An aerial view over downtown West Palm Beach, where RH in December 2017 opened an 80,000-square-foot, mansion-like store with a rooftop restaurant.
Source: Indiehouse Films
WEST PALM BEACH, Fla. – Retailers, restaurants, and other business owners want to be where the people are. And people are moving to South Florida in droves.
Some are temporarily withdrawing during the pandemic, away from the cold weather in the north. Others are making a longer-term change, and companies are still committing to decades-long leases.
At Rosemary Square, an open-air mall near downtown West Palm Beach, a West Elm furniture store and Urban Outfitters are scheduled to open in the coming months. They will be joined by a host of new restaurants, including a recently opened local fast-casual taco shop, the health food chain True Food Kitchen, and the trendy Planta restaurant.
Lucid Motors, the electric car company known as a competitor to Tesla, opened its second South Florida location last month in Rosemary Square, which is operated by the related New York-based developer. He joined Lululemon, Anthropologie, Yeti, Tommy Bahama, Sur la Table, RH, and more than a dozen other retailers that, most weekends, are packed with visitors. After shopping, grab a shake from Pura Vida, another recent addition to the complex, and listen to live music on a central lawn.
Source: Indiehouse Films
Across the water on Palm Beach Island, the activity around Worth Avenue is just as lively.
SoulCycle is running an outdoor pop-up window. Her spinning classes are booked on weekends and frequented by outsiders, who are often heard talking about their plans to return to New York or Washington, DC, eventually.
On Worth Avenue, a Rolls Royce lines up behind an Aston Martin behind a Porsche, as couples drive in and out of Tiffany, Chanel and Saks Fifth Avenue on a cloudless and pleasant Saturday afternoon. The exclusive shopping street, what some might call Fifth Avenue of the South, has hardly any vacancies. The notable exception is an empty Neiman Marcus store that the luxury department store chain closed after filing for bankruptcy last year.
Fifth Avenue Flight
Some business owners have had their decisions shaped by the pandemic and have opted for Worth Avenue over Fifth Avenue.
Maurice Moradof and his mother Yafa Moradof left Manhattan in November 2020 to open Yafa Signed Jewelry on Worth Avenue.
Source: Signed Jewels of Yafa
Maurice Moradof and his mother Yafa Moradof fled Manhattan last November to make a long-term bet and open their second high-end jewelry store, Yafa Signed Jewels, on Worth Avenue. They made the move after a wave of looting and riots related to the George Floyd protests took place in Manhattan over the summer. Businesses along New York City’s main streets were taking a heavy hit from Covid restrictions, loss of tourists, and a setback in consumer spending.
“Business was weakening a bit,” Maurice Moradof said of the Fifth Avenue location, which is still open as a studio. “And it got very dangerous in New York City. I didn’t feel comfortable anymore.”
Since opening on Worth Avenue, the business has exceeded expectations, he said. The retailer signed a 25-year lease on the store, he said, which is between a Lilly Pulitzer and Michael Kors.
“There is no recession in Palm Beach … The rich are getting richer,” said Maurice Moradof. “I don’t see New York coming back for at least another two or three years.”
Worth Avenue, in Palm Beach, is one of the main luxury shopping streets in the world.
Jose More | Group of universal images | fake images
Activity in the South Florida real estate market – towering cranes, new tenants, rising rents and few vacancies – paints a considerably different picture than on the streets of SoHo and Fifth Avenue in New York City. And experts say that real estate in the Palm Beach market, in particular, is increasingly sought after.
“There is national migration from New York, New England, Toronto, Montreal … we’re also seeing people from Chicago and California,” said Drew Schaul, senior vice president of advisory and transaction services at commercial real estate firm CBRE. , specialized in South Florida. “They are licking their chops to be here.”
Some Wall Street financial institutions have also made the leap, citing lifestyle and tax benefits for their decisions. Goldman Sachs is reportedly searching the Palm Beach market for new office space, while Paul Singer’s Elliott Management has moved its headquarters to West Palm Beach from downtown Manhattan.
According to Redfin, a technology-based real estate agency, 56.1% of Palm Beach County home searches during the fourth quarter came from outside the county. Searches from Chicago and Brooklyn were the most popular sources out of state, the firm said.
“Everything that is happening in Palm Beach and around downtown West Palm is a great story,” he said. “And one of the great catalysts, I think, was what Rosemary Square did to attract new customers.”
Even some internet first brands are looking to test the waters in West Palm, in the Related development, which used to be known as City Place until a marketing review in early 2019.
Three businesses: Faherty, a men’s and women’s clothing retailer; Solid & Striped, a swimwear brand; and Mint & Rose, a footwear and accessories company that brings products from Spain, opened pop-up locations in Rosemary Square earlier this year. And all are operated by Leap, a company that helps online retailers find spaces, sign leases and open stores.
“This is a great example of a market that is going to prosper,” said Amish Tolia, Co-Founder and Co-CEO of Leap. “Rosemary Square attracts from multiple different business areas … and we think it will only get better from here.”
Influx of new residents
“Based on what we’re seeing,” Toila said, “we plan to do more in South Florida.”
Lucid Motors opened its sixth location in the United States in January, in Rosemary Square.
What Toila and many other real estate developers see is an influx of people looking to make Palm Beach and the surrounding neighborhoods their home. The pleasant weather and the escape from high taxes have long been attractive, even before the pandemic. But especially now.
There were 289 single-family transactions in Palm Beach in 2020, up 122% from the previous year, according to a report by realtor Suzanne Frisbie of the luxury firm Premier Estate Properties. The year ended “with often staggering and record highs,” he said, which will run through 2021.
Private equity mogul Scott Shleifer has reportedly just closed a beachfront mansion in Palm Beach, paying more than $ 120 million and setting a record for residential sales in Florida and marking one of the most expensive home sales in the country. .
Homes are coming off the market and the boom in other residential construction is a sign that supply remains limited. Related, for example, is still mapping out a couple of high-profile rental communities. One will sit on the site of a former Macy’s department store near Rosemary Square. It has also sped up construction of a 20-story office tower, also adjacent to Rosemary Square, as the pandemic fueled demand that few could have predicted.
Retail rents go up
“Twenty-five years ago, West Palm Beach, as you can imagine, was a very different place with a lot of seasonality,” said Gopal Rajegowda, partner in Related’s southeast office. “But the market began to mature. And indeed, it began to look and feel like a real city.”
“We see the quality and caliber of people going up, and a lot of that is being driven by people moving here from the Northeast and the Midwest,” he said. “Now, we believe that Covid is really accelerating growth in market maturity.”
As demand increases and more retailers and restaurants move to the area, commercial real estate rentals in the South Florida market have also rebounded.
Retail rents in the Palm Beach area, which includes West Palm Beach, increased 2.6% in the past 12 months compared to historical average rental growth of 1.7%, according to data from CBRE. For comparison, in New York, retail rents are down 4.9% from a year earlier, on average, compared to historic growth of 1.6%, the real estate firm found.
“It’s not as bad a story here as it is in many other parts of the country,” said Marty Arrivo, founder and CEO of Acre, a real estate consultancy that has been helping to lease space in South Florida.
“San Francisco is a mess, Los Angeles is a mess, New York is a mess, Chicago is freezing,” he said. “Now all of a sudden, relatively speaking, all these global brands are heading to South Florida and saying, ‘It’s open to the public, the weather’s good.’ We have to focus if we weren’t already here. down ‘”.