An aerial view of downtown West Palm Beach, where RH opened an 80,000 square foot mansion-like store with a rooftop restaurant in December 2017.
Source: Independent films
WEST PALM BEACH, Fla .– Retailers, restaurants and other business leaders want to be where the people are. And people are moving to South Florida in droves.
Some are taking temporary retirement during the pandemic, away from the cold weather in the North. Others are making longer-term change, and companies follow suit by committing to multi-decade leases.
In Rosemary Square, an outdoor mall located near downtown West Palm Beach, a West Elm furniture store, and Urban Outfitters are slated to open in the coming months. They will be joined by a slew of new restaurants, including a newly opened local and casual taco shop, health chain True Food Kitchen and 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 New York-based developer Related. He’s joined Lululemon, Anthropologie, Yeti, Tommy Bahama, Sur la Table, RH and over a dozen other retailers who are packed with visitors most weekends. After shopping, grab a smoothie from Pura Vida, another recent addition to the resort, and listen to live music on a central lawn.
Rosemary Square
Source: Independent films
Across the water on Palm Beach Island, the activity around Worth Avenue is just as lively.
SoulCycle performs an exterior pop-up. His spinning classes are booked on weekends and are attended by outsiders, who are often overheard discussing their plans to return to New York or Washington, DC – possibly.
On Worth Avenue, a Rolls Royce lines up behind an Aston Martin behind a Porsche, as couples walk in and out of Tiffany, Chanel and Saks Fifth Avenue on a cloudless and balmy Saturday afternoon. The upscale shopping street, which some might call Southern Fifth Avenue, has virtually no 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 seen their decisions shaped by the pandemic and have gone to Worth Avenue over Fifth Avenue.
Maurice Moradof and his mother Yafa Moradof left Manhattan in November 2020 to open Yafa Signed Jewels on Worth Avenue.
Source: Jewelry signed 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 acted after a wave of looting and riots linked to the George Floyd protests took place in Manhattan during the summer. Businesses along New York’s main streets have been hit hard due to Covid restrictions, loss of tourists and a decline in consumer spending.
“The business was getting a little weak,” Maurice Moradof said of the location of Fifth Avenue, which is still open as a studio. “And it got very dangerous in New York. I just didn’t feel comfortable anymore.”
Since opening on Worth Avenue, business has exceeded expectations, he said. The retailer signed a 25-year lease on the store, he said, which sits 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 two or three years.”
Worth Avenue in Palm Beach is one of the world’s premier high-end shopping streets.
Jose More | Universal Images Group | Getty Images
Activity in the South Florida real estate market – towering cranes, new tenants arriving, rising rents, and few vacant homes – paints a dramatically different picture than New York’s SoHo and Fifth Avenue streets. And experts say that real estate in the Palm Beach market, in particular, is increasingly in demand.
“There is in-migration from New York, New England, Toronto, Montreal … we also see people from Chicago and California,” said Drew Schaul, senior vice president of consulting services and transaction for the commercial real estate company CBRE, specializing in South Florida. “They’re licking their chops to be here.”
Some Wall Street financial institutions have also taken the leap, citing tax and lifestyle advantages for their decisions. Goldman Sachs is eyeing the Palm Beach market for new office space, while Paul Singer’s Elliott Management has moved its headquarters to West Palm Beach from midtown Manhattan.
According to Redfin, a technology-based real estate broker, 56.1% of housing searches for Palm Beach County in the fourth quarter came from outside the county. Research from Chicago and Brooklyn was the most popular extra-state origins, the company said.
“Everything that’s going on in Palm Beach and surrounding downtown West Palm is a great story,” he said. “And one of the main catalysts, I think, was what Rosemary Square did to attract new customers.”
Even some innovative brands on the internet are looking to test the waters of West Palm, as part of the development of Related, formerly known as City Place until a marketing overhaul in early 2019.
Three companies – Faherty, a retailer of men’s and women’s clothing; Solid & Striped, a swimwear brand; and Mint & Rose, a footwear and accessories company that brings goods from Spain – opened pop-up locations in Rosemary Square earlier this year. And they’re all run by Leap, a company that helps online retailers find spaces, sign leases, and open stores.
“This is a great example of a market that will thrive,” said Amish Tolia, co-founder and co-CEO of Leap. “Rosemary Square pulls from several different shopping areas … and we think it will only get better from here.”
Influx of new residents
“Based on what we’re seeing,” Toila said, “we fully intend to do more in South Florida.”
Lucid Motors opened its sixth branch in the United States in January, in Rosemary Square.
Source: Related
What Toila and many other real estate developers are seeing is an influx of people looking to relocate to Palm Beach and the surrounding neighborhoods. The comfortable climate and the avoidance of high taxes have long been a draw, 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 real estate agent Suzanne Frisbie of luxury firm Premier Estate Properties. The year ended “with often staggering and record highs,” she said, which extend into 2021.
Private equity mogul Scott Shleifer just closed a beachfront mansion in Palm Beach, paying over $ 120 million and setting a Florida residential sales record and marking one of the most expensive home sales in the world. country.
Homes are flying off the market, and the booming construction of other residential spaces is a sign that supply remains limited. Associate, for example, is still charting a pair of high-level rental communities. One will be seated on the site of a former Macy’s department store near Rosemary Square. He also accelerated construction of a 20-story office tower, also next to Rosemary Square, as the pandemic brought demand that few could have anticipated.
Rents for businesses on the rise
“Twenty-five years ago, West Palm Beach, as you can imagine, was a very different place with a lot of seasonality,” said Gopal Rajegowda, an associate in Related’s southeast office. “But the market started to mature. And, indeed, it started to look and feel like a real city.”
“We’re seeing the quality and caliber of people increase, and a lot of that is driven by people who come here from the Northeast and the Midwest,” he said. “Now we think Covid is really accelerating the growth of market maturity.”
As demand increases and more retailers and restaurants settle in the area, commercial real estate rents in the South Florida market have also increased.
Retail rents in the Palm Beach area, which includes West Palm Beach, have risen 2.6% in the past 12 months compared to historic average rent growth of 1.7%, data shows by CBRE. By comparison, in New York City, retail rents are down 4.9% from a year ago, on average, compared to historic growth of 1.6%, the real estate company found. .
“The story is not as bad 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 helped rent space in the south of the country. Florida.
“San Francisco is a disaster, Los Angeles is a disaster, New York is a disaster, Chicago freezes,” he said. “Now all of a sudden, relatively speaking, all of these global brands are looking to South Florida and like, ‘It’s open for business, it’s sunny’ – we have to focus if we don’t focus. not here already. . We have to double down. “”