some buildings under construction, like 360 Rosemary in West Palm Beach, are likely to be completed on schedule, while others may be delayed until preleasing commitments support the financial investment. “Fortunately, Palm Beach County is not a big office market, and a few major leases could move the vacancy rate downward significantly.”

VIEW THE PUBLISHED ARTICLE | VIEW THE FULL FALL 2020 ISSUE

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PRESS RELEASE: Lockdowns Have Not Locked Up Commercial Real Estate Transactions

— Two of NAI/Merin Hunter Codman’s commercial real estate experts discuss what it takes to close transactions during the COVID-19 pandemic. —

West Palm Beach, Fla. – NAI/Merin Hunter Codman, Palm Beach County’s leading commercial real estate firm, acknowledges that commercial real estate transaction activity has slowed throughout the first six months of the COVID-19 pandemic but the firm notes that it has not been locked down entirely. Two of the firm’s seasoned veteran brokers, retail expert Bruce Corn and office market specialist Adam Starr, have successfully completed nearly $10,000,000 in lease and sale transactions while most of South Florida’s shelter-in-place mandates remain in place. The secret to their success has been what they have always done… servicing their long-time clients with updated market intelligence and creative deal making options.

Bruce Corn

Long-time office veteran Adam Starr and retail expert Bruce Corn represent two different commercial real estate market sectors, but they have two things in common – expertise in navigating positive and negative market cycles, as well as long-term, trusted client relationships.

Local office market expert, Adam Starr, who joined NAI/Merin Hunter Codman in January 2020, just six weeks prior to the pandemic shutdown, has facilitated transactions in excess of $5.4 million on behalf of his clients, completing lease transactions in excess of $4.5 million and one building sale in Jacksonville, on behalf of a long-time local client, for $910,000, completed just last week.

Adam Starr

Bruce Corn, who has led NAI/Merin Hunter Codman’s retail services for nearly 30 years, has completed both sales and lease transactions totaling over $5.5 million on behalf of his clients.

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How has COVID-19 affected local, medically zoned commercial real estate?

As featured in Palm Beach County Medical Society

Lesley Sheinberg, NAI/Merin Hunter Codman medical commercial real estate specialist discusses current trends in the local medical real estate market.

It’s no secret that the effects of COVID-19’s social distancing and shelter-in-place mandates have resulted in challenges for the commercial real estate market locally and beyond. One would think that medical properties would thrive during a health-related crisis. However, the real estate market is no more resilient than other sectors, and despite their high demand, not even medical properties are immune.

South Florida, a cited COVID-19 hot spot, put local stay-at-home and social distancing orders in place earlier and longer than other areas of Florida. The March 20, 2020 Executive Order prohibiting medical professionals from performing “unnecessary, non-urgent or non-emergency procedures or surgery” are just now being lifted. These orders resulted in patients refraining from visiting their local doctors for normal basic services as well as non-urgent matters. Simultaneously, urgent care and hospital providers themselves faced sharp increases in costs. The American Hospital Association’s recent report, Hospitals and Health Systems Face Unprecedented Financial Pressures Due to COVID-19, cited, “a total four-month financial impact of $202.6 billion in losses for America’s hospitals and health systems, or an average of $50.7 billion per month”.

As we all wait and hope for a return to normal and improving economic conditions, those making real estate decisions need to be cognizant of the near-term impacts on the medical commercial real estate market. These include:

  1. A large number of leasing, acquisition and dispositions being put on hold;
  2. Fewer previously planned developments being likely to break ground;
  3. Fewer healthcare firm mergers and acquisitions are likely to take place.

On a positive note, healthcare should be one of the few economic sectors to accelerate staffing, and there may be increased funding available for research, facilities/equipment, and preparedness planning.

If your practice is at a point where you want to consider long term growth or resizing, this may be a prime time to:

a. Negotiate an advantageous lease rate for a longer term with better build-out concessions to accommodate square footage needs.
b. Consider purchasing a property at a lower price point than prior to the pandemic, as many second quarter 2020 deals have fallen through or are on hold.

If your practice is struggling, my best piece of advice is to have an open and honest line of communication with your current landlord. Landlords are generally taking a realistic approach with clients that they believe will be assets to their properties over the long term. As a medical real estate specialist, I am happy to counsel my clients regarding their options including a lease review, and an identification of potential opportunities to expand, contract, trade-up, acquire or dispose of commercial real estate. Working with my colleagues at NAI/Merin Hunter Codman, we can utilize our expertise to assist tenants and landlords as they work through today’s challenges. Whether your question is big or small, don’t hesitate to reach out for a free consultation.

To reach Lesley Sheinberg please call 561-254-7810 or 561-471-8000.

CLICK HERE to view the full PDF Release | CLICK HERE to view the printed article.

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