Owens Realty and Galium Complete Sale of Palm Beach Gardens Office Building

Owens Realty Capital and Galium Capital Sell Seacoast Banking Centre for $30.3 Million

In a significant transaction within the South Florida real estate market, Owens Realty Capital and Galium Capital have sold the Seacoast Banking Centre building located at 3001 PGA Boulevard in Palm Beach Gardens for $30.3 million. This off-market deal, finalized recently, highlights the complexities and challenges currently facing the office investment sector in the region.

Overview of the Property

The Seacoast Banking Centre is a three-story office building that spans 70,700 square feet and sits on a 5.6-acre lot. Completed in 2006, the property has been home to several notable tenants, including Seacoast Bank, public relations firm McNicholas & Associates, and financial consultant Janney Montgomery Scott. The sale marks a profitable exit for Owens Realty Capital and Galium Capital, who acquired the property for $25.1 million in 2018.

The Market Context

The sale comes at a time when South Florida’s office investment sales are experiencing a slowdown. Elevated interest rates, coupled with uncertainties regarding the market’s viability, have created headwinds for investors. The Federal Reserve’s aggressive interest rate hikes—11 in total during 2022 and 2023—have significantly impacted financing costs, leading to a widening bid-ask gap. This gap has made it increasingly difficult for buyers to meet sellers’ price expectations, particularly for well-leased properties.

Despite the challenges, the demand for office space in South Florida surged from late 2020 through 2022, driven by an influx of out-of-state companies. High-profile relocations, such as billionaire hedge funder Ken Griffin moving his Citadel and Citadel Securities headquarters from Chicago to Miami’s Brickell Financial District, fueled a leasing spree that pushed rental rates to record highs, reaching $200 per square foot for prime new office projects.

The Role of Owens Realty and Galium Capital

Owens Realty Capital, a subsidiary of Orlando-based Owens Realty Services, is led by CEO Bob Owens. Galium Capital, based in Miami, is managed by partners Jacques Bessoudo and Iser Rabinovitz. Their collaboration on the Seacoast Banking Centre reflects a strategic approach to navigating the current market landscape, leveraging their expertise to capitalize on opportunities even amid challenging conditions.

Suburban Bargains and Future Trends

Interestingly, while urban office spaces have faced difficulties, suburban properties have sometimes emerged as bargains. For instance, Galium recently acquired Lake Shore Plaza II in Sunrise for $17 million—approximately half of what the property traded for a decade ago. Similarly, YMP Real Estate purchased Commercial Place I and II in Oakland Park for $26 million, indicating a potential shift in investor interest towards suburban office spaces.

As the South Florida office market continues to evolve, the dynamics of investment sales will likely remain influenced by economic conditions, interest rates, and shifting tenant demands. The sale of the Seacoast Banking Centre serves as a reminder of the complexities inherent in real estate transactions, particularly in a fluctuating market.

Conclusion

The $30.3 million sale of the Seacoast Banking Centre by Owens Realty Capital and Galium Capital underscores the ongoing challenges and opportunities within the South Florida office market. As investors navigate a landscape marked by rising interest rates and economic uncertainty, the ability to adapt and identify value will be crucial for success in the coming years. The transaction not only reflects the current state of the market but also sets the stage for future developments in the region’s commercial real estate sector.