125 Worth Avenue – Palm Beach, FL
Investment Overview:
In an August 2007 off-market transaction, Crocker Partners purchased a fully-leased, two building, 77,383-sq.ft. portfolio located in Palm Beach, Florida.125 Worth Avenue and 400 Royal Palm Way are arguably the two of the finest office buildings on Palm Beach Island, one of the nation’s most supply-constrained markets. The market consists of less than one million sq.ft. in a handful of small buildings, with no development opportunities. Until recently, vacant space was scarce and normally leased at full service rental rates exceeding $70 per sq.ft., representing one of the most expensive markets in the United States.
Value-add Opportunity:
Although fully-leased, the buildings’ in-place rents were approximately 50% of market rents. Over the years, the seller chose not to mark rents to market, but rather increase them by annual CPI adjustments. Moving rents to market will achieve an opportunistic return. ?Additional opportunities to add value include:
- Capitalizing on 125 Worth Avenue’s prestigious address by reconfiguring the first floor retail areas and adding rental
mailbox services - Buying out / restructuring leases to backfill space at market rates