San Marco Publix project still alive

[Bolles_Bull]

These types of developments happen all over the country.

Retail on the first floor and condos above.

San Marco Square is a thriving area in a desperate need for a neighborhood grocery store.

Why does Jacksonville think it's reinventing the wheel?

Agreed.  Its like such a no brainer its crazy.  Youve got a succesful urban district with a great retail base, but a huge lack of apartments and grocery.  And a perfect location to fill the gap.  AAAARGH!  If only San marco were considered its own town and not compared to the rest of jax... haha

[edjax]

Can this be incorporated into one of the other East San Marco/San Marco Publix threads??? It sure makes it easier to follow the whole story.

[edjax]

It's funny because to me 220 riverside seems like such a riskier project than east san marco.  In my opinion east san marco would EASILY work in that space, brooklyn may be a bit too up and coming.

I wish the projects could have gone East San Marco first to prove the concept in Jax.  Im worried 220 Riverside wont lease up and we will be set even further back for mixed use developments here in jax...   

I think the 220 Riverside project is causing even more concern. I am not aware of any leases signed yet for commercial portion??  Perhaps I am wrong but with the attention this project has generated and with the construction as far along as it currently is I think the fact of no leases yet is a red flag. 

[wordofmouse]

Franchise Consultant with SCORE

The difficulty in financing mixed-use developments in Jacksonville is not because it is a tertiary market, because Jacksonville is in fact a secondary market with much greater liquidity than tertiary markets. There are really only two reasons, and the primary reason is the pioneering project problem. In many urban settings today, urban infill is a very popular product. However, in Jacksonville the population flows are still migrating away from the central core into the suburbs and exurbs, not towards the core. And as Ben Carter said, there's no leadership or broad support for revitalizing the central core. Investors realize these projects are swimming against the current and therefore require a huge risk tolerance, something investors try to avoid.
Resubmitted on behalf of
Paul Hazlett
Real Estate Investment Advisor
CBCworldwide.com

[wordofmouse]

Franchise Consultant with SCORE

The difficulty in financing mixed-use developments in Jacksonville is not because it is a tertiary market, because Jacksonville is in fact a secondary market with much greater liquidity than tertiary markets. There are really only two reasons, and the primary reason is the pioneering project problem. In many urban settings today, urban infill is a very popular product. However, in Jacksonville the population flows are still migrating away from the central core into the suburbs and exurbs, not towards the core. And as Ben Carter said, there's no leadership or broad support for revitalizing the central core. Investors realize these projects are swimming against the current and therefore require a huge risk tolerance, something investors try to avoid.
Resubmitted on behalf of
Paul Hazlett
Real Estate Investment Advisor
CBCworldwide.com

[BoldBoyOfTheSouth]

Even if, let's say Publix goes belly up (it won't) street level retail with parking at the edge of San Marco Square could be carved up into small shops and restaurants.

If the apartments are designed right, upscale but not over the top with studios, one and two bedroom units, there is a market for those.

To be young and within stumbling drunk distance to area restaurants and bars and brunch opportunities just steps from their doors...

Actually, if priced right, I may move there.

[BoldBoyOfTheSouth]

Franchise Consultant with SCORE

The difficulty in financing mixed-use developments in Jacksonville is not because it is a tertiary market, because Jacksonville is in fact a secondary market with much greater liquidity than tertiary markets. There are really only two reasons, and the primary reason is the pioneering project problem. In many urban settings today, urban infill is a very popular product. However, in Jacksonville the population flows are still migrating away from the central core into the suburbs and exurbs, not towards the core. And as Ben Carter said, there's no leadership or broad support for revitalizing the central core. Investors realize these projects are swimming against the current and therefore require a huge risk tolerance, something investors try to avoid.
Resubmitted on behalf of
Paul Hazlett
Real Estate Investment Advisor
CBCworldwide.com

So, what he is really saying: "hey you redneck politicians in JAX, if you hayseeds want this financing, you better place your fried chicken down and come up with more taxpayer corporate incentives. But please, wipe your greasy fingers prior to shaking our hands as you fork over the money.  Then we'll finance you."

