By Jeff Zbar – Correspondent, South Florida Business Journal
April 30, 2021 – The real estate sector was deemed an essential business during the pandemic. Executives also proved to be resourceful and resilient. Countless new projects in single-family, rental apartment, and condominium residential, as well as warehouse, distribution, and logistics developments, are dotting the map from Miami through greater Fort Lauderdale and north to the Palm Beaches.
The flood has been fueled by workers and executives fleeing higher-cost, lower-quality-of-life regions such as the Northeast, Midwest and even California. They’re seeking a more amenable and less expensive remote work or corporate relocation destination.
This search, in one form or another, is nothing new. It has driven development statewide since before Henry Flagler brought his railway south. Today, it’s spurring billions of dollars in development and cementing the region’s role for more than 1,000 newcomers daily as the nation’s place to live, work, and play.
Beyond resourceful, resilient or even essential, these Power Leaders – and those featured in the 2021 South Florida Business Journal’s new Power Brokers subsection – have proven the real estate sector vital to the region’s health and future. We’re honored to have our very own Neil E. Merin, SIOR, CCIM and Jason L. Sundook, SIOR on the esteemed list.
Ready to see the area’s largest brokerages and their biggest producers?
A Palm Beach Gardens office complex built by Jack Nicklaus’ development company sold for $49.8 million. Terra Funding GB, tied to Alliance HSP, sold the 243,000-square-foot Class A office complex for $204 per square foot to a joint venture between Waterfall Asset Management and MHCommercial Real Estate Fund. The Waterfall Asset Management and MHCommercial Real Estate Fund bought a leasehold interest in Golden Bear Plaza, which means the group only purchased the office buildings, but not the land.
MHCommercial was formed in the fall of 2019 by Dung Lam, Neil Merin and Jordan Paul, principals of West Palm Beach-based NAI/Merin Hunter Codman. Waterfall is a New York-based registered investment advisor. Bryn Mawr, Pennsylvania-based Alliance HSP is led by Clay Hamlin III, Jay Shidler, and Richard Previdi.
Click here to learn more about the prestigious Golden Bear Plaza, including current availabilities and amenities.
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.
The following is an excerpt from the original article written by Amanda L Gordon on Bloomberg.com: View Link | View PDF
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.
“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.
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
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.”
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.”
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.”
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