Apartment building boom could mean new retailers for West Palm Beach

March 08, 2018
The Alexander apartment building on Fern Street in downtown West Palm Beach. (Lannis Waters / The Palm Beach Post)

After spending decades in the suburbs, John Hayes has enthusiastically embraced high-rise living in downtown West Palm Beach.

Hayes walks to his job at Palm Beach Atlantic University. He strolls to Starbucks. He enjoys the water view from his 10th-floor unit. He even gave up his vehicle.

While Hayes says he loves most things about city life in downtown West Palm Beach, he airs one gripe: “There’s just not much retail.”

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In a complaint echoed by other downtown dwellers, Hayes laments the lack of basic shopping in West Palm Beach’s center. The Publix at CityPlace is serviceable but small and not particularly well-stocked, he says, and he’d like easy access to a chain drug store.

The construction cranes dotting West Palm Beach’s skyline hint at a potential solution: With hundreds of new apartments recently completed, hundreds more under construction and still hundreds more on the drawing board, downtown is becoming a more densely populated place.

The influx of affluent new residents is likely to attract retailers. In one sign of interest, CVS hopes to lease the Ultima Gym space at 400 Clematis St.

“National tenants are not stupid,” said Raphael Clemente, head of West Palm Beach’s Downtown Development Authority. “They look at rooftops and count numbers.”

The numbers break down like this:

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In all, the apartment building boom could add more than 2,000 units — and 3,000 or more residents — to a downtown whose population the Downtown Development Authority estimates at 8,440.

“It has a domino effect,” said Rick Greene, West Palm Beach’s director of development services. “There’s going to be a demand for more restaurants and more grocery stores. By having a more dense downtown, that’s going to make it a more walkable downtown.”

That change can’t come soon enough for Hayes. For now, when he needs to do a major shopping run, Hayes picks up a vehicle from Zipcar, the sharing service, and drives to Whole Foods Market on Palm Beach Lakes Boulevard.

Another new resident of downtown, Don Gilman, says, he, too, loves urban life — except for the lack of shopping. Gilman and his wife moved to Loftin Place after selling their house on the south end of West Palm Beach, and Gilman finds himself shopping at Publix as far away as North Palm Beach.

“We are in a food desert,” Gilman said.

It’s a paradoxical observation: Gilman says he and his wife often stroll 10 minutes to Clematis Street, with its wealth of restaurants. And the Butcher Shop Beer Garden, a hipster eatery, opened across the street from Loftin Place.

But buying basic groceries still requires driving.

Most observers predict the hundreds of new apartment units, many of them with steep rents, will attract new retailers and slow the turnover of others. While Clemente says Clematis Street retailers and restaurants fare better than most merchants nationally, it’s hard to miss the revolving door of tenants.

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CityPlace, meanwhile, has churned through tenants for years, and its most significant hole opened in 2017, when Macy’s closed its store in the middle of the center.

“Having additional people living downtown will increase across-the-board retail sales for restaurants and retailers,” said Bob Gibbs, president of Gibbs Planning Group in Michigan and a longtime observer of downtown West Palm Beach.

However, there might be limits to the extent of the retail demand created by this building boom. As a rule of thumb, Gibbs said, a new apartment creates demand for 15 to 20 square feet of retail space. By that measure, the 1,000 new units downtown would drive just 15,000 to 20,000 square feet of new stores — a total that’s less than the small Publix at CityPlace.

Even so, the new downtown dwellers represent a desirable demographic. Many of the freshly built apartments cost $2,000 a month — a sum roughly equal to paying principal and interest on a $400,000 mortgage at 4.5 percent interest for 30 years. In other words, the new arrivals could afford to buy homes but rent by choice.

Elie Rieder, chief executive of Loftin Place owner Castle Lanterra Properties, said the new generation of high-end apartments is attracting affluent tenants who are coveted by retailers.

“The newcomers who are moving into West Palm Beach,” Rieder said, “they’re making six figures – mid- to high six figures, many of them – and they want quality.”