Palm Beach’s thriving scene attracts retailers on Fifth Avenue during Covid

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

Some temporarily retreat during the pandemic, away from the cold northern weather. Others make a longer-term change, and companies have been engaged in leasing for decades.

At Rosemary Square, an open-air mall near downtown West Palm Beach, a West Elm furniture store and Urban Outfitters are set to open in the coming months. They will be joined by a number of new restaurants, including a recently opened local taco shop, the healthy True Food Kitchen chain and the plant-based Planta restaurant.

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

Beyond the water, on Palm Beach Island, the activity around Worth Avenue is just as lively.

SoulCycle runs an outdoor pop-up. His rotation classes are booked on the weekends and are attended by people from outside the city, who are often heard talking about their 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, while couples dive in and out of Tiffany, Chanel and Saks Fifth Avenue on a cloudless Saturday afternoon. The luxury shopping street, what some might call Fifth Avenue of the South, has almost no vacancies. The notable exception is an empty Neiman Marcus store that the luxury chain closed after it went bankrupt last year.

Some business owners had pandemic-shaped decisions and opted for Worth Avenue over Fifth Avenue.

Maurice Moradof and his mother, Yafa Moradof, fled Manhattan in November last year to make a long-term bet and open a second luxury jewelry store, Yafa Signed Jewels, on Worth Avenue. They made the move after a wave of robberies and riots in George Floyd’s protests took place in Manhattan during the summer. Business along New York’s high streets has been hit hard by Covid restrictions, the loss of tourists and the drop in consumer spending.

“The business was getting 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. I didn’t feel comfortable anymore.”

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

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

South Florida real estate market activity – towering cranes, the arrival of new tenants, rising rents and few vacancies – presents a considerably different picture from New York City’s SoHo and Fifth Avenue. And experts say that properties on the Palm Beach market, in particular, are increasingly sought after.

“There is internal migration from New York, New England, Toronto, Montreal … we also see people from Chicago and California,” said Drew Schaul, senior vice president of consulting and transaction services for commercial real estate firm CBRE, which specializes in South Florida. . “She licked her chops to be here.”

Some Wall Street financial institutions have also made the leap, citing tax and life benefits for their decisions. Goldman Sachs appears to be targeting the Palm Beach market for new office space, while Paul Singer’s Elliott Management has moved its headquarters to West Palm Beach in downtown Manhattan.

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

“Everything that happens in Palm Beach and downtown West Palm is a great story,” he said. “And one of the big catalysts, I think, was what Rosemary Square did, attracting new customers.”

Even some brands received on the internet are looking to test the waters of West Palm, at the development of Related, which was known as City Place until a marketing review in early 2019.

Three businesses – Faherty, a men’s and women’s clothing retailer; Solid & Striped, a swimwear brand; and Mint & Rose, a footwear and accessories company that brings products from Spain – opened pop-up locations in Rosemary Market 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 co-executive director of Leap. “Rosemary Square draws from many different shopping areas … and we think it will only get better from here.”

“Based on what we see,” Toila said, “we fully 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 their home in Palm Beach and the surrounding neighborhoods. The comfortable climate and the escape of high taxes have long been attracted, even before the pandemic. But especially now.

In 2020, there were 289 single-family transactions in Palm Beach, up 122% from the previous year, according to a report by real estate agent Suzanne Frisbie from luxury firm Premier Estate Properties. The year ended “with often astonishing highs, setting records,” she said, which will be extended to 2021.

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

Houses are flying off the market, and expanding construction for other residential areas is a sign that supply remains limited. Related, for example, plans another couple of profile rental communities. One will be on the site of an old Macy’s department store near Rosemary Square. It also accelerated the construction of a 20-storey office tower, also near Rosemary Square, as the pandemic caused demand that few could have predicted.

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

“We see the quality and caliber of people growing, and a lot of them are driven by people moving here from the northeast and the midwest,” he said. “Now, we think Covid is really accelerating the growth of the market.”

As demand grows and more retailers and restaurants move into the area, commercial real estate rents and the South Florida market have 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 historic 1.7% increase in rent, according to CBRE data. For comparison, in New York, retail rents decreased by 4.9% compared to a year ago, on average, compared to the historical increase of 1.6%, the real estate company found.

“It’s not as bad as 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 helped 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, relatively speaking, all these global brands are heading to South Florida and saying, ‘It’s open for business, the weather is beautiful’ – we need to focus if we haven’t already focused here. We need to focus on we double. “