Palm Beach's "Bankers Row" has 3rd-highest rental asking prices in U.S., new study shows
Palm Beach’s Royal Palm Way — known to locals as “Bankers Row” — has the third-highest average asking price for commercial rents in the country, according to a new study.
The street also is the top-dollar commercial corridor for rental asking prices in the state, according to the study by commercial estate and investment-management firm JLL.
Royal Palm Way has an average “full-service gross asking price” for rents of $134.31 per square foot, according to JLL’s Most Expensive Streets Report for 2024, which was released April 11. JLL is the brand name of Miami-based Jones Lang LaSalle Ltd.
Royal Palm Way’s asking prices have climbed six spots since 2017, the last time JLL researchers conducted their analysis. In the 2017 report, Royal Palm Way took the ninth spot among U.S. commercial corridors.
For the latest report, researchers analyzed 55 U.S. markets, a JLL spokeswoman said, but they only released rankings for the top 15 streets.
Royal Palm Way immediately trailed No. 2-ranked 34th Street in New York City’s Hudson Yards, where the average rental asking price is $162.43 per square foot. The top-ranked street was Sand Hill Road of Menlo Park in the San Francisco Bay area, with a rental average of $167.74 per square foot.
Rounding out the top five on the national list were No. 4-ranked University Avenue in Palo Alto, California ($109.04 per square foot) and Greenwich Avenue in Greenwich, Connecticut ($105.00 per square foot).
Miami’s Brickell Avenue ranked No. 9 with an average of $86.83.
Asking prices for rents on the most-expensive streets exceed the market average by 75%, the report said.
Royal Palm Way earned its “Bankers Row” nickname years ago, thanks to the number of financial institutions that do business there.
That Royal Palm Way scored so high on the national rental list came as no surprise to real estate investor Spencer Schlager. With partner Charles L. Rosenberg, Schlager owns four office buildings at 324, 340, 350 and 440 Royal Palm Way through entities affiliated with their joint venture, CS Ventures.
The high-dollar asking prices are largely a question of supply and demand, Schlager told the Palm Beach Daily News.
“Palm Beach Island is one of the most supply-constrained markets in the country for both commercial and residential real estate,” Schlager said.
“Given the high barriers to entry due to strict zoning regulations, there has been nearly no new office supply delivered to the island for several decades.”
A statement accompanying the JLL report said prime office corridors such as Royal Palm Way “have been relatively immune to recent challenges in the commercial real estate market.”
Such challenges came in the wake of the COVID-19 pandemic and the work-from-home trend that accompanied it.
But prime streets can still attract tenants who want “trophy spaces and premier locations more than ever post-pandemic,” the JLL statement said.
Of the most-expensive streets identified in the study, nearly 5% have a lower vacancy rate than the national average, the report said.
“They also saw positive absorption in 2023, while the U.S. office market overall registered more than 50 million square feet of negative net absorption,” the statement said.
Schlager’s experience owning commercial properties in Palm Beach backs up the results of the study.
“Our (commercial property) portfolio is nearly 100% leased, and we continue to see robust demand from both new to market and existing tenants,” said Schlager, who also holds a Florida real estate license.
He added: “Since COVID, we have witnessed an influx of demand from tenants seeking a more favorable tax environment and quality of life that Palm Beach offers.”
Schlager’s joint venture also owns commercial buildings in Palm Beach at 214 Brazilian Ave. and 375 S. County Road, and in West Palm Beach at 500 S. Australian Ave.
Jeff Eckert, president of Americas Agency Leasing at JLL, said in a prepared statement that companies who rent on prime streets prize the value of those addresses.
“U.S. office assets in prime corridors have shown resiliency over the past four years as companies recognize the value in high-quality offices, not just as a means to motivate return-to-office strategies, but also as a recruitment and retention tool,” Eckert said. “The best buildings in the best locations will continue to shine.”
The report took particular note of how prime corridors in parts of South Florida — including Palm Beach, West Palm Beach and Miami — have benefited from the “migration of a large wave of financial services tenants from other gateway markets chasing an extremely limited trophy supply.”
That rush has helped drive Brickell Avenue’s asking rents up 65% over the past two years, the report said.
Schlager’s partner, Rosenberg, who heads Rosemark Management, told the Palm Beach Daily News the migration to Palm Beach bodes well for the area’s future.
“We also believe that many of the businesses who have relocated their office to Palm Beach will continue to grow and create additional jobs. There is an exciting community of younger investment firms in Palm Beach that we expect will drive economic growth for many years to come,” Rosenberg said.
The JLL report also looked at West Palm Beach’s Lakeview Avenue, which connects to Royal Palm Way via the Royal Park Bridge. The Lakeview Avenue/Royal Palm Way corridor has an overall vacancy rate of 7.9%, compared to the national average of 21.6%, the report said.
Read the full report at US.JLL.com.
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This is a developing story. Check back for any updates.
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Darrell Hofheinz is a USA TODAY Network of Florida journalist who writes about Palm Beach real estate in his weekly “Beyond the Hedges” column. He welcomes tips about real estate news on the island. Email dhofheinz@pbdailynews.com, call 561-820-3831 or tweet @PBDN_Hofheinz. Help support our journalism. Subscribe today.
This article originally appeared on Palm Beach Daily News: Palm Beach street in country's top 3 for commercial-rent asking prices
