United States -  West Palm Beach - Boca Raton

Overview:

Growth reportedly remains strong throughout Palm Beach County, with the number of employers and corporate headquarters in Palm Beach County continuing to increase. In addition to aviation and aeronautical manufacturing, logistics and distribution, biotechnology, and tourism, the local economy is heavily influenced by agriculture. Western Palm Beach is the nation's leading sugar and sweet corn producer. The county produces roughly 18% of the nation's sugar, and its total agriculture production accounts for approximately $3 billion of the county's GDP. According to economic development officials, significant development is occurring across Palm Beach County with roughly $1.7 billion in projects that are in the permitting, planning, or constructions stages as of early 2016. A positive factor on this market was the completion of Phase I of the Palm Beach Outlets in 2014, the largest-scale redevelopment project since the Great Recession. In addition to the 100 stores opened in February 2014, the Palm Beach Outlets will total 850,000 square feet of retail space upon completion of Phase II. The lifestyle complex will reportedly employ 1,500 people and have a $319-million economic impact on Palm Beach County. Along with the significant new development, construction is underway on a Downtown West Palm Beach station for the “All Aboard Florida” high-speed rail line, which will connect West Palm Beach to Miami in 2017. The rail station is expected to create over $164 million in economic impact and add 1,200 jobs for Palm Beach County through 2021.

Despite supply increasing in 2015, future supply is forecast to remain relatively stable. With the quick absorption of the new supply in 2015, we expect occupancy levels to remain flat at the 73% mark, while average rate should continue to increase at a growth rate above 3% in the near term, leveling off to market inflation rates thereafter. Therefore, future revenue RevPAR growth is expected to be driven principally by average rate. Three hotels totaling approximately $56.7 million in transaction volume have sold since January 2015, including such assets as the SpringHill Suites by Marriott West Palm Beach (highest total price paid at $33,600,000 or $259,000 per key). In recent years, improving market conditions have put downward pressure on capitalization rates, driving hotel values to peak levels. However, early indications for 2016 illustrate a deceleration of growth in transaction volume, and values are anticipated to stabilize in the near term. As the transaction market for hotels declines over the next several years given the introduction of new hotel supply coupled with the expectation of higher interest rates, capitalization rates are likely to increase; as such, hotel values are forecast to fall slightly in future years.

* The HVI is an index, a statistical concept reflecting a measure of the difference in the magnitude of a group of related variables compared with a base period. As such, it is a measure of broad market trends, rather than a conclusion as to the specific value of any asset, and cannot be applied to an individual asset. A good comparison is the Consumer Price Index. While this index provides a reliable measure of the overall rate of inflation in a region, it does not indicate how the price of milk has changed at your grocery store. So how can the HVI be of use to an individual investor? Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent big picture data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Valuation Trends and Predictions:

West Palm Beach - Boca Raton United States
Previous Year +1% (37 of 71) +1% (49 of 71)
Growth in 2017 +2% (32 of 71) +2% (36 of 71)
Growth in next 4 years +15% (16 of 71) +12% (32 of 71)

Change In Value For Market:

West Palm Beach - Boca Raton RevPar % Change

For more information, please contact:

Kathy Conroy, MAI
kconroy@hvs.com
  • +1 305 378-0404 (w)
John Lancet, MAI
jlancet@hvs.com
  • +1 305 378-0404 (w)
  • +1 305 502-1167 (m)