Trouble in Downtown?

[simms3]

Well I appreciate it (love practicing my debating skills on Metrojax) but I think everyone will agree that with a fact as commonly known as companies leaving downtown for Deerwood or any number of office parks on JTB specifics aren't exactly necessary.  Plus there are *too* many companies to name   Of course there are plenty of companies that have stayed downtown for their entire existence, though.  They deserve applause but when leases are up I wouldn't be shocked to see more leave.

[cline]

This is an excellent point, Cline.  And no doubt that it has been an ongoing pressure for the past couple of decades.  But there is a reason why that became true, non?

There are no doubt numerous reasons for this trend.  I tend to think one of the major causes was the general shift in favor of the suburban office park. Large landowners, assisted greatly by the city, wasted no time in converting farm and timber land to cheap, available land for office and commercial uses.  JTB provided the conduit for getting people in and out.

[simms3]

Sure parking is cheaper in the suburbs.  There is no denying that, but usually a downtown can offer enough benefits to certain companies needing that kind of office space where parking is not a problem.  Our downtown no longer offers these perceived benefits to these companies and it is no longer centrally located to employees/executives.  Every downtown in America competes with suburbs where parking is free, but not every downtown suffers as much as ours.

[thelakelander]

Here is a quote from a recent article on the issue of companies abandoning downtown Jacksonville.

More companies leaving Downtown Jax

Already struggling from the soaring vacancy rates that have plagued the office market since the recession began, there is a growing concern that some Downtown office buildings might empty out even more as businesses contemplate relocating to other parts of Jacksonville.

The vacancy rate on the Northbank climbed to 26.1 percent in the second quarter from 25.3 percent in the previous quarter, according to the Cushman & Wakefield Marketbeat Jacksonville Office Report, and to 13.3 percent on the Southbank from 12.4 percent during the same period.

Bob Retherford, a senior director of office brokerage services at Cushman & Wakefield, said that to date, most of the losses in the Downtown office market can be attributed to businesses downsizing or closing altogether, not to businesses relocating to other submarkets. But that could soon change.

In addition to Adecco’s expected move, CNL Real Estate Services Principal Brad Chrischilles said he knows of at least two other Downtown businesses occupying 40,000 to 50,000 square feet of space that are also considering moving to other Jacksonville submarkets.

Those moves, combined, could create what Chrischilles calls “a tale of two cities” in which Jacksonville suburban office markets could start to recover while the Downtown market could decline even more.

“I love Downtown and have spent most of my professional career there,” Chrischilles said. “It hurts my heart to see this happening.”

During the recession, businesses have given up as much as 200,000 square feet of office space in the Bank of America and AT&T towers Downtown. And other spaces that emptied before the recession, including space in the Atlantic National Bank building once occupied by Regency Centers Corp. (NYSE: REG) before its move to the Modis building, never filled back up. That building is now 90 percent vacant, and the one tenant that does occupy space there, the U.S. Census Bureau, is only temporary.

Chrischilles said some of the reason for the increasing vacancy rate Downtown can be attributed to the high cost of parking, which can range from $80 to $110 per space per month on the Northbank and $40 to $60 per space per month on the Southbank.

Some businesses, including Rayonier Inc., have made the conscious decision to stay Downtown even as they shopped around for better lease rates. Rayonier (NYSE: RYN) recently signed a 10-year lease to relocate from 34,295 square feet in the Bank of America Tower on the Northbank to 35,615 square feet in the Riverplace Tower on the Southbank.

Office users new to the market have been few and far between, but the largest one recently, the Federal Deposit Insurance Corp., chose the Baymeadows corridor to open a temporary 155,000-square-foot office after considering Downtown space, brokers said.

Some investors, too, are looking at markets other than Downtown.

The Davis Cos., a Boston-based real estate investment, management and development firm, recently announced its interest in buying properties throughout the Southeast using a $230 million investment fund the company recently established.

Managing Principal Seth Werner said he is looking in markets all over Florida, including Jacksonville, but not in any downtown areas because most are suffering from high vacancy rates as businesses move to outlying markets that have fewer traffic and parking issues and more densely populated residential neighborhoods.

“Our preference would be to seek opportunities in more mature suburban southern markets in Jacksonville,” Werner said.

http://www.bizjournals.com/jacksonville/stories/2010/07/19/story3.html

How does the parking and leasing rates of downtown compare with the Southside's?  If downtown is significantly higher, why would any company be willing to pay more for these things in an environment that's not worth the extra expense and hassle?

