A Closer Look At 220 Riverside

[If_I_Loved_you]

The Strand
Jacksonville, Florida 32207 (0.93 miles)
Price: $1245-$2700 | Beds: 0 - 3


Bell Riverside
Jacksonville, Florida 32204 (2.13 miles)
Price: $1077-$2102 | Beds: 1 - 3

[PeeJayEss]

Lots of new construction in the uber popular southside that will be competition for the Brooklyn projects.  Same rent, but you get so much more.  For most it will be an easy decision that will likely not lead them to Brooklyn.

River view, riverwalk access, walking distance to work if you work on Riverside Ave, biking distance if you work downtown, easy access to all the cool, historic neighborhoods in town (save the beach) particularly the most up-and-coming one that you are adjacent to, biking distance to 3 breweries and some of the best, most original restaurants in town, an urban atmosphere, across the street from the Y, walking distance to all the paint stores your heart could desire  , and easy access to I-95 and I-10 so that you can get the heck out of this backwater ( again)? Not to over-apply lipstick, but I wouldn't say you get so much more on the Southside.

To trolleeyore's comments, Park street isn't ideal, but its far from dead. Jimmy Johns is, I believe, making money hand over fist, Two Doors Down is as well (Note: Whiteway is open for only lunch, is that in the "hood" as well?), there are several bars, several mechanics, and the aforementioned paint stores, and this is all in an area surrounded by interstates and covered in mostly cleared land.

[simms3]

They, in my opinion, may be more drawn to the uniqueness of the area, brand new YMCA on the other side of the road, and the non-chain dining options available in Riverside.

Not quite there yet.  It's hard, also, to "see" potential like sophisticated urban types and hipsters often do (great forecasters of the next neighborhoods) when there is NOTHING there, literally.  As someone already mentioned, one road is lined with retention ponds.  The main thoroughfare, Riverside, is a sterile highway with lights.  Nothing is walkable.  You're bounded on all sides by highway.  There are FIELDS instead of existing buildings.  A crop of palm trees near the Skyway maintenance shed.  The YMCA is years away and will still be a drive-up location (plus young people do not join the Y any more...since a long time ago).  I could go on.

It's a challenged neighborhood where even the most "forecaster" of personalities might have trouble seeing reason to flock there (that and the true urban hipster types don't live in sterile new stick apartment communities no matter how dressed up).  This will be filled with transient downtown workers who are in Jax for a year or two and need a quick and convenient place to live in the meantime (a place they can find on Forent.com).  A guy I know who went to school up north and has come back to Atlanta worked in the Federal Court in Jax as a clerk for a couple years.  That's your renter profile here.  Nothing special about it.

[simms3]

The Strand
Jacksonville, Florida 32207 (0.93 miles)
Price: $1245-$2700 | Beds: 0 - 3


Bell Riverside
Jacksonville, Florida 32204 (2.13 miles)
Price: $1077-$2102 | Beds: 1 - 3

Not *that* much of a difference considering the quality and location difference.  Plus even in other "cheap" southern cities like Nashville, Charlotte and Atlanta a building as high end as the Strand would start north of $2K and end north of $5K, literally double the price.  Many people coming to Jax from other cities know this and see a place like the Strand as a steal (I know I would!).

[If_I_Loved_you]

The Strand
Jacksonville, Florida 32207 (0.93 miles)
Price: $1245-$2700 | Beds: 0 - 3


Bell Riverside
Jacksonville, Florida 32204 (2.13 miles)
Price: $1077-$2102 | Beds: 1 - 3

Not *that* much of a difference considering the quality and location difference.  Plus even in other "cheap" southern cities like Nashville, Charlotte and Atlanta a building as high end as the Strand would start north of $2K and end north of $5K, literally double the price.  Many people coming to Jax from other cities know this and see a place like the Strand as a steal (I know I would!).

I was surprised that Bell Riverside went for so much. Sure the ones on the St Johns River should be high. But I would hope the ones facing Riverside Ave would be cheaper? The Strand would be my choice if I had just arrived in Jacksonville as a single person or a married couple without children. With all the space that is opened and ready to be used in the Brooklyn area I hope that 220 Riverside works out and more apartments/condos/retail/restaurants move to this area in the near future.

[Tacachale]

Sigh. Trolls gotta troll, I guess. The rest of us can rest assured that the owners will find a way to make this work, or they wouldn't even bother. If that means lowering the rent for the short term to fill the units, or offering some other deal, I'm sure they'd do that rather than go bankrupt. I also imagine they're not looking at this as a short-term investment that will ripen immediately. 5 years, 10 years, 20 years down the road the area will look totally different, and these owners will have gotten in on the ground floor.

[downtownjag]

They, in my opinion, may be more drawn to the uniqueness of the area, brand new YMCA on the other side of the road, and the non-chain dining options available in Riverside.

Not quite there yet.  It's hard, also, to "see" potential like sophisticated urban types and hipsters often do (great forecasters of the next neighborhoods) when there is NOTHING there, literally.  As someone already mentioned, one road is lined with retention ponds.  The main thoroughfare, Riverside, is a sterile highway with lights.  Nothing is walkable.  You're bounded on all sides by highway.  There are FIELDS instead of existing buildings.  A crop of palm trees near the Skyway maintenance shed.  The YMCA is years away and will still be a drive-up location (plus young people do not join the Y any more...since a long time ago).  I could go on.

It's a challenged neighborhood where even the most "forecaster" of personalities might have trouble seeing reason to flock there (that and the true urban hipster types don't live in sterile new stick apartment communities no matter how dressed up).  This will be filled with transient downtown workers who are in Jax for a year or two and need a quick and convenient place to live in the meantime (a place they can find on Forent.com).  A guy I know who went to school up north and has come back to Atlanta worked in the Federal Court in Jax as a clerk for a couple years.  That's your renter profile here.  Nothing special about it.