[Tacachale]

What he's saying is that the out of town folks investing in the projects aren't confident these projects will make them money. No matter what's happening elsewhere, there aren't really any successful mixed-use developments like this in town to compare to, so the first few are going to be the pioneers. And as Wordofmouse says, the investors aren't seeing a lot of support from the leadership or demographic trends, so who could really blame them?

The hope is that these first pioneer projects do get off the ground and are successful. Then hopefully we'll start to catch up to the trends in other communities where these projects are more and more common.

[simms3]

These types of developments happen all over the country.

Retail on the first floor and condos above.

San Marco Square is a thriving area in a desperate need for a neighborhood grocery store.

Why does Jacksonville think it's reinventing the wheel?

High level, I totally agree.

It's funny because to me 220 riverside seems like such a riskier project than east san marco.  In my opinion east san marco would EASILY work in that space, brooklyn may be a bit too up and coming.

I wish the projects could have gone East San Marco first to prove the concept in Jax.  Im worried 220 Riverside wont lease up and we will be set even further back for mixed use developments here in jax...   

I totally agree.  In a larger/deeper market, Brooklyn and San Marco would be separate from downtown and would have no bearing on each other.  In Jax, at least on paper, not so much.  220 Riverside also does seem like a much riskier project.

I think the 220 Riverside project is causing even more concern. I am not aware of any leases signed yet for commercial portion??  Perhaps I am wrong but with the attention this project has generated and with the construction as far along as it currently is I think the fact of no leases yet is a red flag. 

I don't see much leasing activity with 220 Riverside.  At least, slowwww leasing velocity at best.  I have mentioned previously that there are apartment developers in Atlanta who don't even underwrite the retail space that they by law must include at the base.  Lenders and the developers will look at the apartments only.  Not sure how it was done with 220 Riverside, but then again I don't know their strategy.  Build to hold?  Build to sell in this market?  And then in either case, what are their assumptions about the retail?  I would think they did make some, because retail wasn't mandatory if I'm not mistaken, and the developer next door is not including any with those apartments.  Fortunately carry costs aren't as extreme as in NYC (for vacant retail).

Franchise Consultant with SCORE

The difficulty in financing mixed-use developments in Jacksonville is not because it is a tertiary market, because Jacksonville is in fact a secondary market with much greater liquidity than tertiary markets. There are really only two reasons, and the primary reason is the pioneering project problem. In many urban settings today, urban infill is a very popular product. However, in Jacksonville the population flows are still migrating away from the central core into the suburbs and exurbs, not towards the core. And as Ben Carter said, there's no leadership or broad support for revitalizing the central core. Investors realize these projects are swimming against the current and therefore require a huge risk tolerance, something investors try to avoid.
Resubmitted on behalf of
Paul Hazlett
Real Estate Investment Advisor
CBCworldwide.com

I totally disagree about Jax being a secondary market.  Speaking from the investment side myself, Jax is a tertiary market, through and through.  Atlanta is a [large] secondary market.  Boston is a [small] primary/gateway market.  Austin is [small] a secondary market.  Charlotte, as well.  Jax, Memphis, Milwaukee, Indy, Hartford, etc etc are all [large] tertiary markets.  Baton Rouge is a medium-sized tertiary market.

If Jax is a secondary market, that means investors who are being squeezed out of NYC, Boston, DC, SF, and arguably LA/Seattle are looking at Jax next.  No.  They are looking at Portland, Minneapolis, Atlanta, Dallas, Chicago, Miami, San Diego, etc etc next.  It also can vary a bit depending on product.

Even if, let's say Publix goes belly up (it won't) street level retail with parking at the edge of San Marco Square could be carved up into small shops and restaurants.

If the apartments are designed right, upscale but not over the top with studios, one and two bedroom units, there is a market for those.

