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.

Brokerage General

MHCommercial Real Estate Fund and Waterfall Asset Management Acquire Prestigious Palm Beach Office Project – Golden Bear Plaza – for $49,750,000

— 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.

Click here to read the full Press Release.

Brokerage General Press Releases Property Management Transactions

Billionaire Jeff Greene battles with WPB mayor over unfinished office building

The following excerpt was originally written by Katherine Kallergis and Keith Larsen of The Real DealClick here to view the full article.

Two weeks ago, billionaire developer Jeff Greene threatened to stop construction of a two-tower, 30-story mixed-use project in downtown West Palm Beach.

Jeff Greene and a rendering of 550 North Quadrille Boulevard (Credit: Arquitectonica International via Facebook)

Greene, who told the Palm Beach Post in late April that he would “leave the shell up” because the city was resistant to approve a zoning request, is changing his tune. Now, he’s saying that he will build the project at 550 North Quadrille Boulevard as is, but at a slower pace, if he can’t get the property rezoned. Greene wants to change the project’s zoning from hotel, office space and multifamily to all multifamily.

West Palm Beach’s Central Business District has 673,350 square feet of Class A office space under construction, with an average asking rent of $54.39 per square foot, according to Colliers International South Florida’s first quarter report.

Neil Merin, chairman of the commercial real estate firm NAI Merin Hunter Codman, said the city has shown that it can only absorb one new Class A office building every 10 years.

To go forward with the office component of the One West Palm project “seems to be silly,” Greene said. He’s already invested $100 million into construction.

Want to read the full story? View PDF | View Link

General News Articles

DEALS FORECAST: Predictions about the future of South Florida real estate

The following excerpt was originally written by the South Florida Business Journal. Click here to view the full article.

Before the novel coronavirus infected the South Florida real estate industry, it was always clear whether it was a buyer’s or seller’s market.

But, like most industries, it’s a sector of the region’s economy that’s not immune to the virus, formally known as Covid-19.

An abundance of confidence in South Florida’s most valuable sector has morphed into a wealth of unpredictability in recent weeks.

The Business Journal reached out to local experts — many of whom have weathered previous downturns — to get their take on what the future might look like for each segment of the region’s booming real estate industry: residential, industrial, office, retail and hospitality.

We also asked professionals how the coronavirus affected their deal flow. The results of a Business Journal survey offer a rough picture of an industry at a standstill.

From small companies to large ones, a majority told us that the pandemic greatly slowed or halted deal flow. Most say that’s because of uncertainties among buyers and sellers.

Neil Merin offered his take on the office sector below.

“There will be a slightly higher vacancy rate because some companies will totally fail. Some tenants will renegotiate their rent. Some see it as a way to preserve cash.” – Neil Merin, Chairman, NAI Merin Hunter Codman

What do other professionals have to say? How will each sector feel COVID-19’s impact? See the original article here: View PDF | View Article

General News Articles

Tuesday’s Tour of the Day: 951 Yamato

Check out the stunning 951 Yamato office building in Boca Raton!

A 146,000 square foot Boca Raton Class-A office building featuring a stunning atrium, lush interior courtyard, concierge services and electric car chargers. 951 Yamato is located in Boca Raton, midway between Broward and Palm Beach County business markets and just one mile from I-95 with a Tri-Rail Shuttle stop at the building. Searching for the perfect office suite for lease? 951 Yamato offers small and medium move-in ready spec suites, as well as corporate headquarter sized space for lease. Now ENERGY STAR rated!

Call Jay Grossman or Rich Brockney today at 561-471-8000 to learn more about office space for lease in Boca Raton.

General Property Management Tour of the Day

Tuesday’s Tour of the Day: Gardens Pointe

Check out Gardens Pointe!

Class-A office space for lease in the heart of Palm Beach Gardens. Gardens Pointe is a well appointed property featuring an upgraded lobby area, hurricane rated impact glass, fiber optics, high-end finishes and kitchenettes – in addition to lush landscaping, winding lake view paths, ample parking and vehicle charging stations. Gardens Point is surrounded by the finest retail, dining, and office complexes in the city. Adjacent to The Gardens Mall, Downtown Palm Beach Gardens and Legacy Place, tenants can enjoy a multitude of dining and shopping options within walking distance. The property is also in the heart of Palm Beach Garden’s business corridor while conveniently located ¼ mile from I-95, two miles east of the Florida Turnpike and 13 miles to Palm Beach International Airport.

Call Jason Sundook or Christopher Smith at 561-471-8000 to learn more about space for lease in Palm Beach Gardens.

General Property Management Tour of the Day