Many families and business executives relocate to Palm Beach County for a number of reasons.
Low taxes and no personal state income tax, the balmy winter days, and often an escape from the harried lives they led âback Northâ have lured them South.
What theyâve also found is both a burgeoning and existing business community representing many of the core sectors leading the charge into the new economy. These include information technology and telecommunications; healthcare and health tech; manufacturing, warehousing and logistics; business services; aviation, aerospace and engineering; even equestrian and agribusiness across thousands of open acres to the west.
The growth of financial services, private equity and investment banking has been so concentrated and profound, with names like Citadel, BlackRock and Goldman Sachs coming to town, the Palm Beaches have been coined âWall Street South.â
What each finds is a pro-business, relocation-friendly infrastructure keen to launch, lure or retain new businesses. Thatâs atop the countyâs enduring allure as a vacationerâs and business travelerâs destination. Travel and tourism in 2022 welcomed a record 9.1 million visitors with a total estimated economic impact of $9.7 billion.
It all continues to grow, adding to a county with over 1.5 million residents. Some 70% of business recruitment projects handled by the Business Development Board of Palm Beach County are from out of state, atop the 460 corporate headquarters already here. Topping the list: Carrier, TBC Corp., Office Depot, SBA Communications and ADT.
âWeâre officially âWall Street South,â with many financial firms relocating from New York to the Countycounty, and we only see that trend accelerating as new Class A office buildings open within the next few years,â said BDB President and CEO Kelly Smallridge, whose organization in the last fiscal year landed 33 corporate relocations and expansions, secured some 2,500 jobs, and drove $362.5 million in capital investment. In fact, over half of those deals were from out of state. âWith an A-rated public school district, 115 private and faith-based schools and world-class higher-ed, executives are learning Palm Beach County has the best opportunities for business and family.â
Today, the county is part of a tricounty region of over 6 million thatâs the largest economic engine in a state that is the nationâs fourth largest, with $1.4 trillion in gross state product in 2022 and would be the 16th-largest economy if it were a sovereign nation, notes the International Monetary Fund.
Think of the county as a collection of 39 interconnected municipalities each adding to the greater whole. Eastside destinations, such as Boca Raton, Lake Worth and Delray Beach, bring culture, dining and entertainment that attracts visitors from across the region and world. To the west, Wellington is the global epicenter of winter equestrian sports.
The names of those calling the county home have changed its very reputation. Once known only as a vibrant vacation destination, today itâs a hub of business and industry. Ken Griffinâs Citadel and other investment and private equity firms are only the most recent arrivals to âWall Street South,â the banking, financial services and insurance (BFSI) sector centered in West Palm Beach.
As a medical device manufacturing hub, Johnson & Johnson subsidiary DePuy Synthes, Precision Esthetics, SurGenTec and Boca Ratonâs own Modernizing Medicine are among the hundreds here that make life sciences among the countyâs hottest sectors.
The countyâs diversity makes it a prime market for health care providers. Regional names, such as Cleveland Clinic Florida, Nicklaus Childrenâs Health System and Baptist Health each have made inroads in the county. Baptist, for example, acquired several hospitals – âBoca Raton Regional Hospital and two Bethesda hospitals in Boynton Beach – â and continues to add new services. These include institutes for cancer, vascular care, womenâs health, neuroscience and orthopedics. In all, the county has 23 hospitals, from county-run facilities and leading national health care providers.
The county is a hotbed for higher education. Beyond the UF / Scripps deal, Palm Beach State College recently announced TGL, a new tech-infused virtual golf program and prime-time league co-founded by Tiger Woods and Rory McIlroy, that will attract world-class golfers from around the world on its Palm Beach Gardens campus.
Palm Beach Atlantic University, which recently received Association to Advance Collegiate Schools of Business accreditation, unveiled a new state-of-the-art, six-story business complex planned for downtown West Palm Beach.
Florida Atlantic University (FAU), a top public university as ranked by U.S. News & World Report, is a significant contributor to the regionâs economic growth and development. It awards more than 8,000 degrees annually, making it first in the nation for degree completion, as noted by the Association of Public & Land-grant Universities, and top 20 and top 40, respectively, for graduating African American students and Hispanic students with bachelorâs degrees.
FAUâs undergraduate entrepreneurship program is ranked 27th and the graduate program is ranked 42nd in the nation by The Princeton Review. FAU has received the Carnegie Community Engagement Classification, an elective designation that indicates institutional commitment to community engagement.
Another literally high-profile ranking: the schoolâs menâs basketball team last season had the best season in program history. It notched a school-record 35 wins, the nationâs best record (35-4), a perfect 17-0 record at home and a spot in the NCAA Tournamentâs Final Four.
FAUâs various colleges – â of business, engineering, technology, life science and others – provide next-generation talent for the regionâs growing workforce needs, often alongside career training organization, CareerSource Palm Beach County. As the region expands, employers are turning to such providers to prepare skilled workers.
