The thriving Palm Beach scene attracts Fifth Avenue merchants during Covid

WEST PALM BEACH, Florida – Retailers, restaurants and other business owners want to be where people are. And people are moving to South Florida en masse.

Some are temporarily retiring during the pandemic, away from the cold in the north. Others are making a long-term change and companies are still betting on decades-long leases.

In Rosemary Square, an open-air mall near downtown West Palm Beach, a West Elm furniture store and Urban Outfitters are scheduled to open in the coming months. They will be joined by a host of new restaurants, including a local and newly opened taco shop, the health-run True Food Kitchen chain, and the ground-floor Planta restaurant.

Lucid Motors, the electric car company known as a competitor to Tesla, opened its second location in South Florida last month in Rosemary Square, which operates the New York-related developer. He joined Lululemon, Anthropologie, Yeti, Tommy Bahama, Sur la Table, RH and more than a dozen retailers who, most weekends, are full of visitors. After shopping, grab a Pura Vida smoothie, another recent addition to the resort, and listen to live music on the central lawn.

Across the water, on Palm Beach Island, the activity around Worth Avenue is very bustling.

SoulCycle is running a pop-up window outdoors. His spin classes are booked on weekends and are attended by people from out of town, who often hear about his plans to return to New York or Washington, DC – eventually.

On Worth Avenue, a Rolls Royce lines up behind an Aston Martin behind a Porsche, as couples enter and enter Tiffany, Chanel and Saks Fifth Avenue on a cloudless, calm Saturday afternoon. The luxury shopping street, what some might call Fifth Avenue South, has almost no vacancies. The notable exception is an empty Neiman Marcus store that the luxury department store chain closed after filing for bankruptcy last year.

Some business owners have had their decisions shaped by the pandemic and have opted for Worth Avenue above Fifth Avenue.

Maurice Moradof and his mother Yafa Moradof fled Manhattan last November to make a long-term bet and open their second high-end jewelry store, Yafa Signed Jewels, on Worth Avenue. They made the move after a wave of looting and riots in the summer related to George Floyd’s protests in Manhattan. Businesses on New York City’s main streets suffered strong success due to Covid restrictions, the loss of tourists and a decline in consumer spending.

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

Since it opened on Worth Avenue, business has exceeded expectations, he said. The retailer signed a 25-year lease to the store, he said, that is between a Lilly Pulitzer and Michael Kors.

“There is no recession in Palm Beach. … The rich are getting richer,” Maurice Moradof said. “I don’t see New York coming back for at least another two or three years.”

Activity in the South Florida real estate market (imposing cranes, the arrival of new tenants, increased rents, and few vacancies) presents a very different picture to that of SoHo and Fifth Avenue streets in New York City. And experts say real estate in the Palm Beach market, in particular, is increasingly sought after.

“There are domestic migrations 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 commercial real estate company CBRE. specialized in South Florida. “They lick their ribs to be here.”

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

According to Redfin, a technology-based real estate broker, 56.1% of Palm Beach County home searches during the fourth quarter came from outside the county. Searches from Chicago and Brooklyn were the most popular out-of-state origins, the firm said.

“Everything that’s happening in Palm Beach and downtown West Palm, it’s a big story,” he said. “And one of the big catalysts, I think, was what Rosemary Square has done to attract new customers.”

Even some top brands on the Internet are looking to test the waters of West Palm, in the development of Related, formerly known as City Place until a marketing review in early 2019.

Three companies: Faherty, a clothing retailer for men and women; Solid & Striped, a swimwear brand; and Mint & Rose, a shoe and accessories company that carries products from Spain, opened pop-up stores in Rosemary Square earlier this year. And they are all operated by Leap, a business that helps online retailers find space, sign leases and open stores.

“This is a great example of a market that will thrive,” said Amish Tolia, co-founder and CEO of Leap. “Rosemary Square comes out of several different shopping areas … and we think it will only get better from here.”

“From what we’re seeing,” Toila said, “we intend to do more in South Florida.”

What Toila and many other real estate developers see is an influx of people who want to make Palm Beach and the surrounding neighborhoods home. Comfortable weather and high tax evasion have long been attracted, even before the pandemic. But especially now.

In 2020, there were 289 single-family transactions in Palm Beach, 122% more than the previous year, according to a report by real estate agent Suzanne Frisbie of luxury firm Premier Estate Properties. He concluded the year “with often surprising and record highs,” which came in until 2021.

Private equity mogul Scott Shleifer reportedly just locked in an oceanfront mansion in Palm Beach, paying more than $ 120 million and setting a record for residential sales in Florida and setting one of the most expensive home sales of the country.

Houses are coming out of the market and rising construction for other residential spaces is a sign that supply remains limited. Related, for example, still plots a couple of high-profile rental communities. A sit on the site of an old Macy’s store near Rosemary Square. It has also accelerated the construction of a 20-story office tower, also next to Rosemary Square, as the pandemic boosted demand that few could have predicted.

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

“We see it increasing the quality and caliber of people, and a lot of people moving here from the Northeast and the Midwest,” he said. “Now, we believe Covid is really accelerating the growth of market maturity.”

As demand increases and more retailers and restaurants move into the area, commercial real estate rents in the South Florida market have also increased.

Retail rents in the Palm Beach area, which includes West Palm Beach, have risen 2.6% in the past 12 months compared to a historical average income growth of 1.7%, according to CBRE data . In comparison, in New York, retail rents fell 4.9% from a year ago, on average, compared to a historical growth of 1.6%, according to the real estate company.

“It’s not as bad a story here as it is in many other parts of the country,” said Marty Arrivo, founder and CEO of Acre, a real estate consultant that has been helping rent spaces 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, relatively speaking, all these world brands are heading to South Florida and saying,‘ It’s open for business, it’s been good weather ’: we’ll have to focus if we haven’t focused here yet We need to bend “.