The booming Palm Beach scene draws fifth-floor retailers during Covid

WEST PALM BEACH, Florida – Retailers, restaurants and other business owners want to be where the people are. And people are moving in large groups to South Florida.

Some take refuge during the pandemic, away from the cold weather in the north. Others are making a long-term change, and businesses are following suit by entering into decades-long leases.

Rosemary Square, an outdoor mall near West Palm Beach, a West Elm furniture store and Urban Outfitters, will open in the coming months. There will be a host of new eateries joining them, including a local, fast-paced taco shop, the health-driven chain True Food Kitchen and the hip plant-based restaurant Planta.

Lucid Motors, the electric car company known as a Tesla competitor, opened its second location in South Florida at Rosemary Square last month, which is operated by developer Related in New York. It joins Lululemon, Anthropology, Yeti, Tommy Bahama, Sur la Table, RH and more than a dozen other retailers that are filled with visitors on most weekends. After shopping, grab a Pura Vida smoothie, another recent addition to the complex, and listen to live music on a central lawn.

Across the water, on Palm Beach Island, the activities around Worth Avenue are also bustling.

SoulCycle is popping up outside. The turnaround classes are discussed on weekends and are frequently visited by out-of-towners, who are often heard about their plans to eventually return to New York or Washington, DC.

On Worth Avenue, a Rolls Royce stands behind an Aston Martin behind a Porsche, while couples dive in and out of a cloudless and balmy Tiffany, Chanel and Saks Fifth Avenue on Saturday afternoon. The luxury shopping street, which some might call the Fifth Avenue of the South, has almost no vacancies. The notable exception is an empty Neiman Marcus store that closed the luxury retail chain after filing for bankruptcy last year.

Some business owners let their decisions be shaped by the pandemic, and they opted for Worth Avenue over Fifth Avenue.

Maurice Moradof and his mother, Yafa Moradof, fled Manhattan last November to enter into a long-term contest and open their second jewelry store, Yafa Signed Jewels, in Worth Avenue. They made the move after a spate of looting and riots related to the George Floyd protests took place during the summer in Manhattan. Businesses along the high streets of New York have been hit hard by Covid restrictions, the loss of tourists and a downturn in consumer spending.

“The business has gotten a little weak,” Maurice Moradof said of the Fifth Avenue location, which is still open as a studio. “And it became very dangerous in New York City. I no longer felt comfortable.”

Since the opening in Worth Avenue, business has exceeded expectations, he said. The retailer has signed a 25-year lease on the store, he said, located between a Lilly Pulitzer and Michael Kors.

“There’s no recession going on in Palm Beach … The rich are getting richer,” Maurice Moradof said. “I have not seen New York come back for at least another two or three years.”

The activity in the real estate market in South Florida – tower cranes, the arrival of new tenants, rising rents and few vacancies – paints a significantly different picture than the streets of SoHo and Fifth Avenue in New York. And experts believe that real estate in the Palm Beach market in particular is becoming more and more sought after.

“There is domestic migration from New York, New England, Toronto, Montreal … we also see people from Chicago and California,” said Drew Schaul, senior vice president of advisory and transaction services for the commercial firm CBRE, . , specializes in South Florida. “They’re licking their chops to be here.”

Some Wall Street financial institutions have also made the leap with reference to the tax and lifestyle benefits for their decisions. Goldman Sachs is reportedly monitoring the Palm Beach market for new office space, while Paul Singer’s Elliott Management has moved its headquarters from downtown Manhattan to West Palm Beach.

According to Redfin, a technology-based brokerage firm, 56.1% of home searches come to Palm Beach County during the fourth quarter from outside the country. Searches from Chicago and Brooklyn were the most popular origins outside the state, the firm said.

“Everything that goes on in Palm Beach and in the surrounding downtown West Palm is a wonderful story,” he said. “And one of the big catalysts, I think, was what Rosemary Square did to attract new customers.”

Even some internet-first brands want to test the waters in West Palm, with respect to the development of Related, formerly known as City Place until a marketing reform in early 2019.

Three businesses – Faherty, a retailer for men and women; Solid & Striped, a swimwear brand; and Mint & Rose, a shoe and accessories company that brings products from Spain, opened pop-up locations in Rosemary Square earlier this year. They are all run by Leap, a company that helps online retailers find space, sign leases and open stores.

“This is an excellent example of a market that is going to flourish,” said Amish Tolia, co-founder and co-CEO of Leap. “Rosemary Square does come from different commercial areas … and we believe it will only get better from here.”

“Based on what we see, we plan to do more in South Florida,” Toila said. ‘

What Toila and many other solid developers are seeing is an influx of people who want to house Palm Beach and surrounding neighborhoods. The comfortable climate and the escape of high taxes were long before the pandemic. But especially now.

There were 289 single-family transactions in Palm Beach in 2020, an increase of 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, record highs,” she said, spilling over into 2021.

Private equity tycoon Scott Shleifer has reportedly just closed down a mansion in Palm Beach, paid more than $ 120 million and set a record for residential sales in Florida and one of the most expensive home sales in the country.

Homes are flying off the market, and thriving construction for other residential areas is a sign that supply remains limited. Relatives, for example, are still planning some high-profile rental communities. One sat on the grounds of an old Macy’s department store near Rosemary Square. It also accelerated the construction of a 20-story office tower, also along Rosemary Square, as the pandemic drove demand that few could predict.

“Twenty-five years ago, West Palm Beach was, as you might think, a very different place with a lot of seasonality,” said Gopal Rajegowda, a partner at the Related Office in the Southeast. “But the market started to mature. And effectively, it started to look and feel like a real city.”

“We are seeing the quality and caliber of people increase, and a lot of it is driven by people moving here from the Northeast and the Middle East,” he said. “Now we think Covid is accelerating the growth in the maturity of the market.”

As demand increases and more retailers and restaurants move to the area, rental of commercial real estate in the South Florida market has also risen.

Retail rents in the Palm Beach area, which includes West Palm Beach, have risen 2.6% over the past twelve months compared to the historical average rent growth of 1.7%, according to CBRE data. For comparison: in New York, retail rents fell by an average of 4.9% from a year ago, compared to the historical growth of 1.6%, the real estate firm found.

“It’s just as bad of a story here as it is in many other parts of the country,” said Marty Arrivo, founder and CEO of Acre, a real estate consulting firm that helps rent space in South Florida.

“San Francisco is a disaster, Los Angeles is a disaster, New York is a disaster, Chicago is freezing,” he said. “Now all of a sudden all these world brands are turning, relatively speaking, to South Florida and going ” It’s open to business, the weather’s nice ‘- we have to focus if we don’t already focus here. We have to double.'”