Suffolk Construction, for example, partners with universities to build its pipeline, said Chris Kennedy, VP of preconstruction with the firm, whose list of work in the county includes The Bristol, Plumosa School of the Arts Expansion, The Strand, One City Plaza, and ongoing projects such as Palm Beach International Airport Concourse B Expansion, Royal Palm Residences in Boca Raton and the Ritz-Carlton Residences Palm Beach Gardens.
Among the talent it seeks are those skilled in construction management services, including such lines as its real estate capital investment, design, self-perform construction services, technology start-up investment and innovation research/development.
âWe are seeing more seasoned construction professionals start to retire, so the need for younger talent is even more dire,â added Jay Fayette, Florida East Coast president for Suffolk.
To the west, the aviation, aerospace and engineering sector is home to over 1,600 companies, led by Pratt & Whitney, Lockheed Martin, Sikorsky, Aerojet Rocketdyne and Northrop Grumman. Interspersed where large-parcel land permits, is the burgeoning distribution and logistics sector for companies seeking proximity to a metro area of over six million stretching from the Palm Beaches through greater Fort Lauderdale to Miami-Dade County. Players epitomize household names, including Amazon, Aldi, FedEx, Tropical Shipping, Walgreens, Woodfield Distribution and Cheney Brothers.
Connections make the county and region desirable to logistics firms, as well as those millions of leisure and business travelers and local commuters. The downtown West Palm Beach and new Boca Raton stations for regional rail provider Brightline simplify travel between the three counties – â and soon, Orlando.
For longer travel, Palm Beach International Airport is part of a three- airport offering (along with Fort Lauderdale-Hollywood International Airport and Miami International Airport) offering thousands of flights throughout the region, nation, hemisphere and world.
With growth among its residents, businesses and trade, a high quality of life and that escape from harried lives back north make the county a thriving business and lifestyle destination.
Source: SFBJ
Palm Beach County Approves Commercial Developments In Ag Reserve
Palm Beach County commissioners recently approved three large-scale commercial projects in the Agricultural Reserve, two of them across the street from each other on Boynton Beach Boulevard at the Acme Dairy Road intersection.
The District, if the county approves a zoning change, could be open in about two years. It will consist of 16 indoor pickleball courts, warehouses and a storage facility with wine lockers. It would be built in the Ag Reserve off Boynton Beach Boulevard and Acme Dairy Road (Rendering Credit: The Channing Corporation)
One of the projects, The District, will feature indoor pickleball courts, a fitness center, a microbrewery with a tap room, warehouses and a storage facility that will have lockers for expensive wines. Construction could begin by the middle of next year. It will be built on 47.2 acres.
To make it happen, county commissioners had to approve a land-use and zoning change, which they voted unanimously on Aug. 24 to do. Two prominent South Florida developers, the Channing Corporation and the Butters Group, will now move forward with their building plans.
Channing said he and his partner, Malcom Butters, worked with the area residents to give them what they wanted.
The plans were developed in consultation with two residents groups, the Coalition of Boynton West Residential Associations and the Boynton Ag Reserve Communities.
On the south side of Boynton Beach Boulevard will be Logan Ranch, a residential community that would include apartments and possibly townhouses. At the meeting, the developer said 314 residences are planned, with most of them apartments with 79 of them set aside as workforce housing.
Developer of the Logan Ranch apartment complex moved buildings farther away from Canyon Trails to gain community support. County commissioners approved the project Thursday. The site is at the southeast corner of Acme Dairy Road and Boynton Beach Boulevard. (Image Credit: Palm Beach County Zoning Division)
Plans call for six four-story buildings and seven two-story buildings. The smaller ones would contain the townhouses.
Also approved Thursday was a land-use change on 8 acres on the west side of State Road 7 near Atlantic Avenue. The builder expects to construct warehouses and office space on the parcel. The project can be no more than 155,000 square feet. The builder said there is a need for light industrial uses to serve the area’s increasing residential population.
Source: The Palm Beach Post
Palm Beach County, Downtown Fort Lauderdale Burnish Reputations As Greener Pastures For Businesses
A little chest thumping never hurt anybody â especially when business is sizzling during inflationary times.
The economic development agency for Palm Beach County made a splash in Times Square in New York City with some targeted advertising. (PHOTO CREDIT: Business Development Board of Palm Beach CountY)
In a case of âstrike while the iron is hot,â or perhaps before it turns cold, the Business Development Board of Palm Beach County just took its decade-old âWall Street Southâ campaign to midtown Manhattan with the purchase of one-day ads on giant electronic billboards in Times Square and nearby neighborhoods.
Fort Lauderdaleâs Downtown Development Authority, meanwhile, is circulating a report declaring that its central business district and Flagler Village are generating as much economic activity as Port Everglades and Fort Lauderdale-Hollywood International Airport. For this, think about amounts for each entity that are north of $30 billion a year.
The heads of both agencies are advocates of maintaining hard-earned momentum in a highly competitive economic development game made more difficult by stubborn rising costs for businesses and households.
