Michael Feuerman, Senior Vice President of Tenant Brokerage & Managing Director of Palm Beach County, Berger Commercial Realty

In an interview with Invest:, Michael Feuerman, Managing Director of Palm Beach County and Senior Vice President for Berger Commercial Realty, noted shifts in office space demand due to hybrid work models and why Palm Beach county’s appeal as a financial hub continues to grow. “While in-migration may have slowed compared to the pandemic boom, Palm Beach County’s transformation into a financial hub, similar to Miami-Dade’s evolution, will continue driving demand in office, industrial, and retail sectors,” he said.

Reflecting on the past year, what have been some of the main highlights and milestones for Berger Commercial Real Estate in the last 12 months?
The past year has certainly been interesting for commercial real estate and for commercial real estate brokerage. In the office sector, there has been more solidifying of the hybrid work model. Since the pandemic, there was initially almost 100% work-from-home for those not in healthcare or other mandatory on-site fields. In the subsequent years, many individuals still preferred working from home, but most wanted to return to the office either full time or for most of the week. This evolved into a hybrid work schedule, with some employees full time and some in the office Tuesday through Thursday, and otherwise remote.

This shift has produced a drop in overall demand for office space. For firms with hybrid or full-time employee attendance, square footage demand remains the same. But some companies have allowed all or a portion of staff to work remotely, and this has negatively impacted demand, particularly for class-B and C buildings. Class-A and A+ buildings, and in some cases Class-B+, especially in central business districts, have seen extremely high demand as employers are trying to incentivize employees to come to the office.

Economic uncertainty, driven by high interest rates, has affected investment activity. Buyers are hesitant to borrow at elevated rates, and sellers are reluctant to sell at high cap rates, which generally move in tandem with interest rates. Most investment activity has been in the industrial and multifamily sectors. Still, the investment markets do not change most leasing decisions by landlords and tenants. Tenants with lease expirations must still decide whether to renew, relocate, or right-size their space. Palm Beach County’s office vacancy rate stands at just under 9%, specifically 8.9%, compared to Miami at 8.5% and Broward at 10.5%. These are healthy measures, and if interest rates come down, or buyers and sellers adjust to the “new normal” of higher rates, we should see more properties start to trade based on the strength of occupancy rates.

Lastly, the industrial sector has remained strong. Palm Beach County’s industrial vacancy rate is currently 6.1%, which, while higher than the extreme lows of 2.2% seen during peak COVID demand, still reflects a fundamentally strong market.

What are some key market trends that you are seeing and how is Berger positioning itself to capitalize on them?
Palm Beach County has been remarkably successful in attracting tenants from across the country, a trend that began during COVID and has continued since. This is not a temporary phenomenon but a lasting shift. The county is now regarded as the “Wall Street of the South,” drawing wealth management, private equity, and hedge fund firms. The lifestyle, climate, and concentration of high-net-worth individuals make it an appealing destination for these sectors.
However, this growth has driven up the cost of living, creating challenges for the workforce, specifically affordable housing. Without solutions, businesses may struggle to retain employees who cannot afford to live here. This is a critical issue that the county and state must address to sustain economic success.
In the office sector, high interest rates have reduced purchase demand, while some businesses are now opting to own rather than lease their properties. Tenants are also right-sizing their spaces, which means that where they once needed 10,000 square feet, they may now require only 7,500 square feet. This adjustment has led to relocations or renegotiations within existing buildings.
The industrial market has seen significant rent increases, with tenants facing renewal rates nearly double what was in their previous leases. For example, tenants paying $8.50 per square foot based on a 2015 lease signing may now encounter renewal rates of $17.00 per square foot or higher. Common area maintenance (CAM), real estate taxes, and insurance costs have increased significantly, as well. This has required educating clients on current market pricing and helping them adapt to the “sticker shock” when negotiating renewals or relocations. While rent growth has slowed, industrial space remains expensive.

