West Palm Beach needs more luxury office space downtown. Or does it? We soon could find out.
Intech, the longtime anchor tenant of the luxury CityPlace Tower office building, is weighing a move to another office building, which two real estate sources say is One Clearlake Centre, west of the downtown.
The deal, in its final stages, would free up 50,000 square feet of arguably the best space in town. Intech’s 17th and 18th floors at CityPlace Tower feature not only water views but luxury features not typically seen in the average office.
Zen garden? It’s in there. So is a waterfall. Also, there are offices built large for the executive lifestyle. Best of all, the firm’s name adorns the tower’s top.
A top official at Intech confirmed it is weighing a move to another building in West Palm Beach because its lease expires in the next 24 months. But the official said a decision on a move hasn’t yet been made.
“We are exploring several options in West Palm Beach, including our current space,” said Justin Wright, Intech’s chief operating officer and general counsel. “I have open proposals in front of me for several different spaces, and I plan to have that decision made during the first quarter in 2018.”
Intech’s lease at CityPlace Tower expires in August 2019, according to real estate brokers.
If Intech vacates CityPlace Tower, it’s unlikely the space will remain empty for an extended period, predicted Kelly Smallridge, president of the Business Development Board, Palm Beach County’s chief business recruitment arm.
The Related Cos. of New York and Crocker Partners of Boca Raton built the 18-story, 300,000-square-foot CityPlace Tower, next to CityPlace, in 2008. The 525 Okeechobee Blvd. tower is filled with top law firms, financial firms and Cleveland Clinic Florida medical offices.
But the tower’s leasing was kicked off by Intech, the money management firm now owned by Janus Henderson Global Investors. Intech moved to the tower’s penthouse floors, which are connected via an internal staircase, from a location in Palm Beach Gardens when CityPlace Tower opened in 2008.
Intech’s build-out was “palatial,” said Neil Merin, chairman of NAI/Merin Hunter Codman real estate brokerage in West Palm Beach.
In fact, it’s so over the top, “I don’t know who is going to take it like that,” Merin said.
“It’s very desirable space,” Smallridge said. “I don’t think it’s going to be empty that long. Everybody keeps complaining there isn’t enough office space. And (this amount of) space hasn’t come on the market in a long time.” Smallridge predicted anyone leasing the space would expect to retrofit it, unless they happen to be fond of zen gardens.
The deal is important for a couple of reasons.
First, if the CityPlace Tower penthouse becomes available, Smallridge said it will be an indicator of whether the market really needs more luxury office space.
City commissioners recently voted down a new office building plan by the Related Cos. to build a waterfront office tower. The proposed tower, dubbed One Flagler, would have been on the waterfront next to the First Church of Christ, Scientist along Flagler Drive.
The 25-story tower was pitched to be built on land zoned for only five stories. To get around that hurdle, city staff proposed a special business district that would have allowed the tower to be built on the site.
But the public was divided, with some extolling the tower’s design and need in the market, and other residents decrying the business district as a thinly veiled attempt at spot zoning. In September, the business district was voted down 3-2 by city commissioners, killing the tower plan.
Smallridge said the penthouse CityPlace Tower space, if freed up, could be attractive to local tenants wanting nicer digs as typically happens in West Palm Beach’s “move around” market. Or the space could lure out-of-town tenants earnestly seeking to move to West Palm Beach, as Related officials assured was the case as they pressed their tower proposal.
“It’ll be a big test,” Smallridge said.
In addition, if Intech hops over to One Clearlake, it could significantly raise the profile of this older, 18-story office tower at 250 S. Australian Ave.
The property recently sold for $42 million to Velocis, a private equity real estate manager, in partnership with CREC, a Miami-based real estate company. A CREC official did not return a phone call for comment.
The 218,461-square-foot building, just east of Interstate 95, has plenty of space. Shoes for Crews, a footwear maker that occupies several floors, is moving to the Boca Raton Innovation Campus, where it will occupy one floor of 37,000 square feet.
Intech is eying some of the Shoes for Crews space, specifically, the top two floors totalling 25,000 square feet, half the size of its existing office.
Real estate sources say One Clearlake also is attractive to Intech executives because the building is conveniently located off the interstate, away from the traffic headaches of downtown.
And you can’t beat the rent at One Clearlake, which is considerably less than the Class A CityPlace Tower.
Rents at One Clearlake are about $26 a square foot, not including about $15 per square foot for taxes, maintenance and insurance. CityPlace Tower, on the other hand, commands rents starting in the mid-$40 per square foot range, plus another $20 for common area maintenance, real estate brokers said.
Of course, the high rent at CityPlace Tower comes with perks, and not just the newer construction and backup power system. Smallridge pointed out the tower now has two added incentives: The convention center hotel, which makes it easy for out-of-town clients to visit the tower’s offices; and the new Restoration Hardware furniture showroom next door, which features a rooftop restaurant with a garden feel and grand city views.
Recently, word on the street was that CityPlace Tower owner Property Group Partners has been toying with putting the property up for sale. PGP bought the tower for $150 million three years ago. But so far, the property hasn’t hit the market.