Monday, June 24, 2024

Fast-growing Florida retirement haven is luring business away from Wall Street

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New York’s wobbly office market, limping from a record-high 20% vacancy rate and loss of some tenants to lower-tax South Florida, has more competition to worry about: Boca Raton.

The once-sleepy Sunshine State city of 100,000 between Fort Lauderdale and West Palm Beach is surging with new office development and amenities to support it.

Boca Raton is more varied than visitors sometimes glean from its repetitive, gated residential communities, or its old reputation as a retirement town filled with geezers in golf carts. Its Atlantic Ocean waterfront now thrives with luxury condo towers, restaurants and private clubs that draw a younger clientele.

Renaissance Boca Raton Hotel, top left, and soon-to-be-built Midtown Place office building, right. Paola Morrongiello

That transformation is most evident in an area now called Midtown, formerly known as the Golden Triangle, which has become the hub of Boca’s growing finance footprint.

The commercial district — bounded by Yamato Road to the north and Palmetto Park Road to the south, and between Interstate 95 to the east and St. Andrews Boulevard to the west — is home to 38 NYSE — and Nasdaq-listed companies.

Leasing at Boca’s 13 million square feet of offices topped 525,000 square feet in 2023, easily besting  343,000 square feet in Fort Lauderdale and 126,000 square feet in West Palm Beach.

The momentum continued into 2024 with six new leases at the  Boca Raton Innovation Campus (BRIC), a former IBM facility a short distance from Midtown that’s undergoing a $100 million project to transform it into more modern offices, places to eat and entertainment venues.

“We continue to see an influx of cutting-edge companies flocking to South Florida in search of flexible, yet turnkey, workspaces to meet the needs of their employees,” BRIC general manager Michael Perrette said.

Midtown, formerly known as the Golden Triangle, has become the hub of Boca’s growing finance footprint. Midtown Place

Several new office buildings that are planned or under construction will bring millions more square feet to market in the next few years.

Prominent among them is Midtown Place, a rising, Class-A project with 120,000 square feet of state-of-the-art offices to open next year. A project of Butters Construction & Development, it will bring south Palm Beach County its first new offices in more than a decade.

An existing building, 2 Town Center, was significantly upgraded by owners CP Group two years ago with such Manhattan-style features as prebuilt floors and hybrid meeting spaces. It boasts its own “restaurant row.”

CP managing partner Angelo Bianco said it’s more than 60% leased at $45 per square foot to such firms as BMO Harris Bank, Praedium Group, Prudential Financial, Related Companies and Wells Fargo Advisors.

Midtown Place, a rising, Class-A project with 120,000 square feet of state-of-the-art offices is expected to open next year. Midtown Place

Companies are drawn by what Boca Raton Economic Development manager Jessica Del Vecchio calls a “built-in workforce of educated talent.”

Del Vecchio summed up the view of some tenants in the post-pandemic world as, “We can keep a presence on Wall Street, but we can also relocate to an area that we want to be in —  that’s low taxes.”

Boca also boasts a stop on the state’s high-speed Brightline service, allowing Miami residents to cut their commute on traffic-clogged I-95 to under an hour.

Midtown tenants enjoy proximity to the gargantuan Town Center Mall. With no fewer than five busy department stores —  Saks Fifth Avenue, Nordstrom, Neiman Marcus, Bloomingdale’s and Macy’s — and hundreds of high-end shops, it has staved off the bricks-and-mortar retail woes in much of the country.

There is also the Brookfield-owned residential and shopping complex Mizner Park, and now — incongruously for a subtropical climate — Boca Ice, a 73,000 square-foot facility with twin, NHL-size skating and hockey rinks.

Boca also has expanded its options for tourists looking to avoid the hassle of South Beach or the exorbitant prices in West Palm Beach.

Boca also has expanded its options for tourists looking to avoid the hassle of South Beach. Renaissance Boca Raton, above. Renaissance Boca Raton

A major hotel/resort, the Renaissance Boca Raton, operated by TPG Hotels & Resorts, recently emerged from an extensive renovation with a new, 30,000 square-foot pool deck and conference facilities.

“We have owned and operated the property since 2006 and have experienced multiple market cycles and economic shifts,” said Ralph V. Izzi Jr., a spokesman for owner, the Procaccianti Companies.

“The current resurgence of Midtown Boca has been remarkable to say the least. Post-COVID demand in leisure and business travel, combined with evolving consumer preferences were key factors in our decision to invest so aggressively in the property.”

Renaissance Boca Raton recently emerged from an extensive renovation and features a poolside cocktails-and-snacks bar. Meat Market

The Boca eating scene is on an upswing everywhere. 

A large outpost of popular and critically praised steakhouse Meat Market is not owned by the Renaissance but is attached to the hotel and also operates a poolside cocktails-and-snacks bar.    

Meanwhile, New York restaurateur Dean Poll opened a branch of his famed Gallagher’s steakhouse last fall. He said he chose the location because it’s in the middle of the “corporate center with millions of square feet of offices. Hotels within a half mile mostly cater to business travelers.”

He and partner Ken Langone were so confident, “We built two dining areas that are able to be made into private rooms.”

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