Mayor Brown calls on rich and powerful to start investor fund

[duvaldude08]

I just had lunch with a friend, who just moved back to Jax he looked at place for rent in the Strand 2/2 24th floor $1,900 a month. Wow.

Some people consider that "inexpensive." I called that highway robbery. I pay $1,200 less for a 3 bed 2 bath house. For housing to be affordable in our downtown rent would have to range from $600-$1200. I know people who dont mind paying $1000 for a one bedroom apartment ( I think its crazy but hey Im very cheap also). anything more than about $1200 is not affordable for Jacksonville. AT ALL. not to rent anyways

[simms3]

^^Is he going to get 1st month free?  How long is the term?  He must be moving into the St. Johns floorplan, the largest and most expensive of the 2 bedroom floorplans, which also has a waitlist (all the other floorplans have availabilities, so there must not be that many of this particular unit).

Still, suppose $1900/mo is for 12 months (which at that price it sounds like a 6 month lease), no concessions, no free months rent or TV deals, etc and size is 1,343 SF, that's still an effective rate of only $1.41 psf.

The most expensive price they are advertising as far as my research can tell is $1,599, with most of the 2-bedroom pricing in the $1,399 to $1,549 range, which is low.  I was paying $1,550 for an unfinished ground floor 2BR in a Post property my junior year in college.

I do some work in NYC and have begun to learn that market pretty well.  You can actually find studios for $2500 in the Clinton/West Midtown area in older re-used hospitals and what not.  Rents in Manhattan are at the ~4.50-$7.50 psf range.  Rents in Midtown/Downtown/Buckhead Atlanta are in the $1.50-$3.00 range.  Rents in downtown Jacksonville are in the $0.75-$1.25 range.  Atlanta is considered CHEAP and risky.  Jacksonville is not considered an investor market at all.

[fieldafm]

I'm not sure how well capitalized Vestcor is.

Oh yeah, John Brood is dead broke 

$600-$1200

You're not going to pay $1,000/mo for a place like Strand on the 24th floor in any city in America.  $600/mo that high up is called a federally-subsidized housing project

 

[fsujax]

Post properties are over rated! well, if he can afford $1,900 a month for a 2/2 good for him. He is paying for the view, which he wants. Yes, I know Simms Jacksonville is nothing, not even to be mentioned with the big boys. I left Atlanta to come back here, hopefully to make it a better place, that one day an investor might like us.

[thelakelander]

I'm tired of people talking about the need for a grocery story downtown (not referencing your comment Debbie).  What other part of town can you live in where you walk to a grocery store? 

You can be tired of that talk all you want but a nicer grocery store is absolutely necessary.  This is not some other part of town; its downtown and one of the primary necessities must be a grocery store to which you can walk.

Why?  Why can't you get in your car and go to the grocery store like the other million plus people that live in Jax?  And if that's a necessity, why don't you walk your urban behind to Winn-Dixie?  Again, current occupancy rates don't suggest we need a grocery store, they suggest we need more leasable product.

Publix will be moving forward with their San Marco Square site in another year or so.  There's also a Winn-Dixie operating in downtown right now.  By the end of the year, it will be joined by a Julie's Urban Grocery adjacent to the Kings Avenue Skyway station.  Julie's will also have a Springfield location at 5th & Main.  Grocery needs in downtown Jacksonville should be covered.

http://www.jacksonvillegrocery.com/

[fieldafm]

I'm tired of people talking about the need for a grocery story downtown (not referencing your comment Debbie).  What other part of town can you live in where you walk to a grocery store? 

You can be tired of that talk all you want but a nicer grocery store is absolutely necessary.  This is not some other part of town; its downtown and one of the primary necessities must be a grocery store to which you can walk.

Why?  Why can't you get in your car and go to the grocery store like the other million plus people that live in Jax?  And if that's a necessity, why don't you walk your urban behind to Winn-Dixie?  Again, current occupancy rates don't suggest we need a grocery store, they suggest we need more leasable product.

Publix will be moving forward with their San Marco Square site in another year or so.  There's also a Winn-Dixie operating in downtown right now.  By the end of the year, it will be joined by a Julie's Urban Grocery adjacent to the Kings Avenue Skyway station.  Julie's will also have a Springfield location at 5th & Main.  Grocery needs in downtown Jacksonville should be covered.

http://www.jacksonvillegrocery.com/

Add Julies with the two 7-11's and downtown's grocery needs are way better than they have been in the last decade. 

