Native Realty - South Florida Firm Provides Market Update

February 16, 2023

Jaime Sturgis, the Founder & CEO of Native Realty, lays down the fundamentals for South Florida commercial real estate. Native Realty is a vertically integrated, full-service brokerage firm based in Fort Lauderdale. Sturgis and his team handle all asset classes within the tri-county area and have been incredibly influential in the expanding neighborhoods such as Flagler Village, Wynwood, and Downtown West Palm Beach.

South Florida Demand

Without interruption, people, businesses, and capital have continued to flow into South Florida. Retail has been booming, and rent growth has outpaced national averages while demand remains steady. Families from across the country have relocated here and brought their businesses along. According to Sturgis, restaurant retail has outperformed other top U.S. markets; however, second-generation restaurant space with ample visibility is a finite commodity. The lack of inventory pushes rents to $50 to $70 NNN; some spaces in Las Olas can even see $100 NNN. Even with a looming downturn, Sturgis believes retail will remain resilient. Mentioning the strong recovery post-pandemic, an extreme stress test of the market. Two markets stand out: Flagler Village and Downtown West Palm Beach.

Flagler Village

Located a few blocks from Las Olas Blvd, Flagler Village has transformed from a decaying industrial neighborhood into a trendy residential destination. This year alone, Native closed three multifamily development projects in the village and has three more under contract. In addition, Sturgis recently closed on a $10 million office building just a block away. The increasing demand for development in recent years has driven land prices from $100 - $150 to upwards of $250 per square foot. His latest deal was 4 NW Seventh St., sold to Advantis Development. They are proposing to build a visually unique 173-unit apartment building. Sturgis believes the demand for multifamily development will remain resilient as the migration to South Florida continues.

West Palm Beach

Downtown West Palm Beach traditionally has been overlooked compared to markets like Las Olas or Brickell. However, that story is beginning to change as developers such as The Related Companies placed enormous bets on the city. Over the next five years, Related plans to invest over $500 million into the underdeveloped market. Place Projects and NDT Development have two million square feet scheduled for development in the Nora District. The project will include 13 buildings, and the total costs will be over $1 billion. Sturgis mentions many retailers, restaurants, and businesses are seeking expansion out of Broward and Miami-Dade counties. As a result, he and his team are becoming increasingly active in Palm Beach County.

Curation over Compensation

Native Realty has a knack for placemaking. Built on the ethos of “Curation over Compensation,” it has earned a reputation for leasing undesirable spaces and outstanding place-making. Sturgis detailed a scenario where a marina restaurant sat vacant for seven years, and multiple brokerages were unsuccessful. Yet, within two weeks, Native had a tenant secured. So what’s the secret sauce? “We're out hunting people down all day long across the country and the world to bring these concepts into South Florida, not sitting around and staring at the phone and hoping that it rings, like many of our competitors are. So it's just a fundamentally different approach,” he says. Being proactive, not only locally but nationally, can make a difference.

He also mentions the importance of goal alignment with landlords. A greatly overlooked part is tenant curation; it is vital to look at the long-term terminal value of a tenant as opposed to just filling space. Sturgis says, “You're not going to attract other key retailers if you don't have the right tenant mix and co-tenancy. Again, often misunderstood, or people don't have enough patience for it. Don't throw anything into the mix just to try to fill, put people in seats, and it's not a good fit.” On multiple occasions, Native has brought landlords 20 - 30 offers, but they weren’t the right fit. Patience is critical in place-making.

Key Takeaway

The South Florida commercial market has been hot and appears not to be cooling down anytime soon. Expect to see Native Realty’s name appear in new developments in the near future as the rapidly growing markets of Downtown West Palm Beach and Flagler Village will continue to draw new investments. Native Realty’s success stems from its ability to focus on its client’s goals and understand the long-term vision of a property.

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