[thelakelander]

Here's another from back in February...

City could subsidize downtown parking

One way to convince employers to stay downtown may be to pay them to offset the cost of parking.

Although no official plan has been drafted, Jacksonville city officials are toying with the idea because, Jacksonville Economic Development Council Executive Director Ron Barton said, the average rental rate is higher downtown than in the suburbs, making relocating to a cheaper area with better parking a more attractive alternative.

“You pay a premium for having an office downtown,” Barton said. “If you recognize you can’t make the premium go away you’ve got to create value for the premium.”

The city hasn’t yet set any criteria for the proposed parking incentive program, or found a funding source or set a timeline for putting it into place, but Barton said if city officials do decide to move forward with it, he’d like to do it soon.

Adecco North America, which recently acquired Jacksonville-based MPS Group, has already announced it will move out of its headquarters that span five and a half floors in the Modis tower, named for MPS Group’s information technology staffing subsidiary. Other downtown companies are also looking into relocating, Barton said.

Still, Barton said he doesn’t want to open a Pandora's box by providing the incentive.

“We want something that works and is sustainable,” he said. “We can’t afford an empty downtown.”

http://www.bizjournals.com/jacksonville/stories/2010/02/08/daily16.html?ed=2010-02-10&ana=e_du_pub

[Non-RedNeck Westsider]

Actually, parking seems to be the only issue that the city can actually deal with that has a time-frame. 

Downtown can't/won't provide the value on the premiums that these companies are willing to pay to have an office downtown.  It makes sense, in a way.  Why would I pay more to have my company located farther away from my employees with less QOL options before and after work?

When you step back and look at it, why would anyone want to work downtown, especially if it's going to cost more?

[dganson]

Ah my good friend Stephen, a true master of misdirection. Every time you respond to me you seem to miss the point and focus on the inane. For instance, my only real point that I am making is that you embellish your stories and your life with such simple transparency. I stated that there is no $10. Parking to get a $21 haircut.  You have yet to defend that and I think that you damage the already fragile perception of downtown by constantly repeating these destructive non truths. And you instantly get personal. Mark  Rimmer  has nothing to do with any of this and you probably have never spoken to him. And then you always remind everyone of my history with a slight about my business and my membership in the Downtown Merchants Assn., both of which were over 15 years ago. And it is doubtful that I have had any impact on downtown at all ever…except maybe to provide some conveniences to the people who work and visit downtown. I am just a small businessman working hard every day to turn a profit.

[dganson]

You have also made the comment that the two companies that announced that they are leaving are leaving because of parking… but it isn’t true. You repeat this over and over again to make your case but it just is a fabrication of assumptions that you like to make. Here are statements released by both companies as to their decision:

http://www.jaxdailyrecord.com/showstory.php?Story_id=532104

“We chose to relocate our corporate headquarters to Flagler’s Deerwood South business park because of its convenient location, quality space offerings and world- class corporate setting,” said Fortegra Financial President and CEO Richard S. Kahlbaugh in a statement


http://www.bizjournals.com/jacksonville/stories/2010/07/26/daily12.html
Tyra Tutor, senior vice president of corporate development for Adecco, said: “Through the entire process we remained fully committed to the Jacksonville community and decided on this specific location for a variety of reasons, including proximity and convenience for our employees, an efficient building layout and the ability to create the best possible working environment.

[simms3]

Doing some simple math let's say you have 30 employees and need 15,000 SF.  Let's also say the average parking rate on the Northbank is $95 and your rental rate is $20.  You are going to pay roughly $357,000/yr for your space if you are covering your employees' parking.  In the suburbs if you are paying $18/ft and obviously parking is free then you are paying only $270,000/yr, which is almost 25% less.

There are other factors to take into account, but just looking at a cost structure the suburbs are cheaper.  There was a time at the height of the boom in the mid 200s where certain southside submarkets had considerably higher rates than even the northbank, which leveled the costs.  Now the southside is almost as vacant as downtown and building owners have a higher profitability margin on their buildings there so they have slashed rates drastically.

Now downtown is already a tax abatement zone I believe, and it is part of a CID (tax increment zone) and it is an enterprise zone, so there are more incentives to be downtown, but even those aren't making up for the added costs.  We need to make downtown central to the workforce and we need to provide further incentives for companies to be downtown.  I don't know what all other cities do, but I do know that every city grapples with competing suburbs that offer free parking and I do know that other cities have just as much white flight as Jacksonville, but they still manage to get the majority of their companies to be downtown.

