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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.

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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.

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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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NEWS PICK-UPS: Esperante Hires Dynamic MHC Leasing Team

Thanks to the following media organizations who have picked up our Press Release about the leasing assignment of the iconic Esperante Corporate Center in West Palm Beach.

South Florida Business Wealth Magazine: View Link | View PDF

Palm Beach Post: View Link | View PDF

South Florida’s Office Brokers Association: View Link | View PDF

CRE Sources: View Link | View PDF

Palm Beach Chamber North: View Link | View PDF

Boca Raton Chamber: View Link | View PDF

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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.

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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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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 Deal. Click 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

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Tuesday’s Tour of the Day: Centurion Tower

Check out Centurion Tower, a first-class office building near downtown West Palm Beach.

Centurion Tower delivers downtown West Palm Beach Class-A office space amenities at a suburban price point. Centurion Tower is a 144,000-square foot, 14-story, Class-A office building which features an attached 5-story parking garage with covered access, ample surface parking, 24-hour security with closed circuit TV monitoring system, and separately metered, multi-zoned HVAC with no overtime HVAC charges.

Centurion Tower is located just off of Palm Beach Lakes Blvd on Forum Place, less than a minute to I-95 and the Palm Beach Outlets with numerous restaurants, shops and banks within walking distance. Palm Beach International Airport, the County Courthouse, and Downtown West Palm Beach are also just a short drive away.

Call Christopher T. Smith or Shelbi Quinn at 561-471-8000 and come experience Centurion Tower’s stunning golf course and water views today. Don’t forget to ask about Centurion Tower’s recently completed move-in ready spec suites available for lease.

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NEWS PICK-UP: Coronavirus Florida; One West Palm complex, partly built, could halt construction for years

The following excerpt was originally written by Alexandra Clough of The Palm Bach Post. Click here to view the full article.

Photo by: Greg Lovett/palmbeachpost.com

A $250 million twin-tower complex in West Palm Beach is likely to stop construction within days, leaving the city with skeletal towers that could stand as unbuilt eyesores for the next decade.

Palm Beach billionaire Jeff Greene, who is developing the 30-story One West Palm apartment-hotel-office complex, said on Tuesday he is about to pull the plug on construction, three stories shy of reaching the top, because the city is pushing back against his request for a zoning change.

Greene wants to build apartments in a northeast tower, rather than the offices and hotel slated for the space. The southwest tower already is approved for 328 apartments.

With the coronavirus pandemic putting a halt to tourism and shuttering offices nationwide, office space and hotel rooms no longer work, Greene said. He said financing sources for the 200,000 square feet of office and 201-room hotel have collapsed, and a hotel partner withdrew.

Even before the pandemic, Greene said his real estate brokerage could not find even one office tenant willing to lease space in the project, a reflection of the market’s thin demand for new office space downtown.

Real estate experts said Greene’s concerns about office space are valid.

Last year, experts began warning that West Palm Beach’s downtown office market was loaded with empty space, even though business leaders insisted the city needed more space to lure employers.

The city’s existing offices buildings, including its Class A towers, had floors of vacant sublease space. This resulted in a shadow vacancy rate of about 17 percent downtown, said Neil Merin, chairman of NAI/Merin Hunter Codman in West Palm Beach.

Historically, downtown West Palm Beach can only absorb one new office tower every 10 years, Merin said. In addition to One West Palm, the 300,000-square-foot 360 Rosemary office tower also began construction last year.

With businesses alarmed by the pandemic or financially damaged by the tumbling economy, the outlook for urban office leasing is unpredictable.

Some theories predict office tenants will flock to less dense, suburban offices, Merin said.

Others predict companies will shrink their office space to save money on overhead while continuing to let employees work from home.

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

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NEWS PICK-UP: Northbridge Centre Trades Hands for $98 Million

Please enjoy excerpts below from the original article by Alexandra Clough, Business Writer at the Palm Beach Post, featuring insights from Neil Merin. View PDF | View Article Link

The Northbridge Centre office tower last week traded hands for $98 million, as investors continue to pour money into West Palm Beach property. The 21-story office tower at 515 N. Flagler Drive sold to 515 N. Flagler Drive Owner LLC, a partnership of C-III Capital Partners and Vanderbilt Office Properties, according to sources. The tower’s prior sale was in 2016, when it sold for $68 million.

Photo credit: ThePublishedReporter.com

The Northbridge sale took place after its recent owners, Connecticut-based Greenfield Partners and Crocker Partners of Boca Raton, spent three years and an estimated $15 million upgrading the office complex.

The black-glass office tower, nicknamed the Darth Vader building, underwent a renovation that included upgrades to its lobby and common areas and the construction of a conference facility. Some space was built out for prospective tenants, too.

The 294,000-square-foot Northbridge leased up with law firms and hedge funds but reportedly lost out on a big tenant, WeWork, the trendy co-working space. Word is WeWork took a hard look at Northbridge but decided not to lease space in West Palm Beach. Instead, the co-working space leased four floors in a new office tower in Miami.

As it stands, Northbridge still has plenty of vacant space, at a time when two new office complexes, Rosemary 360 and One West Palm, are being built.

Peter Reed, Managing Partner of Commercial Florida Realty Services, which handled Northbridge’s leasing, said new tenants such as Evercore Wealth Management and Atlantic Street Capital bolstered the county’s efforts to brand downtown West Palm Beach the “Flagler Financial District.” Law firms such as Fisher Potter Hodas also took space in the tower, which Reed, a golf aficionado, said was a “chip shot” away from the courthouse.

Nevertheless, Neil Merin, chairman of NAI/Merin Hunter Codman in West Palm Beach, said the office tower still has about 54,000 square feet of vacant space. Merin said two full floors remain vacant, meaning that tenants wanting to be on the water still have good choices for space.

Brokers say there’s already plenty of office space available in downtown West Palm Beach right now. In fact, Merin recently made a presentation before an Urban Land Institute conference in West Palm Beach on the topic. In his speech, he noted downtown’s 17 percent vacancy rate, featuring about 285,000 square feet of available space.

360 Rosemary Square, a 297,000 SF Class-A office development coming to West Palm Beach. Photo Credit: http://www.rosemarysquarewpb.com

Brokers characterized the West Palm Beach office market as a “move around market,” with new office buildings usually poaching tenants from existing buildings. Few large new office users come to the market. The Comvest deal is a perfect example of this trend, they said.

This fact contradicts statements by developers, business and government leaders who maintain there is an immediate and desperate need for more Class A space downtown.

Merin said in the short term, the supply of office space might swell to more than 786,000 square feet with the addition of two more office complexes, keeping office rents in check.

In the long run, however, Merin expects downtown West Palm Beach’s office space will fill up as more financial and business firms move to Florida from high-tax states in the Northeast.

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