Palm Beach's Royal Palm Way the Priciest Street for Offices in Florida
Palm Beach’s Royal Palm Way the Priciest Street for Offices in Florida
A bevy of financial institutions and wealth management companies wanting to be near their well-to-do clients puts Royal Palm Way in Palm Beach, FL among the most expensive streets for office space in the nation, a new analysis shows.
Royal Palm ranked No. 9 in a report on most expensive office rents released this week by JLL. The street averages $61.80 per square foot – 51 percent higher than the average asking rent in the market and a 96.1 percent premium compared to the rest of the area.
JP Morgan Chase, Merrill Lynch, Black Rock, Inc. and Bessemer Trust are among the financial heavyweights on Royal Palm. The street consists of 475,471 square feet of office space, with 128,470 square feet currently available for lease, according to CoStar data.
At 222 Royal Palm Way, where Bessemer is based, the gross asking rent is $60.68 a square foot.
“It’s premium real estate, and they’re not making any more of it,” said Peter Reed of Commercial Florida Realty Services in nearby Boca Raton. “If you’re a major financial firm, you have to have a presence on Royal Palm Way to cater to that clientele that doesn’t want to leave the island.”
Within a mile of Royal Palm Beach Way, more than one-third of the households have an average income over $200,000, according to David Spragg, research manager for CoStar Group, Inc.
“This high-end thoroughfare has a history of high rents,” Spragg said. “Dating back 10 years, the price per square foot never dropped below $50 and averaged $57.65, despite the down economy during the Great Recession.”
Spragg doesn’t see any slowdown in rents along the street. For 2018 and 2019, CoStar projects a 2.2% rent growth in most of the inventory in the Palm Beach office submarket.
But Jonathan Satter of Avison Young suggests that the JLL report missed the mark. He said rents for buildings in downtown West Palm Beach routinely top Royal Palm Way.
Many of the downtown buildings have traded hands in recent years, increasing their tax bills, a cost that landlords are passing on to tenants, he said. Also, the buildings’ operating expenses have increased.
“I’m not just saying this because I have property there, but Palm Beach is a tremendous value today compared to what it has been historically,” said Satter.
JLL brokers in South Florida were not available Friday to discuss the report, a spokeswoman said.
Four other Florida streets made the list of 47 highest-priced strips: Las Olas Boulevard in Fort Lauderdale (No. 18 at $47.03 a square foot), Brickell Avenue in Miami (No. 20 at $44.28), Jackson Street in Tampa (No. 32 at $30.25) and Orange Avenue in Orlando (No. 37 at 26.28).
Sand Hill Rose in San Francisco was the priciest street for office space at $119.38, followed by New York’s Fifth Avenue averaging $116.04 per square foot. San Francisco’s Mission Street came in third at $90.