Market continues to sizzle
The vacancy rate for industrial properties in Palm Beach County fell to a 10-year low of 3.4 percent in the first quarter of 2016 according to a recent report issued by real estate firm CBRE.
Rents rose 4 percent to $8.86 triple-net per square foot in the first quarter from the year-earlier period, according to CBRE.
What’s driving the surge?
Palm Beach is one of the few places in South Florida where there is land to build single family homes which also drives a need for industrial space. In addition, the rise of ecommerce is also fueling a need for distribution type businesses.
Meanwhile, the single family home market continues to sizzle with South Florida remaining among the top ten markets in the country according to the Case-Schiller Index, considered a bible of the industry.
In the most recent study, the index pegged the tri-county South Florida region as the 8th best market in terms of price appreciation.
Portland, Seattle, Denver and Dallas remain the top four markets experiencing double digit, or near double digit percentage growth in home values.
South Florida values are growing at between 3.4 and 6.4 percent year over year.
The growth in home prices is creating a crisis in workforce housing experts say.
The median single-family home price in Palm Beach County reached $305,000 in June, the highest since 2008 and up 3.4 percent from a year earlier. That puts homeownership out of reach for many, if not most, of the county’s residents, experts say.
Median household income totals $53,000 in the county. A general rule of thumb is that you shouldn’t buy a home that costs more than three to three-and-a-half times your income. That would put the maximum affordable home price at $159,000 to $185,500 for a median household.
It is difficult if not impossible to find new construction in Southern Palm Beach County under $200,000.
The median price for a townhome/condo soared to $149,450 in the second quarter, up 8.3 percent from $138,000 last year.
The cost of land and construction makes it difficult for developers to add affordable product in hot markets like Delray and Boca.
The issue of affordability has become a hot button topic across the country, especially in desirable markets which tend to be very expensive.
The shortage of workforce housing is fueling a YIMBY (Yes in My Backyard) in places like San Francisco, Seattle and Denver. Yimby’s believe NIMBYs (Not in My Backyard) are fueling the crisis by making it hard for developers to add product. They argue that prices have surged because of a shortage of new housing, arguing that demand is far outweighing supply ratcheting up prices.
It’s a sea change from the usual greedy developer argument, but the YIMBY movement is also calling on cities to require affordable housing when new projects are built.
The new product being added in Delray and Boca tends to be very high end and far out of reach of teachers, young professionals, police officers and other middle class professions.
Boulder recently hosted the first ever YIMBY conference and more are planned as the movement seeks growth nationwide.
Junior’s Selective About Locations
Savvy cheesecake lovers are eagerly anticipating the opening of a new Junior’s restaurant slated for Mizner Park this fall.
Boca should take some pride in the decision of the landmark New York restaurant to expand to what has been called the 6th borough. In a recent interview in “Shopping Center Today” magazine, Junior’s owner Alan Rosen said the 66-year-old landmark is being very careful with their expansion plans choosing markets that make sense.
“Because of the popularity of our brand, there are parts of the country that are calling for us,” said Rosen who calls Junior’s ‘Brooklyn comfort food’. “To continue our growth, there are certain strategic spots I think we need to be. My goal is to open one new store a year for as long as I can keep up.”
Rosen has his eyes on Las Vegas and Miami, but said he chose Boca Raton for strategic reasons.
“We are not afraid of big stores,” he said noting the Mizner Park Junior’s will be 8,000 square feet and feature indoor and outdoor seating, plus a bakery, a takeout department and a bar. “We are looking for more locations in that big format.”
Rosen told Shopping Center Today that when scouting locations, he has little use for the next hot neighborhood preferring instead to open in already established districts.
“We like high profile locations,” he told the magazine. “Places where I’m not going to have to pray the night before whether or not people are going to be there in the morning.”
While Junior’s sticks to a winning formula, expect the new Boca store to reflect a little bit of the local culture. But the cheesesteak recipe stays the same as it has for 66 years.