Goldman Sachs moving into West Palm's newest office tower; is another high-rise on the way?

Alexandra Clough
Palm Beach Post
Goldman Sachs Group will lease space in 360 Rosemary, a 20-story, 300,000-square-foot office building in downtown West Palm Beach. The 300,000-square-foot, 20-story office building is under construction and is expected to be completed in June.

Goldman Sachs Group will lease space in West Palm Beach's newest office tower, a blockbuster move that instantly raises the downtown's profile as a prime financial center, according to knowledgeable real estate sources.

The New York-based financial firm will lease a floor and a half, or between 35,000 to 40,000 square feet, at the 360 Rosemary office tower being built by The Related Cos. of New York. Related is led by billionaire Miami Dolphins owner Stephen Ross.

About 30 Goldman Sachs professionals will be in the 360 Rosemary office space initially, but that figure could grow to more than 300, said the real estate sources who asked not to be identified. Bloomberg News has said the professionals would be from the asset management and merchant banking divisions.

More:Major hedge fund moving to West Palm Beach from New York

The real estate sources said Goldman Sachs also is in talks with Related about a larger future presence at Rosemary Square, formerly CityPlace, the mixed-use center where 360 Rosemary is located.

Related's Ken Himmel and Stephen Ross, West Palm Beach Mayor Keith James, and Related's Gopal Rajegowda at a "topping off" ceremony for the 360 Rosemary office tower in West Palm Beach.

Related, Goldman Sachs discussing office tower with up to 350K sq. feet

Related and Goldman Sachs reportedly have been discussing a new office tower that could feature between 200,000 to 350,000 square feet of space.

For now, Goldman Sachs will join other financial services firms at the 360 Rosemary building, under construction at 360 Rosemary Avenue. The 300,000-square foot, 20-story office building is expected to be completed in June.

Goldman currently has a small office in West Palm Beach, leasing 5,600 square feet in the Phillips Point office building. The new office at 360 Rosemary represents a much larger West Palm Beach presence for the firm.

More:Related to control West Palm office market: Buys 2 more buildings, lures big mortgage company

The larger office reflects the strategy of Goldman Sachs Chief Executive David Solomon to establish offices in warmer, low-cost states. In recent weeks, Goldman Sachs has sought volunteers willing to relocate to West Palm Beach.

Several other high-profile financial firms already have signed on to lease space in 360 Rosemary.

They include New Day USA, a Maryland-based mortgage lender that is taking 50,000 square feet as part of an expansion to Florida; Paul Singer's Elliot Management, which is leasing 25,000 square feet with an option for another 15,000 square feet; and Point72, a Connecticut-based fund owned by Steve Cohen that is leasing 4,000 square feet, with another 7,000 square feet in expansion space available.

More:Builder of Rosemary Square buying Phillips Point office complex in West Palm Beach

In addition, Spaces, a co-working space, will lease 26,000 square feet, and Comvest Partners will move into 26,000 square feet at 360 Rosemary from the CityPlace Tower office building.

Miami Dolphins owner Stephen Ross (center), seen here with the late Dolphins coach Don Shula (left) and former Dolphins quarterback Bob Griese, leads The Related Cos of New York, which is building an office tower in West Palm that will lease to Goldman Sachs.

Why Goldman Sachs investment in West Palm Beach 'says a lot'

While these tenants are prestigious, Goldman Sachs is considered the icing on the cake for the new tower, as well as the city.

"Goldman Sachs further solidifies the strength of the West Palm Beach market," said Peter Reed, managing principal of Commercial Florida Realty Services in Jupiter. "And where Goldman goes, others will follow."

Goldman's expansion in West Palm Beach also highlights the county's appeal over the glitzier but more crowded Miami market, which has attracted other financial firms. Goldman's decision to locate in West Palm Beach, across the bridges from the millionaires and billionaires on Palm Beach, "says a lot," one real estate source said.

More:Mortgage lender confirms expansion to West Palm Beach, will bring 600 jobs; company's average salary is over $90K

Related Cos. spokesman Jon Weinstein declined to comment. Goldman Sachs spokeswoman Leslie Shribman said the firm would not comment "at this time."

But earlier this year, Ken Himmel, president of Related Urban, the mixed-use arm of Related Cos., said the company's deep investment in West Palm Beach finally is paying off.

In the more than 20 years since Related first came to West Palm Beach with the construction of CityPlace, "we've been hoping something would break." 

That time finally has arrived, Himmel said.

"It's been an incredible feeding frenzy," Himmel said. "I've never seen anything like it."

Hudson Yards' Edge

Related will have monopoly on West Palm Beach commercial real estate

Related, with its roster of top tenants from its sprawling Hudson Yards complex in New York City, is a company already known to many top financial firms, real estate observers said. Therefore, Related expects that many tenants will prefer dealing with one company offering a variety of buildings for leased space rather than having to deal with several different building owners.

To meet demand, Related not only built 360 Rosemary. The company also bought the Phillips Point office complex at 777 S. Flagler Drive and half the ownership stake of Esperante Corporate Center at 222 Lakeview Avenue. In addition, Related is set to buy CityPlace Tower office building at 525 Okeechobee Blvd. 

The Related Cos of New York, which is building the 360 Rosemary office tower in downtown West Palm Beach, bought the Phillips Point office complex at 777 S. Flagler Drive (seen here).

More new construction is planned, too.

This fall, Related is expected to start construction on One Flagler, a 25-story tower set for 154 Lakeview Ave., near the intersection of South Flagler Drive and Okeechobee Boulevard and adjacent to the First Church of Christ Scientist.

In February, Himmel said 100,000 square feet of One Flagler already was committed to tenants seeking space in the planned 270,000-square-foot tower.

Between the purchase of three prime Class A office complexes, the construction of the 360 Rosemary office tower and the likely construction of two more office buildings, Related will have a monopoly on West Palm Beach commercial real estate like no other company has ever had before.

Related's moves come as workers and companies from the Northeast and Midwest are moving to or expanding in South Florida. Many of them are moving from dense, urban cities because of the coronavirus pandemic.

But others are relocating to pursue clients who also moved to South Florida, both for its open spaces as well as its warm weather and the state's more favorable tax environment.

Palm Beach County is attracting big-earning executives who can add to their firm's fortunes through offices outside headquarters in major cities, and do so in the comfort of a warm, tropical clime.

"These portfolio managers and private wealth managers have clients who have come to Miami and they need to be near their clients," Himmel said. "They've made so much money they have the opportunity to live where they want to live, and this is where they want to live."

Earlier this year, the Business Development Board of Palm Beach County (BDB) issued a press release extolling the numerous financial services firms that have selected or were eying the county. The statement included a reference to news reports about Goldman Sachs looking to establish a significant presence here.

BDB President Kelly Smallridge declined to comment on Wednesday.