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.
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.
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.
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.
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.”
— 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.
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.
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.
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:
A large number of leasing, acquisition and dispositions being put on hold;
Fewer previously planned developments being likely to break ground;
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 call561-254-7810 or 561-471-8000.
Click here to view the original article posted by Juniper Square.
Juniper Square’s Strategic Account Directors, Carrie Frugé and Jennifer Sutherland, recently spoke to three leading commercial real estate investors in Florida: Matt Adler, Founder and Managing Principal at Adler Partners; Daryl Shevin, CFO and Principal at 13th Floor Investments; and Neil Merin, Chairman at NAI/Merin Hunter Codman.
Proceeding with caution in uncertain times
Although the panel agreed that the Florida market has a bright future despite unknowns, they were also aware of the current realities.
Merin stated, “The buyers and 90% of the capital that’s out there are looking to see how cheap they can buy things. And that’s freaking sellers out. So sellers aren’t putting properties on the market.”
Buyers feel this is a huge bargain moment. “The way I see it, sellers think it’s January and buyers think it’s July,” said Shevin.
Getting through the current market environment
Merin said the “new normal” requires viewing tenant evaluations through a different lens. “Unless your tenant’s in the PPE supply business, they may not be your tenant next week. Underwriting is going to be a little different now, during this pandemic period. As we consider properties, we’re not just going to look at their financial statement. We want to understand—is this a business that holds up? In retail, six months ago, we used to look for Amazon-proof properties. Now we have to look for COVID-proof tenants.”
Another important tactic mentioned for getting through the downturn is frequent, detailed communication with investors to keep them informed and gauge their needs.
For Merin and his team, technology enables this. “Our primary tool of communication with our investors is Juniper Square. We bring everything into the portal. This allows us to pay monthly to our investors, and report monthly along with the return.”
Being proactive is the key, according to Adler. “You don’t want to be an event communicator. Regularly reporting makes you focused on being very transparent on what the facts are, and not just on waiting for something to happen. That’s a very dangerous game, if you’re waiting for that lease to be signed or that deal to close.”
Looking forward to what lies ahead
As America continues adjusting to life and business during the pandemic, Merin, Adler, and Shevin are rethinking how they approach building management. In addition to protocols such as social distancing, masks, and having ample supplies of hand sanitizer available, Merin cautioned to keep things in perspective.
“At some point, the pandemic will become a distant memory and we won’t have the same fears we do now. In the meantime, you have to observe the fear of the people who work for you, and the people you’re serving as your tenants. You need to be responsive.”
Shevin offered examples of how his business is shifting its residential staging model. “We converted one of our model homes so that the den had a home office. It’s very easy to tell someone, ‘You can make that area a home office.’ But when they walk in and they see the home office, and they see it all set up, it tells a different story.”
Many people love working from home, which is driving relocation from cities like New York to Florida. Merin expects this to continue as workers escape long and crowded commutes, high costs of living, and cold weather.
Merin also predicted that interest rates will continue to stay low, it’ll be easier to borrow money, and the trillions of dollars the government has pumped into the industry will ensure liquidity for the foreseeable future.
As Adler stated, “In 2008 real estate and banks were the catalyst of the financial crisis. This time, banks are part of the solution.”
The following is an excerpt from the original article which can be found here.
Ever since South Florida was pioneered in the 1800s, real estate has shaped the region’s economy. More than 100 years later – through depressions, recessions, and economic tumult – that continues to be the case.
The persistent force behind the local real estate market remains the property owners, developers and real estate brokers who power what remains a significant driver in the South Florida economy.
Though persistent, the individuals reflect the uniquely dynamic nature of South Florida’s real estate marketplace. While 39 are making at least their fifth appearance on the list, 15 are newcomers to the list. Most are frequently mentioned in the pages of the South Florida Business Journal, as they make their mark across the community.
As South Florida emerges from the fallout of recent events, these modern-day pioneers will be the ones who continue to shape the region’s economy and our future successes.
— NAI/Merin Hunter Codman has been retained for the management and leasing of the property –
West Palm Beach, Fla. – MHCommercial Real Estate Fund LLC (“MHC”) a Florida based discretionary private real estate fund has formed a joint venture with Waterfall Asset Management, LLC (“Waterfall”), a New York based institutional asset manager, to acquire Golden Bear Plaza, an iconic 243,000 SF, Class-A, office complex located in Palm Beach Gardens, Florida for $49,750,000.
