Hedge funds flock to Palm Beach and WPB, boosting office market
The Phillips Point office towers in West Palm Beach
Palm Beach County officials are working on bringing hedge funds here from the Northeast, and it’s working, particularly in West Palm Beach and Palm Beach, giving a boost to the Class A office market and the luxury home market.
“Three to four years ago we noticed CEOs from out of state buying second homes here, and a lot were affiliated with wealth management in New York City, Boston and Greenwich, Connecticut,” Kelly Smallridge, president of the county’s Business Development Board told The Real Deal. “But they weren’t setting up business operations.”
So she and her colleagues worked to change that, and they have succeeded. A total of 60 to 70 private equity and hedge fund companies have established offices in the county in the last three to four years, many in Palm Beach and West Palm Beach. The hedge fund firms that have established offices here include:
Tudor Investment Corp., led by legendary hedge fund manager Paul Tudor Jones. The firm is leasing 10,800 square feet at 109 Royal Palm Way in Palm Beach, and he bought a home at 1300 South Ocean Boulevard in Palm Beach for $71 million last year.
Affiliated Managers Group is now taking the entire top floor of the Phillips Point building at 777 South Flagler Drive, covering more than 20,000 square feet, after starting with about 7,000 square feet, Smallridge said.
Wexford Capital and SandPointe, which also are in the Phillips Point building, and Skybridge Capital, led by Anthony Scaramucci, which is based at 3601 PGA Boulevard in Palm Beach Gardens.
“I think more will happen,” Jeff Greene, the billionaire real estate investor who has purchased more than $300 million worth of property in West Palm Beach and Palm Beach, told TRD. “The biggest challenge is human capital. People want to be where they have access to talent and a good education system for their kids.”
Smallridge said the county doesn’t have to offer any incentives to bring the hedge funds down here. High taxes and cold weather in the Northeast do that part of the job. What she and her colleagues must do is “tailor resources” for the firms, she said.
“Many want 5,000 to 10,000 square feet with water views along Flagler Drive in West Palm Beach. Having a list of properties is important for them.” And as Greene pointed out, the hedge funders are concerned about schools. The BDB introduces them to top local schools, Smallridge said.
One problem as more hedge funds move here could be the lack of Class A office space, accountant Richard Rampell, head of MBAF’s Palm Beach office, told TRD. Greene said his One West Palm development planned for 550 Quadrille Boulevard in West Palm Beach would be a logical place for hedge funds to locate.
Meanwhile, some hedge fund heavyweights are eager for expensive homes in Palm Beach. “There’s a hedge fund guy who wants to buy a house belonging to one of my clients, and the amount of money is obscene.” Rampell said. “I know of more than one situation like that.”