Flagler Drive in West Palm Beach. This is the southern end of the new proposed financial district, anchored on the left by the Esparante building. (Melanie Bell)
West Palm Beach is “essentially out of Class A” office space as it moves to ramp up the number of financial services firms doing business in the city, economic development director Chris Roog said.
That’s why city officials and the Palm Beach County Business Development Board say West Palm Beach urgently needs premium office space if it’s to continue pursuing hedge funds, private equity firms and other financial services companies.
Roog said the calls come often from interested companies. He fields about six calls per month from U.S. financial services firms, with at least one group touring the city’s Class A office space to scout potential relocation spots. His latest proposal—nicknamed Project Sphere because of confidentiality agreements between the city and potential investors—comes from a company looking to move to West Palm Beach this year.
But city officials and those responsible for marketing West Palm Beach say there’s little room for new tenants.
“It’s telling that the city is essentially out of office space,” Roog said. “The last time we took a tour of office space, I had three spaces to show. That was last month, which means that the city is essentially out of Class A.”
Prospects typically want 6,000 to 20,000 square feet of Class A space, but some also consider older offices for lower overhead and the potential to create unique and open work environments.
Already, financial services firms are among the largest users of the city office space, occupying more than 198,200 square feet of Palm Beach’s 5.5 million square feet of office inventory, and employing about 4,000 people, or about 8.5 percent of the city’s workforce.
“We very much hope that we get some more Class A office space built,” said Kelly Smallridge, president and CEO of the Business Development Board.
Working with city staff, the board has been recruiting firms to stimulate the economy by creating high-paying white-collar jobs and boost demand for upscale housing and office space.
In January, Mayor Jeri Muoio unveiled the Flagler Financial District—a new name and brand for a large portion of downtown with a cluster of banks and financial institutions. The district runs from Okeechobee Boulevard to Sixth Street and from Flagler Drive to Rosemary Avenue. The goal, the mayor said, was to draw attention to the brisk business already taking place in that quadrant of the city and attract new firms to speed anticipated development expected west of Quadrille Boulevard.
To attract investors, the city and Business Development Board hosted five hedge funds at a dinner about two weeks ago.
The city is also mulling a “data hotel” or center to connect users to Wall Street traders. The idea is still in the early stages, but officials are considering a public-private partnership for the project. The building would be near an intricate network of long-haul optical cables installed downtown and capable of transmitting massive amounts of data.
“The infrastructure is there,” Roog said. “The fact that we have these cables in close proximity to the Flagler Financial District is an amenity that very few can tout. Connectivity is really a critical part of enhancing the district. It’s a goal that I think we’re well-poised to meet.”
So far, the city has succeeded in attracting major deals with firms such as Delaware-based Argent Group, which leased 4,700 square feet at 221 Clematis St. with plans to invest $500,000 to customize the space.
Another investor, the Related Cos., is erecting Gateway Tower at CityPlace, a 12-story complex in the heart of downtown on Okeechobee Boulevard with 200,000 square feet of Class A space and extras like concierge service.
And Westmont, Ill.-based Napleton Acquisitions LLC, which last year bought the former Bank of America Centre at 625 N. Flagler Drive, plans to upgrade the property.
The city, too, has its eye on a commercial project set for the “tent site,” a prime parcel of city-owned land spanning a block at the intersection of Quadrille Boulevard and Lakeview Avenue.
“Our goal has always been to develop that into a signature Class A office site,” said Elliot Cohen, West Palm Beach’s director of communications.
But officials say that’s not enough for the city that saw 91,675 square feet of positive office absorption in the fourth quarter, according to CBRE data.
“I encourage any developer interested in creating Class A office space to take a look at the city of West Palm Beach, because between the city and the Business Development Board, we can fill it,” Roog said.