What makes Palm Beach an ideal market for Berger Commercial to operate in, as well as for others looking to invest in the city?
For Berger Commercial, we expanded into Palm Beach County in 2014 and 2015 as part of a major growth initiative. We have management and leasing operations across the tri-county area – Miami-Dade, Broward, and Palm Beach – but we have made a significant push into Palm Beach County during that time. I joined in 2015 to help manage the Palm Beach County office and support our expansion efforts.
What makes Palm Beach County attractive for growth and investment are the low vacancy rates and high rental rates in both office and industrial sectors. For industrial properties, the average rental rate in Palm Beach County is just under $18 per square foot, which is very high –
for comparative purposes, it is nearly double what it was 10 years ago. While that rate of growth is exceptional and has already slowed, rental rate increases remain above the national average, and vacancy rates are below the national average.
Also, the industrial market in Palm Beach County is more manageable in size compared to Miami-Dade. Palm Beach County has approximately 71.4 million square feet of industrial. In contrast, Miami-Dade has around 277 million square feet of industrial space and Broward County has about 143 million square feet. This smaller scale makes Palm Beach County a more manageable market for investors. They are still investing in a desirable area, but in a smaller submarket.
We also believe that the office sector presents growth opportunities, particularly in class-A properties, where demand remains strong. For class-B and C office buildings, some may not survive the next 5 to 10 years, presenting investment opportunities through conversion, whether to industrial, residential, or other uses. Berger Commercial assists clients in navigating these opportunities, managing properties effectively, retaining tenants, maximizing rents, and controlling costs.

What are the primary challenges facing the commercial real estate brokerage and property management industry in Palm Beach, and how is Berger addressing them?
The challenges in the brokerage industry align with those faced by property owners. Our primary role is to guide owners through market fluctuations, ensuring they maximize income while minimizing costs. One major challenge is rising interest rates. Many borrowers are coming off long-term mortgages, from five, seven, or 10-year notes, and refinancing at much higher rates. For example, their cost of capital may go from 4% to 7%. This does not happen overnight and clients see it coming a year or more in advance, but it can still have massive ramifications to the investment returns. We help them navigate this by advising on rent optimization and cost reduction. If selling becomes necessary, we assist with that as well, including exploring markets outside South Florida where prices may be more favorable.
Another challenge is leasing lower-tier buildings, particularly class-B and C office properties. In a competitive market, differentiation is key, again whether it is through cosmetic upgrades, curb appeal, amenities, or top-tier management. A well-run building maintains its reputation, while poor management can quickly deter tenants. We advise clients on keeping their properties competitive in terms of pricing and quality.
Additionally, tariffs imposed by the current administration are impacting the industrial market. Industrial clients face uncertainty regarding future inventory and construction costs, affecting third-party logistics, manufacturing, distribution, and other tenants. We work to help clients stabilize or reduce real estate expenses during these uncertain times.

What is your outlook for Berger Commercial over the next two to three years? What will your top goals and priorities be?
Our goal is to continue expanding our client base, serving both tenants and property owners, while adding skilled property managers and brokers to our team. We work across market sectors – office, industrial, retail, and multifamily. We remain committed to delivering exceptional service, with our clients as the top priority. We recently expanded our management operations to multifamily properties through our affiliate firm, Andrews Avenue Residential, and we anticipate growing that segment even further.

The outlook for Florida is positive. While in-migration may have slowed compared to the pandemic boom, Palm Beach County’s transformation into a financial hub, similar to Miami-Dade’s evolution, will continue driving demand in office, industrial, and retail sectors. Retail has rebounded strongly post-COVID. Multifamily demand is high.
South Florida’s strong position over the next two to five years is partly due to the state’s business-friendly climate where you have no income tax, incentives from public-private business development boards, and the governor’s reduction of sales tax on commercial rent from 7% to 3%. These efforts make Florida an attractive destination for businesses, and we expect continued growth as a result.