Kelly Smallridge, president and CEO of the development board, said in an interview that her nonprofit agency caught a deal that was hard to resist: Color ads in three locations for $20,000 â not only for this past Wednesday, but for the forthcoming New Yearâs Eve celebration as well.
Development board representatives have been visiting New York for years touting the countyâs âWall Street Southâ campaign, which is designed to persuade executives from financial firms to locate or relocate offices, including headquarters, in Palm Beach County.
Smallridge said her agency was approached by a billboard ad firm and offered a discount rate designed for nonprofit agencies.
She said the ads appeared at the Times Square Tower, the 43rd Rotunda, and on the âI Love NYâ Board at 1530 Broadway,
In a statement, the Business Development Board says that since 2019, it has helped 100 firms open offices in Palm Beach County, which is home to 57 billionaires and 70,000 millionaires. Over the years, the board has even connected headmasters of local schools with company executives to assure them that their children will receive top-notch educations in the countyâs schools.
A Surge In Fort Lauderdale
Jenni Morejon, the DDA president and CEO, said the downtownâs growth has its âbuilding blocksâ in the wake of the recession triggered by the housing collapse 15 years ago.
A report commissioned by the DDA and authored by Walter Duke + Partners, a commercial real estate appraisal firm, concludes that the downtown area, which is defined as a 2.2-square-mile area that runs north of 17th Street to the central business district, Flagler Village and Sunrise Boulevard, âhas an annual economic impact of $35.7 billion, a $6 billion increase from 2019.â
The impact figure rivals Port Everglades and Fort Lauderdale-Hollywood International Airport, the authority says. They combine for more than $105 billion in economic activity such as jobs, generation of tax revenue and business transactions.
The downtown area is now roughly 26,000, according to the report.
The DDA, though, has no plans to broadcast highlights of its uplifting report on Times Square billboards. In the past, Visit Lauderdale, the tourism promotion agency for Broward County, has advertised its latest campaigns there.
Source: SunSentinel
CRE Lending Could Get Even Tighter If Fitch Downgrades Banks
The U.S. commercial real estate industryâs ability to get credit and, therefore, fortunes have strong ties to the 4,648 insured banks (according to the FDIC) in the country that provide about 38.6% of CRE loans.
Anything that negatively affects the stability and credit ratings of the banks is an issue for the CRE industry. Despite multiple federal officials and regulators repeatedly saying that the entire banking system is sound, Moodyâs recently cut ratings on a number of smaller and regional banks and put some larger ones on notice that they might face potential actions.
Now Fitch Ratings analyst Chris Wolfe warned in a CNBC interview that the current financial state of banks couldnât be taken for granted. It is possibly that a slight change in conditions for the industry, with an overall rating drop like the one Fitch instituted in June, could force a reconsideration and credit downgrade of some major banks, including JPMorgan and Bank of America, because an individual bank canât have a credit rating higher than the industry as a whole.
In June, Fitch downgraded banksâ âoperating industryâ score from AA to AA- âbecause of pressure on the countryâs credit rating, regulatory gaps exposed by the March regional bank failures and uncertainty around interest rates,â as CNBC wrote.
A second downgrade would leave the industry at A+. Currently, JPMorgan and Bank of America, among some other of the largest banks, have an AA- rating from Fitch.
JPMorgan said that it did not have a comment in reply to a GlobeSt.com request. Bank of America also said it wouldnât comment, but did send a copy of Moodyâs May 3, 2023, upgrade of the âlong-term debt and deposit ratings, counterparty risk ratings and counterparty risk assessments of Bank of America Corporationâ and its rated subsidiaries and the baseline assessment of its principal bank subsidiary, Bank of America, N.A.
However, in todayâs quickly changing economic environment, the date of that upgrade is close to four months old. Downgrades would have serious implications for banks and for CRE lending. With a lower rating, banks have higher credit costs and more concerned investors and depositors. That could drive banks to polish up their balance sheets even more, which in turn could mean reductions in CRE lending and selling off of existing loans, which would drive down their value and that of existing loans, undermining valuations going forward.
Source: GlobeSt
Industrial Market May Be Flooded With Yellow-Owned Properties
Looking for an industrial site with lots of truck parking? You could be in luck if real estate assets owned by the trucking company Yellow come on the market.
The company filed for Chapter 11 bankruptcy on Aug. 6, and the shutdown is expected to put hundreds of industrial properties up for sale or lease, according to CoStar Groupâs August 2023 real estate data update.
With truck terminals in most major U.S. cities, Yellow or its subsidiaries have âat least seven facilitiesâ in each of New York, Chicago, and Los Angeles.
In total, CoStar tracks more than nine million SF of industrial space that is either owned or leased by Yellow or its subsidiaries in more than 240 U.S. cities. Yellowâs 2022 annual report refers to more than 300 properties across North America.
