March 17--PALM BEACH -- Ivy Realty bought the 25,000-square-foot office building at 250 Royal Palm Way even though its slit-like windows reminded Rusty Warren of a bomb shelter.
"This was perhaps the nicest location -- and the worst building," said Warren, co-Chief Executive of Ivy Realty. "In real estate, you want to buy the worst house on the nicest street, and I think that applies here."
Ivy Realty paid $7 million for the 38-year-old building and spent $2 million on renovations -- and Warren no longer considers it the street's ugliest property. He said he was attracted by the island's concentration of wealth, which creates demand for office space by high-end financial firms that want to manage Palm Beachers' money.
Now Warren is looking for tenants. Northern Trust has leased a 5,500-square-foot office on the third floor, but the entire second floor is available. The landlord is asking $35 to $43 per square foot.
Banker's Row, as Royal Palm Way is known, boasts some of the priciest office space in Florida -- in part because there's so little space there. The entire Palm Beach office market could fit inside Phillips Point, the office building across the Intracoastal in West Palm Beach, said Neil Merin of NAI/Merin Hunter Codman, the brokerage marketing the building.
No new offices are likely to be built in Palm Beach, and renovations usually lead to less leasable space and fewer parking spots, Merin said.
"It's a weird little world over there," Merin said. "It's not your normal supply and demand. That market just keeps getting smaller."
Despite a limited supply of office buildings, there's no shortage of empty space on Banker's Row. Among the spots being marketed on the commercial real estate website LoopNet are 9,000 square feet at 350 Royal Palm Way, 7,000 square feet apiece at 340 and 221 Royal Palm Way and 5,000 square feet at 400 Royal Palm Way.