To be young and within stumbling drunk distance to area restaurants and bars and brunch opportunities just steps from their doors...

Actually, if priced right, I may move there.

I don't want to read too much into this, but this could be what's worrying investors.  These apartments would all rent $1.90-$2.40 psf no problem in Atlanta, Charlotte, Austin (actually they would be closer to $3psf in Austin), etc etc.  In Jax, granted the land is cheaper (though with these sunbelt cities it's not that large of a spread), rents don't often exceed $1.50psf.  In only a few cases do they exceed $1.50psf.

So you as a renter know what you can get on the SS for $1.10-$1.20psf (granite counters, 9 ft ceilings, space space space, a balcony, etc etc).  Are you saying you wouldn't pay $1.60-$1.80psf for less?  Like what's your ceiling and how do you determine it?  Is it capped by your income and perceived living costs as a percentage of your disposable?  Transportation costs are high in Jax as a percentage of income.  The opposite is true in NYC and SF, where it's no big deal to spend 30-40+% of your gross on rent.

[wordofmouse]

thank you Tacachale, that is exactly what Mr. Hazlett is saying. He is not taking a shot at our town, matter of fact he was one of the first to put up $$$$ during the years Jacksonville Dwt. Still had a chance. your down town is Town Center, Those are the shops and business you want in an urban core.   We will find a package that will be attractive to the investor community. 

[BoldBoyOfTheSouth]

Problem with the highrise condos on the Southbank:

1. They were over priced from the start.
2. They are several blocks from San Marco Square with too many highway underpasses, railroad tracks, empty buildings or drab store fronts to make it a pleasurable stroll. (Though, this is beginning to change with infill, new businesses and lighted and paved parking underneath the highways.)
3. The high rise condos have no street level retail and drab suburban style grass. People who want to live within high rise buildings in an urban setting don't want grass out front, don't want dehumanizing reflective glass on the street level exterior or ugly parking garages at eye level. They want to walk outside their doors to go to a cafe, a nice restaurant, walk their dogs as they go to the dry cleaners and meet their friends and say hi to their neighbors who are doing the same.
4. Walk around those high rise condos and you basically alone, wandering the lifeless, windswept plazas while looking at suburban style grass, drab garages and basically nothing to do for ten or twenty blocks. You are there alone most of the time. This is not urban living that most people want, much less over pay for.

[simms3]

Problem with the highrise condos on the Southbank:

1. They were over priced from the start.
2. They are several blocks from San Marco Square with too many highway underpasses, railroad tracks, empty buildings or drab store fronts to make it a pleasurable stroll. (Though, this is beginning to change with infill, new businesses and lighted and paved parking underneath the highways.)
3. The high rise condos have no street level retail and drab suburban style grass. People who want to live within high rise buildings in an urban setting don't want grass out front, don't want dehumanizing reflective glass on the street level exterior or ugly parking garages at eye level. They want to walk outside their doors to go to a cafe, a nice restaurant, walk their dogs as they go to the dry cleaners and meet their friends and say hi to their neighbors who are doing the same.
4. Walk around those high rise condos and you basically alone, wandering the lifeless, windswept plazas while looking at suburban style grass, drab garages and basically nothing to do for ten or twenty blocks. You are there alone most of the time. This is not urban living that most people want, much less over pay for.

Well I can tell you are speaking from no experience.  Here is where you are wrong in your mindset:

1. Overpriced in what way?  What makes them overpriced?  Is it lack of amenities? (the Strand is *highly* amenitized, and the Peninsula is easily considered luxury, trust me)  Is it materials/quality? (what makes Strand inferior to what you find on SS?  I would think it's superior)  Is it location?  (well let's move on to addressing your other concerns)

Is it overpriced to you because it's Type I construction, requiring concrete, crane rentals, more expensive land, mitigation, experienced high rise contractors, etc etc?  Or do you not care about the building construction itself and factor that into rent?  SS apartments are typically Type V wood frame construction.  Most of them are absolute shit and will suffer damage from any major hurricane or wind event.  Many will suffer damage from termites and or moisture problems.  And any one of them can be lit up like a kindle box under certain duress (I personally would feel safer in my apartment on the 20th floor of Strand knowing a kitchen fire is occurring 10 floors below, than being in one of those wooden apartments during a serious kitchen fire...several Type III construction apartments across the country that were nearly complete have gone totally up in flames in minutes, in the past month)

So construction alone will require higher rents.

