Related Ross Is Eyeing Tech Firms For West Palm Beach's Next Phase Of Growth

Stephen Ross' push to remake West Palm Beach as “Wall Street South” has generated an influx of wealth and a booming office construction pipeline filled with finance firms. His new Florida-focused development firm, Related Ross, is now pushing to further redefine its identity.

“I truly still feel we're in the early stages of growth for Palm Beach County,” Greg Kuhlman, vice president of leasing at Related Ross, said at Bisnow's Palm Beach State of the Market event Dec. 11. “Our chairman and founder, Stephen Ross — we're fortunate enough to have a moniker, Wall Street South — has also said this is really the next Silicon Valley.”

Kuhlman said his firm, which developed the 25-story One Flagler office tower where the event was held, is “having some pretty exciting conversations right now” with West Coast-based technology companies.

“I think that will be a real game-changer in the marketplace, not just going to be in financial services,” he said. “We're really expanding the tent across here and should have some exciting news for you next year.”

Palm Beach County attracted 25% of the $39B in wealth that migrated to Florida in 2023. Now, it is home to 59 billionaires and 71,000 millionaires, and the region has become a hub for high net worth individuals and asset managers overseeing $36T globally, Kuhlman said. 

Related Ross is relishing in the demand, completing more than 200K SF of office leasing transactions this year, Kuhlman said, and he expects another 250K SF to close in short order. 

The developer signed two New York-based companies to leases at One Flagler last month, The Palm Beach Post reported: technology service company OceanSound Partners and GoldenTree Asset Management.

Related is the dominant developer in the city, with nearly a dozen projects, but others have also had success luring big-name finance companies. Fortune 500 financial services company Edward Jones signed a lease Thursday for 10K SF at 111 Olive St., in Brand Atlantic Real Estate Partners and Wheelock Street Capital's Banyan & Olive boutique office and retail project downtown.

Rents for Class-A office space in the West Palm Beach central business district were $67.21 per SF in the third quarter, a 5% increase year-over-year, according to CBRE. Class-A office vacancy stood at 8.3%, far below the national average of 15.5% in prime office space.

Trophy buildings in West Palm have an even lower vacancy rate of 4.5%, according to CBRE. The city also has 3M SF of office space in the development pipeline, West Palm Beach Mayor Keith James said at the event.

Businesses are coming down to West Palm Beach for its favorable climate, busines- friendly environment and low taxes, James said, adding that the town has seen the relocation or expansion of more than 30 companies.

“When I first moved here in 1987, I like to tell people you could throw a bowling ball down the middle of the street after five o'clock and not see a person, no one who lived downtown,” James said.

37 years later, Palm Beach County is among the nation’s fastest-growing metro areas, with major developments like the $1B Nora District project and Related Ross’ South Flagler House — set to introduce the two tallest towers on the skyline at 373 feet — which started vertical construction in November. West Palm Beach is undergoing a building boom, and city officials are embracing it.

West Palm Beach adopted a downtown housing incentive program and a citywide workforce housing incentive in 2021 which has led to the construction of more than 1,200 new residential units, James said. Other programs, like the Live Local Act, have also aided in moving forward with projects. Developers credited fruitful partnerships with city officials as a large part of their success — and something that is notably different from other markets.

“Coming from New York City, doing land use work in New York City ... it's a whole different ball game down here,” said Chris Schlank, founder and managing partner of Savanna. 

Administration has made the process easy, Schlank said, adding that clear and transparent communication has fostered an understanding of the city’s development goals.

But Andrew Dance, managing partner of Brand Atlantic, said the city needs to start thinking of taller buildings to house the incoming population. In 2022, the city approved zoning and land development requests that allow developers to design buildings that exceed height restrictions, the WLRN reported.

While the tallest building in West Palm Beach to date is One Flagler at 365 feet tall, the majority of the city's landscape remains below 300 feet, and its surrounding towns and cities are largely filled with single-family houses. 

“I think West Palm Beach has really established itself as a city. So, we're seeing a new paradigm where the rest of Palm Beach County are kind of veteran communities,” Dance said. “That was just like a new way of looking at a new framework for Palm Beach County.”

While it may seem like an easy fix, there are challenges when it comes to introducing multi-story buildings to historical neighborhoods that have been around for 115 years. Taller buildings typically mean that a drastic change is coming to the city's landscape, potentially blocking views and adding a crowded nuance.

But it comes with the territory for a large city with an influx of new residents, businesses and visitors.

“I think it should almost be mandatory if you're going to move into a big city,” said Jorge Garcia, founder and CEO of West Palm Beach-based architecture firm Garcia Stromberg. “Get with the program and understand that height and views are not your own, and that these are the repercussions.” 

But many developers are looking more at building relationships with neighbors and getting their buy-in on projects, relying on the good neighbor approach and having proactive meetings.

“Constant communication, transparency and what's going on, and legitimate visuals help,” Kyle Goebel, vice president of operations for Suffolk Construction, said.

But not everyone agrees. Garcia argued that while educating the public about a new development is helpful, some residents can never be swayed and shouldn't be catered to in a high-growth period.

“Even though the good neighbor policy is a really good one, we face sometimes that regardless, they’re coming out with pitchforks and lanterns and to do the search for the guilty in terms of the neighbors that are already there and so on,” Garcia said. “I think it's great to appease them and be inclusive about their opinions and so on, but it's just a fine line.”

Dramatic changes are afoot. While transitioning from a quiet coastal town into a name on the map, developers and city officials are honed in on shaping the city's future. It's clear there will be friction on what that looks like. West Palm Beach City Commissioner Christina Lambert said onstage that she wants to “continue to have our historic neighborhoods and our character,” but preached balance.

“As we continue to grow, and I'm looking out at this beautiful landscape here, it's making sure that we build density in the areas that are appropriate,” Lambert said.