I really can't emphasize enough how nice a 24 hour convenience store is going to be for this area.  It serves a very basic need that has been unmet downtown for quite awhile.  It's not 'sexy' like the Laura Trio or the Shipyards, but these are the little things that functional, walkable neighborhoods require.   

[ben says]

I'm tired of people talking about the need for a grocery story downtown (not referencing your comment Debbie).  What other part of town can you live in where you walk to a grocery store? 

You can be tired of that talk all you want but a nicer grocery store is absolutely necessary.  This is not some other part of town; its downtown and one of the primary necessities must be a grocery store to which you can walk.

Why?  Why can't you get in your car and go to the grocery store like the other million plus people that live in Jax?  And if that's a necessity, why don't you walk your urban behind to Winn-Dixie?  Again, current occupancy rates don't suggest we need a grocery store, they suggest we need more leasable product.

Publix will be moving forward with their San Marco Square site in another year or so.  There's also a Winn-Dixie operating in downtown right now.  By the end of the year, it will be joined by a Julie's Urban Grocery adjacent to the Kings Avenue Skyway station.  Julie's will also have a Springfield location at 5th & Main.  Grocery needs in downtown Jacksonville should be covered.

http://www.jacksonvillegrocery.com/

Think you covered that issue pretty well! I'm sold.

[simms3]

Post properties are over rated! well, if he can afford $1,900 a month for a 2/2 good for him. He is paying for the view, which he wants. Yes, I know Simms Jacksonville is nothing, not even to be mentioned with the big boys. I left Atlanta to come back here, hopefully to make it a better place, that one day an investor might like us.

Post is not a superior product, which is why I menioned it (and it is stick construction and often suburban in nature).  Post is a good operator, however. The older Post property I lived in (Post sold it to a different operator this year) was an urban concept with exposed brick and cement floors (and really cheap finishes), and filled with Tech students, and yet 2 BRs were $1550-$1750.  Now studios are $1230-$1235 with the large E20L floorplan at $1730, 1BRs are $1375-$1535, 2BRs are $1880-$2145.  That demonstrates decently strong pricing for inferior product but good location (1-2 blocks off Peachtree) and it demonstrates strong rent growth (I lived there only 3-4 years ago).  Rents are in the $1.50-$1.80 psf range.  It is half occupied by students.  Students. (dorm life/student housing was not any less expensive, in fact more expensive for a lot less)  This property is similar to what has been proposed for Brooklyn (albeit more urban with 5 floors of "loft-like" apartments around a courtyard and garage surrounded by thousands of other units within 5 blocks).

You really take my posts out of context (or you're just 10 steps behind).  I mentioned rate ranges for urban product in other cities to shed light on where Jacksonville falls and how far behind it is before it can see new development, and also to shed light on why Vestcor's developments may not be the most profitable.  A penthouse at 11 East is going for $1.55psf, which is the most expensive unit in Jax, most likely.  ($1700 for 1,097 SF)  11 East cost an estimated $24.1M for 225 units ($107K per unit, which is pretty low), and Vestcor put in $1.1M equity and the project benefits from $3.2M in tax credits.  I think these projects are combination of too low rent, no rent growth (just consulted a BizJournal article from 2002), higher costs, they probably require higher capital costs due to the building's age, and they seem to be over-leveraged.  $1.1M in equity?  That's like a limited partner's equity in the smaller developments I work on.

Ultimately the city is and has been doing something wrong, or more developers, locally and outside of Jax, would have looked into doing similar things.  As it stands now, there is no reason for any private equity to be invested in downtown without the city's help and backing.  It's a sure loss.  Something needs to be done at the city level first and then all that money parked on the sideline or elsewhere may start allocating bits and pieces to downtown real estate.

[simms3]

Yes, I know Simms Jacksonville is nothing, not even to be mentioned with the big boys. I left Atlanta to come back here, hopefully to make it a better place, that one day an investor might like us.

Here is my quote:

Atlanta is considered CHEAP and risky.

