The apartment boom in downtown West Palm Beach suggests a new version of the old saw: Build it and they might not come.
The apartment vacancy rate in West Palm Beach jumped to 7.8 percent at the end of 2017, up from 6 percent a year earlier, Marcus & Millichap says. The commercial real estate brokerage blames the combination of new construction and what it calls “tempered demand.”
Even so, downtown West Palm Beach rents rose sharply, increasing 6.9 percent in 2017, to an average of $1,376.
Palm Beach County’s overall vacancy rate was 6.2 percent at the end of 2017, up from 5.3 percent at the end of 2016. Countywide, rents rose 1.8 percent to an average of $1,526.
For downtown West Palm Beach, the numbers of new units break down like this:
- Landlords have opened 464 apartment units at two recently completed projects, Loftin Place at the north end of downtown and The Alexander at 333 Fern St.
- An additional 605 apartments are scheduled to open this year at two other projects, Broadstone City Center at 410 Datura St. and Park-Line near the Brightline station.
- And nearly 1,400 more units have been proposed at five other projects, though those have yet to break ground.
It’s no surprise that a building boom would cause vacancies to jump. Elie Rieder, owner of Loftin Place, said he expects landlords will need about two years to find tenants for their new units.
“Short-term, softness in rents could happen,” Rieder said in a March interview.
For tenants, he said, that could mean rent concessions and other attractive deals.