Q2 2012 Palm Beach, Florida Commercial Real Estate Economy

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Q2 2012 Palm Beach, Florida Commercial Real Estate Economy

Although Palm Beach County claims a number of distinguishing factors with respect to South Florida generally, including high household incomes and a substantial high-tech industry sector that includes major bioscience entities, it could not separate itself from the pack under the weight of the recession. And, like the region generally, its recovery is proceeding at a painfully slow pace. According to data provided by the U.S. Bureau of Labor Statistics (BLS), non-farm employment in the county as of July 2012 was up just 3,500 jobs (0.7%) from 12 months prior following similar gains over the preceding 12 months. These small increases leave the local economy with much ground to make up: employment per the latest July remained down fully 10.3% (56,500 jobs) from July 2006.

One positive sign emerging over the latest 12-month span, meanwhile, was an increase in job growth in the large and highly important Professional and Business Services sector. Employment therein as of July was up 3,700 jobs (4.4%) from July 2011 following a minimal increase over the preceding July-to-July period. Also encouraging was the shift to positive net job creation indicated for the Construction sector—a 1,200-jobs (5.3%) increase over the latest reported 12-month period following a series of severe year-over-year losses that began in 2007 (indeed, current employment in Construction is less than half of what it was in July 2006). The Government sector changed direction as well—growing by 2.5% (1,400 jobs) over the latest July-to-July span, an increase due entirely to growth in Local Government, which added net 1,900 jobs.

Meanwhile, as described in the Special Real Estate Factors and Industrial sections in this report, the frustration over the sluggish performance of the Bioscience sector, for which such high hopes have been held, is being relieved to some extent with the recent move-in by Germany-based Max Planck Society to a new building at the Florida Atlantic University (FAU) campus in Jupiter. According to the South Florida Business Journal, the society along with Scripps Research Institute, which moved to the FAU campus a few years ago, and FAU scientists may finally be forming the dynamic bioscience “cluster” long envisioned for the area. “We are generating something here that is more than the sum of the parts,” a Planck executive informed the Journal. Another hopeful sign are the pending near-term starts for a couple of major mixed-use developments—Transit Village in West Palm Beach and Atlantic Plaza II in Delray Beach—as described in this report.

Amid mixed signals, the housing market, greatly weakened by the downturn, continues to struggle. According to RealtyTrac as cited by the Journal, Palm Beach County, along with Miami-Dade two counties to its south, saw an increase in foreclosure activity in August on the order of 3.0% to 2,096 notifications (Broward, located between the two, saw a decline). According to CoreLogic, 42.1% of Palm Beach County homes were in a state of negative equity as of the second quarter, the Journal reported in September, lowest (by a little) in South Florida but nearly twice the 22.3% national rate. On a brighter note, these proportions are lower than in previous recent readings. Home sales, meanwhile, have increased, “7% to 8%” year-over-year in the county. So have prices. According to The Realtors Association of Palm Beach as reported by the Journal in July, the median single-family home price as of June was $225,000, up 7.0% year-over-year. The median condo-townhome price was $88,000, up 16.6%.