Commercial buildings continue to trade in West Palm Beach as companies bet on the future.
The pandemic is not pausing real estate action just south of downtown West Palm Beach.
During the past several months, three deals have closed on Dixie Highway south of Southern Boulevard, pushing new investment farther south to an area of town dubbed “SoSo,” or South of Southern Blvd.
“It’s a real shot in the arm to SoSo,” said William Reis of Corcoran Group Real Estate on Palm Beach.
The deals are a sign that, for now, investors and business owners see long-term strength in the city’s economy.
The transactions also further add to the renaissance of Dixie Highway that began during the last recession, when investors began buying property mostly between Okeechobee Boulevard and Belvedere Road.
During the past decade, this part of town has seen new restaurants, shops, design centers and even a new school.
Over time, development started to push south of Belvedere Road, including a redevelopment of the Palm Beach Post property. Now investment is moving south once again, past the next major east-west road, Southern Boulevard.
The decision by investors and companies to buy property in this part of town “is an encouraging sign of confidence in the area … and its future,” Reis said.
The coronavirus pandemic may have shocked the economy, and hurt retailers, restaurants and hotels, but it isn’t stopping buyers from closing on commercial building purchases.
Among the recent transactions is the sale of the complex at 5301 S. Dixie Highway, longtime home of Hatfield’s Rug Cleaners. Reis represented the sellers, an investment group.
In June, a group that includes investor and developer Sam Fisch paid $950,000 for the complex of buildings totaling 9,300 square feet and stretching from Putnam Road to Oxford Street.
Fisch said he has big plans for the site.
They include redoing the buildings to create space for a gourmet market. He also wants to build executive office space. Both are intended to serve the upscale neighborhoods in the area.
Nearby, at 4912 S. Dixie Highway, Precision Esthetics Dental Laboratory paid $2.4 million for the former Mary Fisher design building last December. Plans are to move by year end from about 2,000-square feet on Georgia Avenue into the 8,100-square-foot Dixie Highway building, where the company will be able to grow its manufacturing capability.
“It’s a huge expansion,” said Eduardo Sorrel, Precision Esthetics marketing director.
Meanwhile, the retail center at 5707 S. Dixie Highway traded for $1.6 million. Ellen Quinlan of Quinlan Realty, who also is an owner of West Palm Beach’s Darbster restaurant, said she lives in El Cid “and is a strong believer in the area.”
The property closed at the end of March, and while the growing pandemic cause them a moment of pause, “we didn’t really get cold feet. We went ahead, and it’s been good,” she said.
The property is fully leased to tenants that include a delicatessen, law firms and a realty company.
Fisch said he went under contract to buy the Hatfield’s building in October, but title issues delayed closing. Despite the pandemic, he said he still wanted to go forward with the purchase “because it’s a great building and the area is so underserved. We felt it was a good opportunity to revitalize the site. Everybody knows the Hatfield’s building.”
The property was a grocery store in the 1920s, and later, a diaper factory, Fisch said. For many years, it has been home to its current tenant, Hatfield’s.
Fisch said plans are afoot to modernize the building and make needed repairs to the roof. Hatfield’s will remain but be moved into smaller space.
The big picture plan is to turn the property into a market that will cater to nearby residents who want gourmet food and maybe some prepared foods, too, but don’t want to travel far.
“People want good ingredients,” Fisch said. “It can be something they prepare or something that is prepared for them.”
Gourmet neighborhood markets are a popular tenant for building owners seeking to revitalize Dixie Highway properties and cater to nearby upscale neighborhoods.
Farther north on Dixie Highway, Bedner’s Farm Fresh Market will take space in the planned Flamingo Place development at 420 Claremore Drive, said Bill Reichel, president of Reichel Realty, which is handling leasing. The space, formerly Ragtops Antique Auto dealership, is at the corner of Claremore Drive and Dixie Highway.
Bedner’s market construction is underway, with plans are to open by November, Reichel said.
And at the Palm Beach Post complex, just south of Belvedere Road at 2751 S. Dixie Highway, owner Tricera Capital plans to bring an unnamed grocer to the site.
The interest in gourmet grocery tenants comes as residential sales action remains strong in nearby neighborhoods.
Historic and once-sleepy residential enclaves in West Palm Beach have turned into multi-million dollar homes.
In SoSo, teardowns are all the rage as buyers seek to build houses that would cost double on the other side of the Intracoastal Waterway on Palm Beach, said Burt Minkoff, of Douglas Elliman Real Estate on Palm Beach.
Minkoff said inventory remains low due to strong buyer demand. Young families, particularly families moving from the Northeast, are eager to buy homes with multiple rooms so they have room to work, in case their children will be enrolled in virtual school in the fall due to the pandemic.
In addition to the market, Fisch said he also plans to build executive-suite style space for people who want an office near their homes but do not want to have to step inside an office tower.
“It will be executive suites but with a neighborhood feeling,” he said. Between 10 to 12 offices are planned, he said.
During the course of the pandemic, Fisch said he’s learned just how valuable small executive offices can be.
People reluctant to work in crowded offices, but unwilling or unable to work from home, leased up four remaining private offices in a co-working building he owns in Northwood, north of downtown West Palm Beach. The space, 300 Butler Business Centre, features shared workspaces and 18 private offices, “but private office space is what everybody wants,” he said.
In addition to the market and office space coming to SoSo, the growing Precision Esthetics will add a new employment base to this part of South Dixie Highway.
Between 20 to 30 employees work at the company, now located on Georgia Avenue. But that number is expected to grow by another 30 with the newly expanded building, according to the Business Development Board of Palm Beach County, the county’s business recruitment arm.
Precision Esthetics caters to dentists not only in Palm Beach County but nationwide and even globally.
The company hasn’t been hurt by the pandemic, Sorrel said. On the contrary, it has gained new customers as clients have not been able to tap large manufacturers in China but have had to switch to U.S. makers instead.
Commercial buyers looking to score deals from property owners struggling from the pandemic might have to look elsewhere, said Reichel, who also manages properties for landlords.
For now, 92 percent of some 400 tenants he manages have paid the rent, many of them likely helped by the Small Business Administration’s loan programs.
“We’ve done exceedingly well in this crazy market,” Reichel said.
If building owners start having trouble in the future, it’s not likely their properties will sit unclaimed for long. Reichel said a number of investors have plenty of “dry powder,” or cash reserves, waiting for opportunities.