In Atlanta where rates and parking are more expensive, vacancies are really high (due to downsizing just as one of those articles mentioned creating shadow space and just being way overbuilt) companies are still relocating to the two inner submarkets of Midtown and Buckhead.  Regions Bank is the only significant bank in Atlanta without a name on a building and it is seriously shopping around right now (in the city, not the burbs).  Alston and Bird, a local big 50 law firm, is tired of sharing an older building (One Atlantic Center, 1988, 820 ft. high, 50 floors, Phillip Johnson design...still not good enough LoL I guess bc it's not LEED certified) with other tenants and is somewhat considering building its own new building in Midtown.  Either local city leaders do something to keep companies in the downtown area or the city itself provides the right environment for companies to feel that the benefits outweigh the costs (which are higher here than in jax).

It may be that Jacksonville is just a lot poorer than other cities like Charlotte and Atlanta and truly can't afford downtown anymore.  If that is the case then we are pretty screwed for a while.

[simms3]

Actually, parking seems to be the only issue that the city can actually deal with that has a time-frame. 

Downtown can't/won't provide the value on the premiums that these companies are willing to pay to have an office downtown.  It makes sense, in a way.  Why would I pay more to have my company located farther away from my employees with less QOL options before and after work?

When you step back and look at it, why would anyone want to work downtown, especially if it's going to cost more?

This.

[cityimrov]

Ah my good friend Stephen, a true master of misdirection. Every time you respond to me you seem to miss the point and focus on the inane. For instance, my only real point that I am making is that you embellish your stories and your life with such simple transparency. I stated that there is no $10. Parking to get a $21 haircut.  You have yet to defend that and I think that you damage the already fragile perception of downtown by constantly repeating these destructive non truths. And you instantly get personal. Mark  Rimmer  has nothing to do with any of this and you probably have never spoken to him. And then you always remind everyone of my history with a slight about my business and my membership in the Downtown Merchants Assn., both of which were over 15 years ago. And it is doubtful that I have had any impact on downtown at all ever…except maybe to provide some conveniences to the people who work and visit downtown. I am just a small businessman working hard every day to turn a profit.

Perhaps calling someone a 'liar' might be considered 'personal'?

I don't know how much you spend for a haircut, but I spend at least 21.  If Im going to come all the way downtown to have a haircut, chances are Im going to hang out and grab lunch as well, keeping in mind the standard uncertainty as to when a stylist is going to be available.

If Im driving (which incidentally I don't) Im going to park for a while.  I have a choice, either hang out on the street and risk a 15 dollar ticket, or park in a garage.

That is going to be ten dollars for a couple of hours.

And given a choice between the same haircut and lunch in five points minus the parking fee, Im going to choose five points or san marco.

Don't forget, 5 pts is also way more fun.  Downtown still gives me that feeling of a small police state or authoritarian utopia.  Going to downtown is a headache.  Going to 5 pts is interesting. 

[dganson]

Again a lie. There is no where downtown that 2 or 3 hours costs $10.00. You continue to push this same line but it is a lie. Just because you say it doens not make it true.

[dganson]

Oh I get mty haircut in the BBT building...another long time successful business downtown, John Combs..and it is $11.00

[thelakelander]

Downtown can't/won't provide the value on the premiums that these companies are willing to pay to have an office downtown.  It makes sense, in a way.  Why would I pay more to have my company located farther away from my employees with less QOL options before and after work?

When you step back and look at it, why would anyone want to work downtown, especially if it's going to cost more?

Quite frankly, this is what it basically boils down to.  Downtown in its current state is not worth paying more operate a business in over the suburbs.  Whatever issue we want to make as the main culprit doesn't really matter.  The fact that the environment flat out isn't worth the costs to operate in it does.

[KuroiKetsunoHana]

except for fans & stoves, all the interesting has been bled out ov five points...

...but that's neither relevant nor constructive.  stephen, i do think you're a little too hung up on this parking thing.  yes, it's a factor in our downtown desolation, but you're ascribing it far more importance than it actually has.

on the other hand, Dganson, your private little crusade against stephen (and presumably other 'liars') is getting a little tiresome.  i don't doubt that 10.00 for two hours is unlikely and perhaps nonexistant, but you've got to allow people a little hyperbolë for dramatic effect; no point has ever been clearly made without it.