Did you not read?  It's a secondary market to the gateway cities such as DC, Boston, NYC and San Fran.  When those markets become overheated and buyers can't justify the pricing to their investors or to their model, then they look at Atlanta, which is what is happening now in droves with Metlife, Manulife, Northwestern Mutual, UBS, Batson Cook Development, Hines, and all sorts of guys getting into the multifamily game in droves to park money.

Make no mistake about it there will be a bubble and the rent growth that has occurred over the past few years will stop.  Rent growth and fundamentals are what lenders and equity are looking at.  They want to see NOI growth because they are planning to sell the damn thing.  They want to make sure their ground-up development won't be in a hyper-competitive situation where they will lose out on rent or need to increase concessions.  They need rents to be at a level where they can justify construction or a certain pricing, and they need enough people in the market to be able to afford the rents and the rent growth.

High barriers to entry are the key factors in the gateway/mature markets, which is why Atlanta is excluded.  Job growth is also key for multifamily.  Job growth drives multifamily.  Income growth, job growth, barriers to entry/lack of supply and fundamentals regarding vacancy are what drive rent growth.  Dallas and Houston and Raleigh have the lowest barriers to entry, but are all attractive markets because of crazy job growth.

The fact that all new multifamily construction and Class A transactions are on the SS is indicative of all the job growth occurring on the SS and that area becoming the "center" of town.  The city needs to do something to make downtown the center of town again, and you'll get more fringe developments as proposed for Brooklyn...and eventually it will move into the center where land prices are higher and construction costs much greater as momentum builds.

[fsujax]

sorry. i take it back, quick reading, since I am working!

[mtraininjax]

Because the type of person that moves to a downtown environment expects it.  Look at other markets.  Its easy for me to go out to my driveway and hop in my car.  Its not when you live in a high rise.  If you've been to that WD, you know why someone at the LST ain't walking to it.

+1

Hey, the  Weaver's house on the river is up for sale, so they are asking 5.5 million for it, maybe Wayne and Delores can take the proceeds and give them to Alvin. Of course they are still trying to unload John Gorrie, which they are in debt to around 13 million, with only a few units sold. I can't see them ponying up funds for Alvin's Private/Public Partnership until they have sold that albatross.

I lived in a Post Peachtree Hills apartment when first built in the early 90s. Nothing like being the first tenant in NEW space. My 1 BR was about 800 sq ft and cost me $645 per month. What a deal it was back then, compared to the mortgages I pay now.

[MusicMan]

That Winn Dixie would be smart to operate a courtesy van to the major residential properties in downtown, Cathedral Lofts, 11E, Berkman, Churchwell Lofts, The Carling, anything with 20 units or more. Even the hotels.
Great PR and folks who might have never gone there before might start going on a regular basis.

[Bill Hoff]

I dont know why he keeps referecing a movie theatre or grocery store Downtown. Just focus on the Trio and get it done!

The Library (old Haydon Burns library) is a far, far, far less expensive project, is further along in planning, and is much more viable. Doesn't hurt that it's a relatively successful downtown location, either.

Needs a mill or two.

[Debbie Thompson]

Back to The Strand.  Hence my comment about affordable housing and that not everyone can afford riverfront living.  When we moved to the urban core, Berkman was still apartments, as was 11 E, just being completed.  I'm not into paying rent instead of mortgage (although between buying at the top of the market, and with the economic downturn, that may not have been smart of me after all...but I digress.)  However, once Berkman went condo, and Berkman II was announced, we looked into it.  A one bedroom unit was about $250K, and condo fees on top of that.  For that price, one can purchase a beautifully restored single family home in Springfield or Riverside.  Yes, the view was great, but you have to have room to live.  And if a studio isn't big enough, then you can't spring big dollars for the river view.

Had right sized dwellings with mortgage payments in the $1000 to $1200 range, and reasonable condo fees, been available downtown, it would have been something we would have considered, definitely.  And there is a large chunk of the population in that same price range. Working stiffs like us who can't afford "luxury high rise riverfront views" but would still like the cool factor of living downtown.

[thelakelander]

^This is why I think the old city hall annex building that some are rushing to tear down is worth looking at as potential market rate housing.  There aren't too many sites in DT Jax that can be revamped for a product offering units at a certain price point.  Given that the city already owns the structure and site, its much easier to make the numbers work.