Mansion GlobalBY MICHELE LERNER
May 9, 2021
With the biggest deals often initiated outside the boardroom, are business people feeling pressure to follow their peers and put down roots in the popular Florida enclave?
Jonathan Adler considers himself first and foremost a potter rather than the owner of a global home furnishings business. His creative side is what drove Mr. Adler and his husband, Simon Doonan, to buy a home on Palm Beach Island in March 2020.
“Palm Beach just has a singular place in my blood,” said Mr. Adler, who also has homes in New York City and Shelter Island on the Eastern End of Long Island in New York. “We had an apartment here for years, then took a break. This year we realized we wanted to own a home on the island to add a sundrenched getaway to our rotation.”
But for many recent Palm Beach purchasers, the allure is just as much about business as it is about leisure.
“Financial services leaders have been buying second homes and moving part of their businesses here for years,” said Kelly L. Smallridge, president and CEO of the Business Development Board of Palm Beach County. “But once the pandemic hit, we’ve had at least one new company a day looking to open an office here.”
The turning point came when executives decided to shelter in Palm Beach with their families during the pandemic and realized that they could work just as easily from here as from New York, Ms. Smallridge said.
“Before the pandemic, many executives felt their employees wouldn’t relocate from New York, but now they’re telling me their employees are encouraging them to move,” Ms. Smallridge said.
Among the financial services companies that have become part of the “Wall Street of the South” are Elliott Management, Point 72, Colby Capital, Virtu Financial, Citadel and Moelis & Co.
Tal Bar-or, co-founder of Lantern Real Estate, a New York City-based real estate investment and advisory firm, moved to Palm Beach on a trial basis in the summer of 2020. He and his wife and their three children, ages 2, 5 and 7, never looked back.
“In the summer of 2020, Florida looked good, and New York City didn’t in terms of the pandemic,” Mr. Bar-or said. “We didn’t want our three kids doing school online in our apartment again. We wanted in-person school and an active outdoor lifestyle.”
Mr. Bar-or was able to get his two older children accepted to Palm Beach Day private school.
“Over 90 new families came into Palm Beach Day in the fall of 2020,” said Erin Sykes, chief economist with Nest Seekers in New York City and Palm Beach. “Now the competition for private schools here is starting to look like Manhattan.”
Competition for homes is heated, too. Ms. Sykes said that single-family homes in Palm Beach, which cost an average of $7 million, often sell the day they are listed. From the first week of December 2020 until the end of March 2021, prices rose 30% for luxury homes priced above $5 million in the Palm Beach area, Ms. Sykes said.
“We’re seeing some crazy flips, too, with one house that sold for $4.5 million in the spring of 2020 now listed for $9.9 million after having minimal work done,” she said.
The spike in demand for homes this spring means that on Palm Beach Island in April there were just 11 homes available for less than $10 million, four of which were already under contract, said Simon Isaacs, broker/owner of Simon Isaacs Real Estate in Palm Beach. Normally about 50 single-family homes are available.
“There’s definitely a ‘FOMO’ effect happening,” Ms. Sykes said. “If entrepreneurs and business leaders see someone they look up to as a savvy leader moving to Palm Beach, then they’re more likely to want to buy a place, too.”
Mr. Bar-or and his company established a real estate financing office in Florida.
“We’re not running away from New York and we still have lots of clients there, but there’s also a great opportunity for growth in South Florida,” he said. “Most of the executives and business owners I know plan to be in Florida full-time or at least spend a significant part of the year here.”
Is the Palm Beach Business Draw Permanent?
Business leaders moving to Palm Beach appears to be a permanent shift rather than a pandemic-driven temporary trend.
“The executives we talk to are asking us to show them places to buy and want to tour private schools here for their kids,” Ms. Smallridge said. “If this was a temporary move, they would be looking at rentals and keeping their kids enrolled in New York schools.”
A fundamental shift from Palm Beach as a vacation destination to a permanent home has occurred over the past year, one indication of which is families enrolling their kids in school, said Mr. Isaacs.
Younger families with active businesses have been moving to Palm Beach and discovering that they can find excellent private schools for about one-third the cost of New York City’s schools, Mr. Bar-or said.
Ms. Smallridge said that many people ask about how they can get ingrained into the community.
“They want to know about nonprofit organizations they can support and how they can integrate into the social life here,” she said. “Most people in Palm Beach are from somewhere else, so it’s not like breaking into a community where everyone has 30- and 40-year long friendships. Even the elected officials have only been here a decade or so.”
Most important, instead of signing a short-term lease for office space, many are signing long-term leases of eight to 10 years or asking about building their own offices, Ms. Smallridge said.
“Most people who move here keep an office in New York, but we’ve seen a few companies start slowly moving employees who want to relocate here, too,” Mr. Isaacs said. “Palm Beach Island offers good access to I-95 to do business within Florida and is about a 10-minute drive from the airport when you need to get to New York.”
Airport traffic jams of private jets in Palm Beach have led some people to look at property in Stuart, about 40 miles north, which has a private airport and more space for yachts, said Ms. Sykes.
Younger Vibe to Palm Beach Social Scene
Palm Beach has been known for decades for its glittery galas and country club lifestyle, but that too is shifting.
“People imagine Palm Beach as having that ‘Thurston and Lovey Howell’ vibe of fabulously wealthy people and you can find that if you want,” said Mr. Adler, referring to the wealthy couple on “Gilligan’s Island.” “But Palm Beach is also a naturally beautiful place with a laid-back Bahamian vibe.”
While people often think of Florida as being full of retirees, the average age in Palm Beach County is 39, Ms. Smallridge said. Mr. Adler says the island is full of surfers and young families, too.
Business executives are flocking to some outposts of New York restaurants that have opened in Palm Beach, such as La Goulue, Le Bilboquet and Café Boulud.
Country clubs continue to draw businesspeople who want a place where they can relax and networks, said Mr. Isaacs.
“The country clubs are inundated with membership requests now, when they were giving them away two years ago,” he said.
The Bear’s Club, an exclusive golf course community in Jupiter near Palm Beach, has a one-year waiting list now, Ms. Sykes said. She said that golf clubs such as the Seminole in nearby Juno Beach and Old Palm in Palm Beach Gardens are also highly competitive.
Whether they meet at a school fundraiser, the opening of a trendy new restaurant, on the beach or the golf course, business connections are being made under sunny skies in Palm Beach.
Licensed Real Estate Salesperson (FL & NY), Nest Seekers Chief Economist, LEED AP