Where do you see the most concentrated growth in neighborhoods?

From a perspective of residential value appreciation, the island of Palm Beach stands out prominently. Recently, there’s been talk about the Tarpon Island property reportedly under contract for over $80 million. We had listed Tarpon Island in ’93-’94 for less than $6 million, showcasing nearly 40% year-over-year appreciation for three decades. However, it’s important to note that every region in Palm Beach County is experiencing positive growth in this cycle.

Are there any factors that could potentially hinder or slow down this growth?

Certain asset classes are witnessing an influx of new capital seeking investment opportunities. The office sector, in particular, has seen a surge in investment, outpacing its underlying occupancy and lease markets. Buyers may have moved hastily into this market, and now, the fundamentals need to align with the investment values.

Does this mean the market is in a bubble when you mention the need for fundamentals to catch up?

In Downtown West Palm Beach, class-A office vacancies stand at 36%, yet asking rents are at an all-time high. With record-breaking prices paid for buildings, there’s a disparity that needs resolving. Either tenants will have to pay significantly more in rent, or overvalued investments might underperform. Whether it’s a bubble is uncertain, but there’s a need for adjustment. My experience tells me that good times and bad times don’t last forever. Factors like heightened inflation in construction, labor, and material costs, as well as potential federal taxation changes, could potentially disrupt the current trends, particularly if certain proposed federal policies, like elimination of the 1031 exchange rules, come into effect.

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