Ken Griffin Drops $83M On Palm Beach Office Building
A company affiliated with billionaire Ken Griffin, the head of hedge fund Citadel, paid $83M to acquire an office building in Palm Beach as Griffin and his firm continue to expand their presence in South Florida.
Griffin purchased the 49K SF property at 125 Worth Ave. through an entity called 125 Worth LLC, acquiring it from a joint venture of Palm Beach-based Frisbie Group and Maryland-based Dreyfuss Management. A spokesperson for Citadel said the acquisition was executed by Griffin, not the hedge fund he leads, and declined to disclose any plans for the property.
It’s the second acquisition for Griffin on the high-end retail corridor of Worth Avenue — last April he paid $78M for an adjacent building that had been a Neiman Marcus department store. Citadel is planning to convert that building, located at 151 Worth Ave., into an office space with ground-floor retail, Bloomberg reported last July.
The Palm Beach acquisitions are part of a South Florida buying spree for Griffin and Citadel, which announced last June that it would move its headquarters from Chicago to Miami’s Brickell neighborhood.
Griffin, who has a personal fortune of $37B, has spent $350M buying properties in Palm Beach over the last decade, including a 25-acre beachfront assemblage that Griffin began acquiring in 2012 on a stretch of South Ocean Boulevard known locally as Billionaires Row, The Palm Beach Post reported.
In Miami, entities connected to Citadel spent around $670M to assemble a 2.9-acre parcel near 1201 Brickell Bay Drive where the company is planning to build an office tower that will host its new headquarters, the South Florida Business Journal reported.
Citadel has been leasing space at Southeast Financial Center, located at 200 South Biscayne Blvd., while it develops plans for the office tower. It subleased an additional floor at the property in August, taking the space from the nonprofit Knight Foundation.
The hedge fund has also leased around 90K SF at the under-construction 830 Brickell, a 55-story, 1M SF office tower being developed by OKO Group and Cain International. The property, which saw a burst of leasing activity after Citadel signed a lease there in August, is fully leased and expected to finish construction this quarter.
Griffin’s $107M purchase of a 4-acre residential property in Coconut Grove in September was also a record high for a residential asset in Miami-Dade County, shattering the previous record he set in December with a $75M purchase of a 2-acre residence on Miami Beach’s Star Island, the Miami Herald reported.
The properties add to Griffin’s extensive portfolio of expensive homes. He has an estimated $1B of residential property holdings including a $238M Manhattan penthouse and a $122M London mansion.
The recent Palm Beach acquisition comes as other developers, most notably Related Cos., explore opportunities in the region, which has become a top destination for well-heeled executives relocating from states like Illinois and New York.
New York-based Related recently expanded its plans for the redevelopment of The Square in West Palm Beach, an 82-acre mixed-use community that the firm began developing in 2000 under the moniker CityPlace.
The development firm, already the largest owner of office space in West Palm Beach’s downtown, completed a 297K SF office property called 360 Rosemary there in 2021. The building is fully leased and has attracted tenants like BlackRock and Goldman Sachs. Related, owned by Miami Dolphins owner Stephen Ross, is also building the 285K SF One Flagler office tower nearby and expects to finish construction this year.
In January, the city commission approved a 25-story office building called 515 Fern that Related plans to build next to 360 Rosemary. The 466K SF office building would be the largest office tower in West Palm Beach.
Related also revealed plans in June for two other office towers at The Square, planning to replace a former AMC theater at 545 Hibiscus St. with nearly 1M SF of office space across the two buildings. Related is also planning a 364-unit luxury apartment building on the nearby site of a former Macy’s and an eight-story hotel in The Square.
The acquisitions and development plans come as office rents in Palm Beach County continue to rise even as demand shows some signs of softening. Asking rents grew 5.5% year-over-year to $45.19 per SF in the second quarter, according to a market report from Cushman & Wakefield, marking the first time rates surpassed $45 per SF.
While the 465K SF of leasing activity in the second quarter outperformed the same period of 2022, year-to-date leasing activity is down 21.7% from a year ago, according to C&W. Year-to-date absorption has also fallen into negative territory, adding 284K SF to vacancy after accounting for move-ins.