While Yellowâs bankruptcy may increase the supply of industrial space, Amazon may be ready to do the opposite. Each month from May through July, Amazon put 600,000 SF of warehouse space up for lease, CoStar noted. However, CoStar believes Amazonâs strong second quarter earnings report suggests that strategy could change.
Source: GlobeSt
The Pursuit Of Unclogging The U.S. Supply Chain Has Helped Industrial Investment Outperform The Rest Of CRE
If there’s one thing the pandemic shed a spotlight on, it is how the global supply chain was not ready for an influx of consumerism.
Ships were backed up at some of the world’s largest ports, meaning that hardware, car parts and furniture were absent from retailers’ usual inventory.
Industrial real estate investors have benefitted from the pivot to a regional supply chain focus. The asset class has outperformed almost all other commercial sectors. During the past two years, JLL found that industrial investment activity picked up across the entire spectrum as automotive companies continued diversifying their footprint. And as supply chain logistics move to nearshoring and reshoring, investors are snatching up regional industrial space opportunities, especially near busy ports.
For example, Miami-based real estate and investment firm Black Salmon, in partnership with InLight Real Estate Partners, this week announced the $103 million disposition of Hicks Transload Facility, a Class A truck terminal and trans-loading warehouse in the Port of Savannah, the country’s third busiest port, as well as the disposition of Rex Distribution Center in Atlanta, Georgia.
According to a June report from Motley Fool, industrial commercial real estate has grown 10.3% in the past 12 months, led by demand for logistics space and limited available real estate. The vacancy rate for industrial is also the lowest in commercial real estate (CRE) at 4.3%. That performance, which is outshining the multifamily and office sectors, is fueling the present and future investment strategies of companies like Black Salmon and InLight.
DiLeo also noted that industrial investors for specific property uses aren’t necessarily looking for new, high-end properties.
As for the future of industrial investment, Evans is bullish and says he has already raised funding for the next year of targets.
Source: yahoo!finance
Apartment Developer Buys Delray Beach Industrial Site
Trammel Crow Residential (TCR) acquired an industrial site in Delray Beach that already has approval for an apartment complex.
Eckols â70 Ltd and Admiral â80 Ltd., both managed by Richard Eckhouse and Norman D. Olson in Boca Raton, sold the 6.74-acre site at 1155 S. Congress Ave. to the Dallas-based developer for $12.67 million.
The property last sold for $616,000 in 1980, so the sellers generated a huge return after a long-term investment. It currently has a 29,250-square-foot warehouse, but it will be demolished to build apartments.
Source: SFBJ
Fewer CRE Loans Being Refinanced, But Lenders Find Other Ways To Work With Borrowers
Lenders and special servicers are looking beyond refinancing options when it comes to working with borrowers on commercial real estate loans that are set to mature in the coming months and years, even as those loans increasingly are backing properties facing distress.
According to an analysis by Moody’s Investors Service, the percentage of real estate properties that use commercial mortgage-backed securities debt that are being refinanced is on the decline. Conduit refinance rates were 78.1% and 71.8% in the first and second quarter of this year, respectively, compared to 85.5% in 2019, the year before the Covid-19 pandemic and broader economy upended the commercial real estate market.
Interest-rate hikes imposed by the Federal Reserve over the past year in the wake of rising inflation have compressed real estate values. Add to that rising vacancy rates and a weaker leasing environment in especially the office sector, and the pressure has increased on building owners with loans coming due in the near term.
Lenders also have tightened standards in the wake of a more challenging economy and commercial real estate market, with some banks outright saying they’ve stopped new lending to office properties. While fewer loans are getting refinanced overall, there’s been an uptick in the number of performing loans that are past maturity but haven’t been formally extended. That amount, negligible before the pandemic, reached 5.2% in Q1 of this year and 6.9% in Q2.
The Moody’s analysis, which only examined CMBS loans, found 16.7% of maturing loans tracked by the firm were delinquent as of the second quarter. That share was much higher in the office sector, with 27.6% of office loans scheduled to mature in Q2 2023 considered delinquent.
Source: SFBJ
Bednerâs Farmers Market In Palm Beach County Plans To Use Land For Industrial Development
The owner of Bednerâs Farm Fresh Market, a popular agricultural attraction, has proposed rezoning part of its land west of Boynton Beach for industrial development.
Bedner’s Farm Fresh Market has proposed industrial rezoning on the two parcels outlined in red in Palm Beach County.
(IMAGE CREDIT: JMORTON PLANNING AND LANDSCAPE ARCHITECTURE)
Bedner Brothers Farms, managed by Stephen Bedner, filed a land use amendment with Palm Beach County officials concerning 14 acres of the 19-acre site at 10066 Lee Road, on the west side of U.S. 441.
The Bedner family proposed changing the zoning of the strawberry and pumpkin fields from agricultural to commerce/light industrial, which would allow up to 274,428 square feet of industrial uses. That could include warehouses, flex office/warehouse or self-storage facilities. However, the five-acre site including the farmerâs market would be preserved through a conservation easement.
The land use amendment will require County Commission approval. A hearing before the board is tentatively scheduled for Nov. 1.
