West Palm Beach agreed to sell the site of its former city hall to developer Navarro Lowery for a mixed-used project anchored by an AC Hotel.The city commission approved the $11.5 million sales contract on Jan. 4 for the 2.3-acre site at 200 2nd Street, which has a water view. The deal also includes $1.5 million in tax increment repayments over five years plus a $1 million construction incentive through the city’s community reinvestment agency. The city agreed to approve the 410,000-square-foot project within 60 days of it being submitted.Meanwhile, the CRA will lease the neighboring waterfront site to Navarro Lowery for a restaurant and open space.The deals can close once development approvals are in place.
The development plan calls for a 180-room AC by Marriott Hotel, 6,500 square feet of meeting rooms, a rooftop bar and pool deck, 295 units for either live-work apartments or office suites, and 36,000 square feet of retail, including the 5,000-square-foot restaurant overlooking the water. It would have a 416-space parking garage.
Navarro Lowery, led by Frank E. Navarro, plans to transfer the hotel ownership to Concord Hospitality, according to city documents
While Palm Beach’s biggest firms have significantly less agents than those in Miami-Dade and Broward counties, their hooks remain the same: competitive commission splits, technology and in-house tools and training.
The Real Deal ranked real estate firms in Palm Beach County by the number of actively licensed agents and spoke to executives about recruiting strategies, commissions and top sales for the year.
Here are the top five:
#1 Keyes Company | 526 agents
Keyes has 11 offices and four satellites in Palm Beach County, president Mike Pappas said. The family-owned and operated firm targets a mix of newly licensed and experienced agents. Keyes is on track to reach $4.3 billion in sales this year, and hires more than 1,100 agents a year statewide.
While most of its agents are in Miami-Dade and Broward counties, Keyes leads the ranking in Palm Beach. The brokerage also has an in-house corporate relocation program, based in West Palm Beach.
Keyes has recently refinished or relocated up to eight offices in Palm Beach County. “We think facilities still matter,” Pappas said.
Steve Reibel, vice president of recruiting, previously said that commission splits between the agent and company vary from 60 percent to nearly 90 percent, “pending the level of production.”
Pappas has said the firm is “very aggression on splits.”
#2 Coldwell Banker | 466 agents
Coldwell Banker has 10 offices in Palm Beach County, including Boca Raton, Delray Beach, Jupiter Beach, Wellington, Palm Beach Gardens, West Palm Beach and Boynton Beach.
Duff Rubin, regional senior vice president, would not disclose the company’s commission split policy but said, “We as a company try to be more of a value-proposition brokerage,” including Coldwell Banker’s tools, management and support. “Commission splits are typically based on production. You’re only as good as your production,” he said.
The top sale in Palm Beach County was a single-family home at 600 Northeast Fifith Avenue in Boca Raton. Jonathan Postma had the listing for the property, which sold for $8.3 million.
Rich Fleischer, regional vice president of Coldwell Banker east central region of Florida, said sales are split evenly between condos and single-family homes. “We do not focus solely on one type of property or one specific price point. Our overall goal is to ensure that the customer has the best real estate experience possible, regardless of property type,” Fleischer said.
The company hires about 225 agents, a mix of experienced and newly licensed, in the county on an annual basis.
#3 Illustrated Properties | 435 agents
Illustrated Properties has 23 offices in Florida. The firm offers online marketing tools, a lead generation program, training classes and mentoring programs, according to its website.
The company also provides in-house marketing.
Debbie Zuloaga, director of recruiting, could not be reached for comment.
#4 ERA Home Run Real Estate | 373 agents
Home Run Real Estate hires about 50 agents a year, owner Debbie Smith said. The company has three offices in Palm Beach, including Palm Beach Gardens, Royal Palm Beach and Lake Worth.
Smith said she doesn’t pay for recruiting, and that ERA’s technology brings the majority of her agents. Home Run offers services like a seller security program, a Palm Beach County auction department and a Zap platform for its agents. Smith also provides a real estate boot camp, which takes agents from contract to closing.
Home Run, which was founded in 2003 and affiliated with ERA in July, does not charge its agents monthly fees. Smith would not disclose its commission split policy. It’s closed about $200 million in transactions this year, Smith said.
