Scarcity of Trophy space in Downtown West Palm is triggering construction, but is there enough demand?
The four Trophy Assets in Downtown West Palm are at historically low vacancy.
March 05, 2019
- The four Trophy Assets in Downtown West Palm – Esperante, CityPlace, and Phillips Point – are at historically low vacancy. Vacancy over the previous three years has averaged 4.5 percent, which in turn has helped push rates to record levels.
- At over $65.00 per square foot (full service) and nearly $50.00 per square foot on a NNN basis, pricing has been able to support new construction, something existing tenants would certainly welcome.
- It was recently announced that One West Palm broke ground, a mixed use project that will have roughly 200,000 square feet of office space alongside luxury residential, retail and various other amenities. Additionally, 360 Rosemary is also in the pipeline downtown, a nearly 300,000 square foot office building located adjacent to the Brighltine rail station. Neither property has any preleasing in place.
- The last building to deliver in the Core CBD was CityPlace Tower in 2008. While timing was unfortunate, it took nearly 11 years for the market to absorption the 300,000 square feet added to the market. And the market’s profile has not changed much since prior to the recession - financial and legal tenants with small footprints. There are certainly some larger tenants in the market, but with the prospect of an additional 500,000 square feet coming online, large new-to-market tenants will be needed to provide stability over the long-term.
Source: JLL Research