Source: SFBJ
Coconut Creek To Decide Whether New Warehouse Complex Can Be Built In South Part Of City
According to Coconut Creek officials, plans to build a warehouse complex in the cityâs south part are in the âbest interest of the city.â
City commissioners are expected next week to take the first set of votes on whether to permit developers to build a 385,000-square-foot light industry complex on vacant land on the northwest corner where Atlantic Boulevard and Lyons Road connect.
Those plans have already been approved by two city panels and will now advance to the commission for final decision.
The commission will need to rezone the land and approve the building plans before the 36-acre property — owned by Coolidge Inc. â can be developed into three buildings. The property was approved in 2008 for a 340,000-square-foot Lowes Home Improvement and Kohlâs plaza, but was never constructed.
Some nearby residents have spoken out and sent letters to city officials urging them not to move forward with the building plans out of concern for traffic, noise and other issues. Developers — and some real estate brokers — have said the complex would meet demand for new industrial buildings to support âservice-oriented uses and distribution of goodsâ in Broward County.
The Cocomar Business Logistics Park, as the complex would be called, would be designed for local and national businesses looking for âClass A logistics space,â according to plans.
The project is expected to create more than 3,200 jobs and generate more than $1.3 million in impact fees for Coconut Creek and Broward County, according to plans.
The buildings would range in space from 61,055-square-feet to 167,350-square-feet. The site would include 314 parking spaces, a preserve, and relocation of more than 80 trees and two palms, as well as landscaping buffering with nearby homes, according to plans.
According to city documents, the city finds the complexâs site plans are âin the best interest of the cityâ and consistent with land regulations.
City commissioners are schedule to vote on the propertyâs rezoning and site plans on Thursday, July 13, at 7 p.m. at Coconut Creek Government Center, 4800 West Copans Road.
Source: TAPintoCoconutCreek
Industrial Outdoor Storage Rises In Popularity Among Institutional Investors
Industrial outdoor storage (IOS) is emerging as an increasingly popular property sector among institutional and other types of investors.
Interest in the sector ramped up during the pandemic as space was needed for container storage to relieve backlogged ports. Estimates from the experts WMRE interviewed suggest that the U.S. IOS market, which represents a niche within the larger industrial asset class, ranges somewhere between $130 billion and $200 billion in value.
Zoned for industrial use, IOS sites typically house vehicles, construction equipment, building materials and even shipping containers on an interim basis and range in size from two to 10 acres, often including a small building. The sector has been referred to as a âbeautiful ugly ducklingâ by Green Streetâs Vince Tibone since the properties are just lots with storage containers and construction equipment that have delivered âexceptionalâ returns over the last three years and brought in more institutional investors for funds raising hundreds of millions of dollars to target IOS.
While the sector is not immune to the same forces that are affecting other property types in the current environment, Tibone said he remains bullish on IOS over the next five to 10 years. Investor demand for IOS has been buoyed by strong recent operating results, favorable long-term supply/demand dynamics and a minimal cap-ex burden with an option to use the land for a higher and better use at some future time.
IOS sites located in infill submarkets in particular can deliver risk-adjusted returns âthat are superior to those available on most other commercial real estate investments, including traditional industrial,â Tibone said. However, the fragmented, non-institutional ownership structure of the sector today makes it difficult to invest at scale, he noted.
Among investors that are currently raising funds and targeting acquisitions in the IOS marketplace is EverWest Real Estate Investors, a Denver-headquartered real estate investment advisor with $5.2 billion in assets under management, including in the industrial, multifamily, office and retail sectors.
EverWest operates open-end funds and three singleâclient accounts with industrial strategies focused on IOS. The average size of the deals it has completed ranges between $10 million and $25 million.
So far in 2023, EverWest acquired two IOS sitesâ39.6 acres south of Atlanta for $12 million and 4.12 acres in Miami for $12.5 million, according to John Maurer, EverWestâs senior managing director and head of portfolio management. In May, the firm also invested in an industrial asset in Carlson, Calif. that includes acreage that can be used for IOS.
Part of the appeal of the sector is that when U.S. industrial inventory tightens and rents rise, IOS sites rise in value as they become reliever locations for a wide range of logistics activity, Maurer noted. In addition, in a market where industrial assets are still often priced at a premium, with cap rates as low as 4.5%, an IOS site adjacent to such a traditional industrial asset will often sell at a cap rate thatâs 50 basis points higher. Rental rates in the sector have also been rising by 3.5% to 4.0% a year, according to Maurer.
EverWestâs open-end fund, the Open End Diversified Core Equity Fund in the NFI-ODCE Index, has a target return of 10%. Like Tibone, Maurer noted that the IOS marketplace is less institutionalized than regular industrial and has more fragmented ownership.
