Falling vacancies, rising rents: Palm Beach County office market tightens

Phillips Point

Phillips Point

Palm Beach County’s office market continued to tighten during the first three months of the year, according to a report by commercial real estate brokerage CBRE. Vacancies fell to 18.9 percent, and rents have risen for 10 quarters in a row.

“Traditional concessions, such as free rent, generous improvement allowances and free garage parking, are almost non-existent,” CBRE said.

In a separate first-quarter report, Cushman & Wakefield said Palm Beach County ranked in the top 10 among 87 metro areas in rent growth and absorption of office space. Despite strong job growth, the county’s office market has seen no new construction of offices in recent years.

“Lenders aren’t willing to make loans on speculative office buildings,” said developer Jeff Greene.

Greene, a Palm Beach billionaire, plans to build two 30-story towers on his property at 550 N. Quadrille Blvd. in downtown West Palm Beach, where the vacancy rate is 13.8 percent.

Real estate is local, as the saying goes, and the fortunes of Palm Beach County’s submarkets vary widely. Delray Beach’s vacancy rate is 46.5 percent, CBRE says. Royal Palm Beach’s vacancy is only 6.3 percent.

The Class A market — the designation for high-end office space — had a vacancy rate of only 14.2 percent in the first quarter, CBRE says.

“We don’t have as much Class A space as we need if we’re going to continue to attract companies into the county,” said Jordan Paul, chief executive of NAI/Merin Hunter Codman in West Palm Beach.

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