Palm Beach Office Market May Be Stabilizing

FT.LAUDERDALE-The Palm Beach office market suffers from some of the highest vacancy rates in South Florida, but the situation is not as bad as it looks in the charts, says Michael Erickson, senior vice president at CB Richard Ellis in Boca Raton.

The affects of the severe downturn in financial services, which has plagued Boca Raton’s office market, as an example, look worse on paper, because Boca Raton is a relatively small submarket, with only 11.4 million square feet, says Erickson. In these submarkets, the loss of a large tenant becomes magnified.

An even clearer example of the magnification phenomenon can be found in Palm Beach County’s Delray Beach submarket, which has only 1.4 million square feet and a 58.9% vacancy rate, which is due to the loss, nearly a year and a half ago, of Office Depot, a huge tenant. But the office supply retailer, which now resides in a 625,000-square-foot space in Boca Raton, moved only two and a half miles away, says Erickson. In a place like Delray Beach, “even a 10,000 square foot lease can move the dial,” he says.