As a result, EverWest aims to aggregate a number of acquisitions from different sellers to build up its IOS holdings. Over the past 12 to 18 months, the firm has invested about $200 million in the IOS sector and it hopes to double that volume in the next 12 to 18 months. EverWest is also planning to launch an enhanced fund with a higher return strategy in the near future that will have a significant IOS component, according to Maurer. The firm is hoping to build off its current investor base of public and private pension plans, foundations and endowments, insurance companies and financial advisors for the fund, Maurer said.
However, Maurer admitted that EverWestâs transaction volume is currently about 15% off what it was a year ago because the increase in interest rates has made the firm more selective in making new purchases.
Assuming a leverage level of 40% to 40%, EverWestâs investments can deliver gross returns of 12% to 14% over a seven- to 10-year period, Maurer noted. That would require a barbell approach of doing straight up five-year lease IOS deals, he said. There would also need to be some value-add component for redevelopment in its strategy. About 20% of the IOS marketplace is about adding a warehouse over time, Maurer noted.
Change Is Coming
In the meantime, the number of institutional players involved in the sector is growing. For example, Brooklyn-based Zenith IOS, a builder and owner of outdoor storage properties, has partnered with institutional investors advised by J.P. Morgan Global Alternatives, to buy hundreds of millions of dollars of IOS properties last year. In February, J.P. Morgan and Zenith IOS announced a $700 million joint venture to buy more IOS assets.
Another active participant in the marketplace is Alterra IOS, which is part of Philadelphia-based Alterra Property Group, a real estate investment and development company that, according to reports, made more than $850 million in acquisitions over the past year.
In its most recent announcement, dated June 22nd, the firm expanded its presence in Las Vegas by acquiring a six-acre site for $7 millionâits third in the marketplace.
Alterra declined to comment on its current fundraising effort, instead referring to a public filing from the Ventura County Employeesâ Retirement Association (VCERA). The filing contained a recommendation to commit $35 million from the pension fund to Alterraâs IOS Venture III fund. Alterraâs goal has been to raise $750 million for the fund targeting IOS properties, according to IPE Real Assets. A previous Alterra fund raised $524 million in 2022, exceeding the firmâs goal of $400 million.
IOS Venture III will target smaller, infill IOS assets operating on triple net leases. Part of the value proposition of these assets, according to VCERAâs filing, is that they are typically owned by single owner-operators and have escaped the attention of most institutional investors. Alterra also plans to leverage its in-house management and leasing expertise to pursue value-add strategies for the assets. The firm estimates that it will generate from 30% to 40% of its total returns through the assetsâ current cash flow, creating annual cash flow yields of 6% to 8%.
The fund has an eight-year horizon, with two one-year extension options, and will offer a preferred return to investors of 9%, with a carried interest of 20%. The fundâs net IRR target is between 14% and 16%, with a leverage ratio of 65%.
In addition to VCERA, Alterraâs equity investors include other public pension funds, foundations, endowments, insurance companies and family offices, both domestic and foreign, according to Managing Director Matthew Pfeiffer.
He also mentioned the attraction of low cap-ex.
According to BJ Feller, managing director and senior vice president at Northmarq, cap rates on traditional industrial properties have gotten so aggressive in recent years that institutional capital was looking for opportunities with a similar profile, but more attractive cap rates.
He added that while equity inflows to the sector have âcooled to a certain degreeâ on a year-over-year basis, they remain robust relative to other property types.
Source: Wealth Management
Palm Beach County: Business Basking In The Sunshine
Many families and business executives relocate to Palm Beach County for a number of reasons.
Low taxes and no personal state income tax, the balmy winter days, and often an escape from the harried lives they led âback Northâ have lured them South.
What theyâve also found is both a burgeoning and existing business community representing many of the core sectors leading the charge into the new economy. These include information technology and telecommunications; healthcare and health tech; manufacturing, warehousing and logistics; business services; aviation, aerospace and engineering; even equestrian and agribusiness across thousands of open acres to the west.
The growth of financial services, private equity and investment banking has been so concentrated and profound, with names like Citadel, BlackRock and Goldman Sachs coming to town, the Palm Beaches have been coined âWall Street South.â
What each finds is a pro-business, relocation-friendly infrastructure keen to launch, lure or retain new businesses. Thatâs atop the countyâs enduring allure as a vacationerâs and business travelerâs destination. Travel and tourism in 2022 welcomed a record 9.1 million visitors with a total estimated economic impact of $9.7 billion.
It all continues to grow, adding to a county with over 1.5 million residents. Some 70% of business recruitment projects handled by the Business Development Board of Palm Beach County are from out of state, atop the 460 corporate headquarters already here. Topping the list: Carrier, TBC Corp., Office Depot, SBA Communications and ADT.
Today, the county is part of a tricounty region of over 6 million thatâs the largest economic engine in a state that is the nationâs fourth largest, with $1.4 trillion in gross state product in 2022 and would be the 16th-largest economy if it were a sovereign nation, notes the International Monetary Fund.
Think of the county as a collection of 39 interconnected municipalities each adding to the greater whole. Eastside destinations, such as Boca Raton, Lake Worth and Delray Beach, bring culture, dining and entertainment that attracts visitors from across the region and world. To the west, Wellington is the global epicenter of winter equestrian sports.