#5 United Realty Group | 356 agents
United Realty Group offers 100 percent commissions with a flat per-transaction fee. The firm has four branches in Palm Beach County, according to Melanie Brownell, director of recruitment. It hires on average 20 agents a month.
The majority of sales in the county come from single-family homes, she said.
United Realty, which is in the tri-county area and Orlando, doesn’t charge its agents desk or franchise fees or provide training. It offers a 100 percent commission with a $299 transaction fee.
Year-to-date, United Realty has $810.3 million in sales. The firm has 13 offices with two additional locations opening early next year. Top sales this year include a commercial sale in West Palm Beach in August for $4.8 million.
Sales of apartment properties totaled a record $2.8 billion in South Florida last year, according to CBRE’s multifamily market update, as new residents flocked to the area and people continued to shift from homeownership to rentals.
Developers and other real estate professionals think the trend will continue for now, though things could get overheated in the future, especially at the top end of the market. “There’s been a lot of chatter about a bubble, but for the next two years things look fine,” Don Ginsburg, CEO of Realty Master Advisors in Fort Lauderdale, said.
As for the population numbers, South Florida’s population rose by 361,000, or 6.5 percent in the last five years. And Nielsen estimates the population will increase another 377,670, or 6.4 percent, over the next five years. Meanwhile, the national homeownership rate slid to 63.7 percent in the third quarter of 2015, near a 30-year low. “Those factors are fueling demand,” Ginsburg said.
But that doesn’t mean it’s a slam dunk for everyone, says Nader Salour, a principal at Cypress Realty of Florida, a multifamily developer based in Jupiter. “Developers need to be very careful both where they build and building a project with the right style,” he said.
Cypress just opened the first phase of its $120 million Loftin Place apartment project at 805 North Olive Avenue in West Palm Beach. “The quality of finishes and amenities are very different at Loftin and nicer than rental projects even 10 years ago,” Salour said. That’s what people demand from a project on the northern edge of downtown West Palm Beach, he said.
The good news for multifamily developers is that people of all ages are interested in apartments — from millennials who can’t afford to buy a home yet to empty-nest baby boomers who are looking to return to urban areas. “We have people of all ages in Loftin, not just 25 to 35,” Salour said. “The universe of potential users is far greater than the last 10 to 20 years.”
Jack McCabe, CEO of McCabe Research & Consulting in Deerfield Beach, sees risk on the horizon. “If rental rates get so high that the vast majority of the population can’t afford available units, there is a chance we’re getting into bubble territory,” he said. Effective rents rose 5.8 percent in Miami-Dade County last year, following a 4.8 percent increase in 2014, leaving the average rent at $1,197 a month, or $1.44 per square foot, according to CBRE.
“Probably 35 percent of renters in South Florida are paying more than 50 percent of their income, and 28 percent is a good number,” McCabe said. “The vast majority of new units are Class A. Maybe 5 percent are affordable units.” So the top end may be turning into a bubble, he said. “Low-priced units if anything are underdeveloped.”
Costs are a problem, McCabe and others say. Land costs, construction material costs and labor costs are soaring, they say. That makes developers reluctant to take on affordable housing projects. Salour feels the problem first hand. “Usually the rule of the jungle applies, and developers won’t overpay” for a property, he said. “If developers do overpay, then they are forced to build expensive projects, and the market may not be there for that price.”
Keyes has 11 offices and four satellites in Palm Beach County, president Mike Pappas said.The family-owned and operated firm targets a mix of newly licensed and experienced agents. Keyes is on track to reach $4.3 billion in sales this year, and hires more than 1,100 agents a year statewide.
Rich Fleischer, regional vice president of Coldwell Banker east central region of Florida, said sales are split evenly between condos and single-family homes. “We do not focus solely on one type of property or one specific price point. Our overall goal is to ensure that the customer has the best real estate experience possible, regardless of property type,”Fleischer said.
Smith said she doesn’t pay for recruiting, and that ERA’s technology brings the majority of her agents. Home Run offers services like a seller security program, a Palm Beach County auction department and a Zap platform for its agents.Smith also provides a real estate boot camp, which takes agents from contract to closing.