Golden Bear Plaza, a three-building project originally developed between 1985 and 1990 by Jack Nicklaus’ development company, is a locally recognized landmark with panoramic views of the Intracoastal Waterway and the Atlantic Ocean that serves as home to some of the most prominent tenants in South Florida including AT&T, Otis Elevator Company, Pike Electric, Dycom Industries, NextEra Energy, SlimFast and Zimmer Biomet 3i.
The 90% occupied property is the third acquisition for MHC which was formed in the fall of 2019 by Dung Lam, Neil Merin and Jordan Paul, Principals of West Palm Beach, Florida based NAI/Merin Hunter Codman, Inc. along with Florida based real estate veteran Joe Sprouls to acquire income producing properties with strong cash flow potential in dynamic markets throughout the Southeastern United States. Corey Winsett, MHC Director of Acquisitions and Asset Management, spearheaded the due diligence for MHC working with Shutts & Bowen LLP who served as counsel for the purchaser under the direction of Art Menor.
“We are very pleased to have successfully closed this transaction in a challenging environment,” said MHC Principal Jordan Paul, “Golden Bear Plaza is a trophy asset that aligns perfectly with MHCommercial Real Estate Fund’s investment goal to acquire high-quality assets in growing Southeastern markets. The property benefits from a strong and diverse tenant base and we are particularly pleased to have an exceptional financial partner in Waterfall Asset Management.”
The project represents the first office acquisition in South Florida for Waterfall, a New York based registered investment advisor with approximately $8.8 billion in assets under management as of February 1, 2020. Patti Unti, Managing Director in charge of commercial real estate equity for Waterfall said, “The acquisition of Golden Bear complements our portfolio with the addition of a well performing asset within a desirable sub-market while partnering with a best-in-class local operator, MHC.”
Financing for the project was provided by M&T Bank under the direction of Senior Relationship Manager Steve Potting. MHC Principal Dung Lam, who structured the financing with M&T Bank stated, “The acquisition of Golden Bear fits very nicely with our investment thesis and hurdles. We were able to structure a phenomenal loan with M&T Bank that will allow us to realize this asset’s potential. This was our first deal with M&T Bank and we hope it’s the first of many as we deploy the remaining capital in our fund.”
NAI/Merin Hunter Codman will provide property management and leasing services for the new ownership group under the direction of MHC Principal Neil Merin, SIOR, CCIM who said, “After 17 years of providing leasing and management services at this iconic office project, we are excited to step into an ownership role and continue to operate this first-class office project as part of our portfolio”.
Jason Sundook, SIOR and Lesley Sheinberg will oversee leasing for NAI Merin Hunter Codman and may be contacted at 561-471-8000.
— NAI/Merin Hunter Codman bringing former Canon Solutions Campus to market. —
West Palm Beach, Fla. – The former Canon Solutions America, Inc. customer experience and showroom center, located in the Park at Broken Sound, is being offered for sale by Court Appointed Receiver Neil Merin, Chairman of NAI/Merin Hunter Codman. The receivership is the result of a foreclosure action filed due to a loan default which occurred when Canon’s long-term lease expired. Consisting of 143,290 square feet of office space situated on 12.24 acres in Boca Raton’s premier mixed-use development, the site and building is one of the largest commercial real estate offerings in Boca Raton, Florida.
According to Mr. Merin the property is being offered on an “as-where is” basis. “This is a significant piece of real estate that has generated much interest as a result of the foreclosure,” Mr. Merin stated, “I expect to market the property and accept bids for just a few weeks before selecting a buyer.” The property is located at 5600 Broken Sound Boulevard NW, Boca Raton, Florida 33487. It was constructed in 2002 to the highest corporate levels as a build-to-suit for the former tenant. Features of the property include a full backup generator facility, over 450 on-site parking spaces, an on-site full-service cafeteria with indoor and outdoor seating, and the offices all feature raised floor electrical distribution for easy reconfiguration and layout. Additionally, due to the large site size, there is potential to add significant additional building area to the existing structures.
For additional information about this opportunity please contact Neil. E. Merin, SIOR, CCIM at 561-471-8000.