The names of those calling the county home have changed its very reputation. Once known only as a vibrant vacation destination, today itâs a hub of business and industry. Ken Griffinâs Citadel and other investment and private equity firms are only the most recent arrivals to âWall Street South,â the banking, financial services and insurance (BFSI) sector centered in West Palm Beach.
As a medical device manufacturing hub, Johnson & Johnson subsidiary DePuy Synthes, Precision Esthetics, SurGenTec and Boca Ratonâs own Modernizing Medicine are among the hundreds here that make life sciences among the countyâs hottest sectors.
The countyâs diversity makes it a prime market for health care providers. Regional names, such as Cleveland Clinic Florida, Nicklaus Childrenâs Health System and Baptist Health each have made inroads in the county. Baptist, for example, acquired several hospitals – âBoca Raton Regional Hospital and two Bethesda hospitals in Boynton Beach – â and continues to add new services. These include institutes for cancer, vascular care, womenâs health, neuroscience and orthopedics. In all, the county has 23 hospitals, from county-run facilities and leading national health care providers.
The county is a hotbed for higher education. Beyond the UF / Scripps deal, Palm Beach State College recently announced TGL, a new tech-infused virtual golf program and prime-time league co-founded by Tiger Woods and Rory McIlroy, that will attract world-class golfers from around the world on its Palm Beach Gardens campus.
Palm Beach Atlantic University, which recently received Association to Advance Collegiate Schools of Business accreditation, unveiled a new state-of-the-art, six-story business complex planned for downtown West Palm Beach.
Florida Atlantic University (FAU), a top public university as ranked by U.S. News & World Report, is a significant contributor to the regionâs economic growth and development. It awards more than 8,000 degrees annually, making it first in the nation for degree completion, as noted by the Association of Public & Land-grant Universities, and top 20 and top 40, respectively, for graduating African American students and Hispanic students with bachelorâs degrees.
FAUâs undergraduate entrepreneurship program is ranked 27th and the graduate program is ranked 42nd in the nation by The Princeton Review. FAU has received the Carnegie Community Engagement Classification, an elective designation that indicates institutional commitment to community engagement.
Another literally high-profile ranking: the schoolâs menâs basketball team last season had the best season in program history. It notched a school-record 35 wins, the nationâs best record (35-4), a perfect 17-0 record at home and a spot in the NCAA Tournamentâs Final Four.
FAUâs various colleges – â of business, engineering, technology, life science and others – provide next-generation talent for the regionâs growing workforce needs, often alongside career training organization, CareerSource Palm Beach County. As the region expands, employers are turning to such providers to prepare skilled workers.
Suffolk Construction, for example, partners with universities to build its pipeline, said Chris Kennedy, VP of preconstruction with the firm, whose list of work in the county includes The Bristol, Plumosa School of the Arts Expansion, The Strand, One City Plaza, and ongoing projects such as Palm Beach International Airport Concourse B Expansion, Royal Palm Residences in Boca Raton and the Ritz-Carlton Residences Palm Beach Gardens.
Among the talent it seeks are those skilled in construction management services, including such lines as its real estate capital investment, design, self-perform construction services, technology start-up investment and innovation research/development.
To the west, the aviation, aerospace and engineering sector is home to over 1,600 companies, led by Pratt & Whitney, Lockheed Martin, Sikorsky, Aerojet Rocketdyne and Northrop Grumman. Interspersed where large-parcel land permits, is the burgeoning distribution and logistics sector for companies seeking proximity to a metro area of over six million stretching from the Palm Beaches through greater Fort Lauderdale to Miami-Dade County. Players epitomize household names, including Amazon, Aldi, FedEx, Tropical Shipping, Walgreens, Woodfield Distribution and Cheney Brothers.
Connections make the county and region desirable to logistics firms, as well as those millions of leisure and business travelers and local commuters. The downtown West Palm Beach and new Boca Raton stations for regional rail provider Brightline simplify travel between the three counties – â and soon, Orlando.
For longer travel, Palm Beach International Airport is part of a three- airport offering (along with Fort Lauderdale-Hollywood International Airport and Miami International Airport) offering thousands of flights throughout the region, nation, hemisphere and world.
With growth among its residents, businesses and trade, a high quality of life and that escape from harried lives back north make the county a thriving business and lifestyle destination.
Source: SFBJ
How The Ag Reserve Is Changing: Palm Beach County OKs Warehouses On Nursery Land West Of Delray Beach
Joe Mulvehill and his siblings have been working to get their 40-acre wholesale plant nursery west of Delray Beach rezoned for about a decade so it could be sold to a commercial developer.
Now that dream is on its way to fruition.
The Palm Beach County Commission has proposed warehouse development at the site at the northeast corner of State Road 7 and Happy Hollow Road in the countyâs Agricultural Reserve. BBX Logistics Properties, based in Fort Lauderdale, plans to build three warehouse buildings and offices totaling 672,533 square feet and 687 parking spaces.
