COMMERCIAL REAL ESTATE
Commercial Real Estate Trends & Outlook – January 2021
Commercial Real Estate Trends & Outlook is provided by the National Association of REALTORS Research Group.
“On a year-over-year basis, sales declined by 1% in the fourth quarter of 2020 (5% in the second quarter). Leasing volume fell by 1% (4% in the second quarter). Construction activity among REALTORS® was down by 3% (6% in the second quarter). The risk spread (cap rates less 10-year T-bond) remains elevated at 6% compared to 4% prior to the pandemic.
For the first quarter of 2021, REALTORS® expect an increase in sales of land (5% y/y), industrial (3% y/y) and multifamily (2% y/y) properties. Regarding the land market, the properties with the strongest expected increase in sales are residential land (7% y/y), industrial land (5% y/y), and ranch lands (5% y/y).”
Commercial Market Insights – December 2020
Commercial Market Insights is provided by the National Association of REALTORS Research Group.
“Commercial sales transactions fell 57% year-over-year in November, with sales falling across property types, even for industrial properties.
In both the multifamily and office markets, transactions in suburban markets have contracted much less than in CBD markets. Sales prices in suburban markets are also picking up faster than prices in CBD markets. Industrial property acquisitions have contracted year-over-year, but sales prices have increased, an indication that investors continue to acquire properties with good market fundamentals. In the retail market, cap rates remain at a five year high, reflecting the higher risk perception of investors as e-commerce sales continue to accelerate during the pandemic.”
If you have any questions about the commercial real estate market or a specific property, contact Chris Losquadro at 561.584.8555.
Palm Beach County Commercial Real Estate
Year End 2020
COVID-19 continues to weigh on the commercial real estate market in Palm Beach County. While there are some positive signs in specific markets and sectors, overall the market has been adversely impacted by the pandemic.
Following is the most updated commercial real estate market information for Palm Beach County for each of these individual sectors.
- Commercial Office Market
- Retail Market
- Industrial Market
- Multifamily Market
The information was provided by our commercial real estate valuation affiliate partner, BAAR Realty Advisors, Inc (“BAAR”). BAAR can assist with all your commercial real estate appraisal and other valuation needs. Please contact Chris Losquadro at Quantum Realty Advisors, Inc. for more information.
The Palm Beach County Office Market
The 57 million square foot Palm Beach County commercial office market reports a 2020 vacancy rate of 10.9% (up from 10.6% in the Q3), an availability rate of 14.1% (up from 13.8% in Q3) and more than 1.1 million square feet of space under construction. The average rental rate across all classes of office properties was reported to be $35.78 per square foot which is an increase from the Q3 amount of $35.15 per square foot. Net absorption during the quarter was 4,229 square feet.
Significant office lease transactions during 2020 are as follows:
- University Centre – 40,000 square feet
- Boca Raton Innovation Campus – 37,982 square feet
- 1700 Palm Beach Lakes Boulevard – 32,503 square feet
Within the past 12 months there have been 260 commercial office transactions in Palm Beach County. The average sale price was reported to be $237 per square foot with an average capitalization rate of 6.7%.
Significant office sales that occurred during 2020 are as follows:
- Divosta Towers (North Tower) – $40,245,859 or $368 per square foot
- Divosta Towers (South Tower) – $39,754,141 or $355 per square foot
- Boca Clinic – $34,000,000 or $449 per square foot
Palm Beach County Retail Market
The 79 million square foot retail real estate market in Palm Beach County reports a vacancy rate of 6.3%, up from 5% in Q3, with approximately 563,000 square feet of space under construction. The average rent across all retail asset classes (malls, power centers, general retail, etc.) was reported to be $28.51 per square foot, up slightly from Q3.
Retail leasing continued to lag due to the impact of COVID-19 with negative net absorption at a negative 14,788 square feet. Significant retail lease transactions for 2020 are as follows:
- 21046 Commercial Trail – 62,146 square feet
- Legacy Shoppes – 58,341 square feet
- Grove Market Shopping Center – 28,983 square feet
Within the past 12 months there have been 201 retail property transactions in Palm Beach County. The average sale price was reported to be $335 per square foot with an average capitalization rate of 6.0%. Significant retail sales transactions that occurred during the quarter are as follows:
- Coral Sky Plaza – $36,306,180 or $169 per square foot
- 6550 Okeechobee Boulevard- $30,000,000 or $245 per square foot
- 259 Worth Avenue – $26,400,000 or $3,604 per square foot
Palm Beach County Industrial Market
At this time the 64 million plus square foot Palm Beach industrial real estate market reports a vacancy rate of 4.4%, up from 4.0% in Q2. The 7.2% availability rate is slightly lower than Q3 (7.9% availability rate) with approximately 760,000 square feet of space under construction. The average market rent across all industrial asset classes (flex, distribution, etc.) was reported to be $12.49 per square foot, up from $12.25 per square foot in Q3.
Industrial leasing during the current quarter continued to weaken with net absorption totaling negative 285,190 square feet. Significant industrial lease transactions in 2020 are as follows:
- 15335 Park of Commerce Blvd – 114,536 square feet
- 6043 Southern Boulevard (Home Depot) – 77,760 square feet
- 601 103rd Avenue North – 60,000 square feet
Within the past 12 months there have been 198 industrial property transactions in Palm Beach County. The average sale price was reported to be $145 per square foot with an average capitalization rate of 7.4%. Significant industrial sales that occurred during 2020 are as follows:
- 6600 Congress Avenue – $52,311,000 or $235 per square foot
- Dania World Trade – $31,750 or $296 per square foot
- 700 Banyan Trail – $31,400,000 or $179 per square foot
Palm Beach County Multifamily Market
At this time the 69,000 +/- unit multifamily apartment market in Palm Beach County reports a vacancy rate of 8.2%, up slightly from Q3 at 7.8%. Approximately 3,300 units are under under construction at this time and the average market rent across all multifamily asset classes was reported to be just over $1,694 per unit.
Within the past 12 months there have been 79 multi-family property transactions in Palm Beach County. The average sale price was reported to be $256,513 per unit with an average capitalization rate of 6.4%, down from 7.9% as of Q3. Significant multifamily sales are as follows:
- Park-Line Palm Beaches – $114,750,000 or $395,689 per unit
- Sole at City Center – $103,494,000 or $328,552 per unit
- The Hamptons at Palm Beach Gardens – $80,000,000 or $357,142 per unit
If you have specific questions about the commercial real estate market or how we can help with your commercial real estate needs, contact Chris Losquadro at 561.584.8555.
South Florida Commercial Real Estate Market Report
Third Quarter 2020
Central Florida Commercial Real Estate Market Report
Third Quarter 2020
Disclaimer: The data for this market update was obtained from sources deemed to be reliable, is not guaranteed. No warranty or representation, expressed or implied, is made as to the accuracy contained herein and submitted subject to errors, omissions and other conditions.