2/4.  Yes.  So you're asking developers/lenders to plop down millions of dollars to be pioneers in this arena, but you're not willing to pay $12K/yr to do the same?  Something's wrong with that picture.

In both SF and NYC, there are similar areas of the city that are just now being hit with new development and gentrification.  DC, as well.  Believe me when I say that people are actually lining up in these cities to live in the most bombed out areas.  NEMA is a 754 unit 2-tower high rise apartment community that just went up in Mid-Market near the Tenderloin in SF.  This area makes any area in Jax look superb.  And the building (which just opened in phases starting last Oct) is now leased-up with average rents around $5psf.  The developer is the same developer that bought the Strand (Crescent Heights out of Miami).  The residents are all brave, pioneering souls.  When I first moved here, the area was wayyyy worse than what you describe above of the Southbank.  Not only were their tumbleweeds, there were 11,000 homeless nearby and serious crime.  Bombed out buildings (literally).  SF's version of the Bronx.  Now, just 2 years later there is a grocer going in, a new upscale gym, some restaurants, renovated boutique hotels, new bars, etc etc etc.

It took both pioneering developers (Shorenstein spent hundreds of millions to renovate 1.5 million SF of warehouse space in an old Merchandise Mart building, and then attracted Twitter's global HQ...it's basically the coolest building ever now [I just got to tour it and it's like a much cooler Google campus right in the city]).  Long story short, Jax won't succeed without pioneering RENTERS as well.  If your mentality is commonplace, then it has been noted by investors because Jax clearly has very poor shopping habits, very poor renting habits, etc etc.  Researchers look at individual cities' collective human behavior and mentalities.

3. ??  In your posts 2/4 you won't live in a DT high rise because of highway overpasses, windswept [concrete] plazas, garages, railroad tracks, etc etc.

If concrete bothers you, then why would grass in a city bother you?  People living in NYC, Chicago, and SF *cherish* their grass BECAUSE there isn't much of it!!!  The whole appeal of Atlanta is the combination of tree coverage/grass/houses/yards right in the city.  All of the new buildings here are putting grass parks on their roofs.  Parks in the city are PACKED on the weekends.  I don't get this comment, at all.

[JayBird]

BoldBoy...

.... Ummm so the great occupancy at Strand and Peninsula are false (according to NEFLRB both stay between 88-96% full at any time)? I know several people whom reside in both and love it there. Maybe not as good as Southside apartments but much better than some other areas.

I see the biggest problem of these type investments is that it has been proven many times over that Jaxons have no problem driving 10 minutes to get something, even if it's available one block away. Most places can rely on a guaranteed market for their wares, and in places like Miami when you are looking for a place to live, you'll gladly pay more for a place where you don't have to sit in miles of causeway traffic to get basic staples. In Jacksonville, we are not yet to the point where we will choose the store downstairs over a store possibly paying cheaper prices (as a result of cheaper rents) off of University. Also, seeing that the hype of 220 Riverside isn't matching the apparent financials yet, I'm sure that is a cautionary tale for any and all investors. No one wants to get holding the bag.

[Tacachale]

^Yes, that's a lot of assumption there, those problems haven't stopped the buildings from staying almost entirely occupied and fetching record prices in sales, as we saw just a few months ago. The East San Marco project is different; I don't think any perceived deficiencies with the Southbank towers have much to do with it.

[edjax]

Wow.  Of course the only reason for the grass in front of the Peninsula is because the market turned and the planned 3rd tower did not get built.

Just curious, what is this suburban grass you talk about?  Is it prettier or uglier than urban grass?