Construction will likely begin in the first quarter of 2024 with a total project cost of more than $100 million, Levy said. The average tenant, such as plumbers, electricians, companies which supply hospitals and schools and others, will rent from 25,000 to 60,000 square feet. Offices will be in the front, with storage areas in the rear.
Nursery Operation In Southern Palm Beach County Dates To 1980s
Mulvehill, 60, owns the property with his siblings Diane, Suzanne and James. He began working for his nurseryman father, the late Joe Mulvehill Sr., at age 17 when he was still a student at Coral Springs High School in Broward County.
The 40-acres of the Mulvehill Nursery (Photo Credit: Andres Leiva, Palm Beach Post)
Mulvehill, who is the nursery operationsâ sole owner, has been in business for 42 years and has run the nursery from the current location since 1995. He said he was grateful the county commission understood that the nursery was “left out of the Ag Reserve Master Plan. We are one of the few remaining property owners who bought our property before the Ag Reserve land use restrictions went into effect in the late 1990s.”
Mulvehill and other small landowners in the 22,000-acre Agricultural Reserve west of Boynton Beach, Delray Beach and Boca Raton, have said for years that the countyâs development rules for the area have depressed the value of their land by limiting what a potential purchaser could do with it. The Ag Reserve was formally created in 1980.
Despite hurricane damage and losses, insects, diseases, labor shortages and other issues Mulvehill has faced over the years, he wants to stay in the business. He ships foliage and interior plants throughout the continental U.S. and Canada and sells locally to landscapers.
Mulvehill said this year has been especially difficult as he lost all his entire crop of mandevillas, a flowering vine, to a pest called pepper thrips.
He said he will continue to operate Mulvehillâs Nursery on 15 acres off Smith Sundy Road, an arrangement that “will be less stressful and give me more time to enjoy life,â Mulvehill said.
Some Concerns Warehouses Won’t Fit With Agricultural Area
At the May 25 hearing before the county commission, nearby residents who support the project and those who oppose it spoke and submitted comment cards. Those opposed expressed concerns about noise, lights and increased traffic that could impact residential developments and horse farms.
The commission took two votes, the first was a 6-1 approval, changing the propertyâs future land use designation from Agricultural Reserve to Commerce with an underlying Agricultural Reserve.
Vice Mayor Maria Sachs opposed the land use change, as did the countyâs staff, which said it will be an isolated industrial use inconsistent with the other development along that portion of S.R. 7.
Sachs said she wants to work with the legacy farmers to find ways for them to get out of the business, and for the highest and best use of their land. However, she said Clint Moore Road and Congress Avenue, about 12 miles to the southeast in Boca Raton, is a more appropriate location for warehouses.
Sachs also said that the Florida Department of Transportation said that the project may generate more traffic than allowed under the Commerce designation.
Next, the commission voted 7-0 to rezone the property from the Agricultural Reserve Zoning District to the Multiple Use Planned Development Zoning District.
Commissioner Marci Woodward said she met with neighbors in the immediate area of quiet roads next to a canal and said they are happy with the entrance being moved to S.R. 7 because there will be less traffic on Happy Hollow and Smith Sundy.
Joseph Starkey owns a 60-acre horse boarding farm, Irish Acres of Florida, near Lyons Road and Atlantic Avenue, also in the Ag Reserve west of Delray Beach. He said that the warehouses do not belong in the Ag Reserve.
Mike Atchison, owner of Atchison Exotics at 9625 Happy Hollow Road, and president-elect of the Palm Beach County chapter of the Florida Nursery, Growers and Landscape Association, said he supports the rights of the Mulvehills and other farmers to have their property rezoned and to sell their property.
Suzanne Mulvehill, Joe Mulvehillâs sister and a former Lake Worth Beach city commissioner, also spoke before the commission.
Commissioner Mack Bernard noted that the Mulvehills had worked with the county on the site’s future for several years.
Entrance To Warehouse Complex Will Be Off State Road 7
The approval includes a requirement for an 8.9-acre preserve and a 4.26-acre water management tract with a 2.86-acre wetland designed to provide enhanced environmental features.
BBXâs Levy said the extraordinary population growth in southwestern Palm Beach County proves the need for more warehouses, and right now no space is available. He said the Mulvehill location is ideal because it is on the U.S. 441-S.R. 7 corridor and close to Florida’s Turnpike. Some companies could not find space in Palm Beach County, and had to locate as far away as Miami and Orlando.
The loading docks will be in the projectâs interior, with the buildings serving as a noise buffer, and Levy said he expects most of the trucks coming in will be vans and box trucks, not semi-trucks.
Levy said that he will reach out to homeowners in the nearby Four Seasons residential development after a homeowner stated at the meeting that the group had not heard from the developer. The buildings might be built in phases, and once they are occupied, Levy estimates that 250 to 300 people will be working there.
Source: Palm Beach Post