"These sales figures are a strong indication that the Palm Beach County office market is experiencing renewed investor interest and is beginning to stabilize in what was previously a fluctuating economy in 2002 and early 2003," the report states. Class A building investment is expected to continue in the CBD and other submarkets this year.
Also, says the report, the Boca Raton submarket, the county's dominant corporate sector, is starting to recover. The submarket's fourth-quarter statistics show almost 50,000 sf of positive direct net absorption, compared with negative 35,421 sf in the previous fourth quarter. The improvement was affected greatly by activity in class A office buildings along the Federal Highway corridor, including the 595 Financial Center and the Renaissance Centre, both of which were successful at pre-leasing and delivered about 70% occupied.
The Boca sublease vacancy rate at year-end declined about one-third from 2.8% in 2002 to 2%. Leasing activity totaled more than one million sf for the second year in a row. For reasons such as these, Boca Raton is expected to continue to be a principal corporate setting this year.
In Northern Palm Beach County, the economy is expected to benefit significantly over the next decade as the Scripps Research Institute moves to the Palm Beach Gardens submarket.
In Palm Beach Gardens, the direct net absorption was a negative 56,822 sf at the end of the year, but it has been increasing since the middle of the year and ended 2003 with a positive 57,262 sf, the report states. The Scripps project should help increase leasing activity and decrease the direct vacancy rate, which grew from 13.6% at the end of 2002 to 20.1% a year later. While the county saw a negative direct net absorption of 206,495 sf at the end of last year, the fourth quarter saw positive absorption of 113,404 sf. And absorption should be positive by the middle of this year, as a drop in the sublease vacancy rate is expected, along with increased leasing and less downsizing.
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