PALM BEACH—Why is now the time to invest anddevelop office product in downtown West PalmBeach? That's the question we asked Brad Capas,founder of CapasGroup Realty Advisors.

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“The performance and fundamentals of the Downtown West PalmBeach office market are compelling,” Capas tellsGlobeSt.com. “For instance, the three true class A buildings inDowntown West Palm Beach are now 95% occupied so new tenantsseeking large blocks of class A space are being turned away.”

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From Capas' perspective, if a new officebuilding came to market there exists “sufficient demand” to secureat least one or two new market entrants with sizable officespace requirements. What's more, he says, tenantsrelocating locally from other, older class A and B buildings woulddrive additional pre-leasing activity.

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Capas has a good point. Considering several hundred thousandsquare feet of existing office leases in aroundthe urban core are scheduled to expire during the next five years,along with other market conditions, the timing seems right for newoffice development.

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“From an economic standpoint the class A officerents in Downtown West Palm Beach now revolve around $50 to $55 persquare foot gross,” Capas says. “That's the highest among the threeSouth Florida urban markets making a strong statement in support ofdevelopment feasibility.”

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Capas also points to the recent sale of CityPlace Tower atmore than $500 per square feet. KBS REIT sold CityPlace Tower for $150 million in August. That sale putDowntown West Palm Beach on the map for achieving the highestpriced office building sale in South Florida formany years.

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“These dynamics in combination with several proposed hotel,rental apartment and condominium developments, plus a new commuterrail station, will elevate the office and development appeal ofdowntown West Palm Beach,” says Capas. Stay tuned for our series ofarticles featuring Capas' insight into the West Palm Beachoffice market. Next, we'll look at the impact AllAboard Florida's West Palm Beach station will have on the area.

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