I'm sure we could both go on and on about it; I personally doubt MAA would get involved without confidence in the project, and I actually live here so maybe I know something about the area too ;-).  I can agree that the "hipster" crowd often times leads the charge for the re-development of an area, but these are high-end apartments; not delapidated houses in need of a creative touch where value will later be discovered by house-flippers and developers.  I agree it could be transient workers of Downtown, but also people who work at Baptist Downtown, Fidelity, LPS, Haskell... etc.

Let's side table our disagreement & reconvene when the project is moving along.

[thelakelander]

I went to the ground breaking today and was very impressed with what is planned.  I'm most excited about Unity Plaza, which will be programmed continuously year round and modeled after Pioneer Courthouse Square in Portland.  220 Riverside is expected to be completed in August 2014.  The development next door is expected to come before council soon and it also has a 2014 completion date.  For those of you who are concerned about Brooklyn, literally half of the neighborhood will be these two projects.  Assuming both are on time and schedule, the vibe of that entire stretch of Riverside Avenue will be different in two years.

[fsujax]

It will be great Lake, and they will not have any problem leasing them.

[thelakelander]

I don't think they'll have any problem.  If anything, I believe there is a pent up demand because urban Jacksonville really doesn't offer much of this product type compared to similar sized communities.

[simms3]

Sigh. Trolls gotta troll, I guess. The rest of us can rest assured that the owners will find a way to make this work, or they wouldn't even bother. If that means lowering the rent for the short term to fill the units, or offering some other deal, I'm sure they'd do that rather than go bankrupt. I also imagine they're not looking at this as a short-term investment that will ripen immediately. 5 years, 10 years, 20 years down the road the area will look totally different, and these owners will have gotten in on the ground floor.

I can rest assured nobody developing this project is looking to hold past 5 years (this is not a term balance sheet loan or a Fannie arrangement...it's a construction loan, LoL, and even with a Fannie arrangement with a 4 year lockout they would have a much earlier exit).  I can also agree and add to your point that most new apartments in sunbelt markets, especially in testy submarkets, open with major concessions.  They probably underwrote 2 years of concessions with major burnoff after that point.

If they're holding past 3-4 years (which given the market is a high probability), they'll need to place a term loan on this (which unless they want to hold for an additional 5 years past stabilization, 2-3 years post delivery, 18 months post groundbreaking, they'll go the traditional route).  The new traditional loan will be sized based on debt yield, which is the new gold standard of underwriting and is based on NOI.  If they don't stabilize to 95+% occupancy AND burn off all concessions in 2-3 years at the time they will be trying to secure said loan (a loan with flexible prepayment options I'm sure, which means no agency or HUD), then they'll be stuck with a loss (or a major resize, which will require a huge paydown of construction loan out of pocket and a slashing of their IRR if that's the return they are going for - probably is considering the risk, market, product and new construction).

So given the momentous task the developers have of trying something new in Jax, the riskiest of all markets, leasing this baby up for sticker shock prices in a shoddy area within 2 years AND burning off concessions either for a sale or to put a perm on the asset, and given historical performance of Jax apartments (especially boundary pushers like the infill developed in Riverside and downtown), then Yeah...someone IS losing sleep over this deal!!!!

____________________________________________________________

Being the only new construction in the area, it's likely that its selling point will be free cable/wi-fi - maybe even a new flatscreen to come with apartment, etc etc.  Vintage deals in cheaper sunbelt metros are also finding that they must offer more services to stay relevant and compete with newer product and keep their rent growth or maybe even just to keep rents stable.

Don't discount me as a troll because I tend to offer devil's advocate POV.  I work on a multifamily deal and on plenty of other large deals for a big time investment shop, and I travel frequently to various markets and live in a larger market.  I look at places like Brooklyn from a "fresh" outsider's pair of eyes.  Seasoned "been there done that" transients in Jax will not find the area urban, hip, exciting or walkable even when built out.  I can go on about the many reasons that is so, but nobody will believe me.  There are more promising developable infill areas in Jax that are not getting any attention right now.

To your average Jax native who has not yet ventured out of the Jax bubble and has not experienced real city life, Brooklyn still won't be appealing as an exciting new urban experience.  For that everyone knows you go to Riverside or downtown.  For all others who could care less (most in Jax and in actuality most young people despite the perpetuated myth that all young people demand to be in the action), the ability to leave your parents' nest and either BUY a house or rent a luxury apartment on the SS is most appealing.

Obviously the lender and the parties involved have confidence in the project, but let's face reality: this project has been 6-7 years in the making and only now in this time of near-bubble multifamily lending environment can the lender find it in themselves to fit this baby within their underwriting standards.  If this were a 2008 built deal sold through CMBS, it would still probably fall in the riskier category placing it in a lower tranche, mmhmm.

[CityLife]

How many employees of Fidelity, BCBS, etc work right there on Riverside? I imagine there will be some major demand from them. They would basically save about $100-$200 in commuting costs monthly,  have less wear and tear/mileage on the cars, and about 5 hours less of commuting per week vs. the Southside which Simms claims is so attractive. Subtract the financial and intangible benefits from walking to work vs. driving and 220 is far more attractive than living on the SS. Especially when you factor in proximity to DT and Riverside, which by and large many (if not most) prefer over the SS.

[tufsu1]

I went to the ground breaking today and was very impressed with what is planned.  I'm most excited about Unity Plaza, which will be programmed continuously year round and modeled after Pioneer Courthouse Square in Portland.  220 Riverside is expected to be completed in August 2014. 

yeah...the difference is that Portland's IS downtown....this is just one more programmed space (like the Landing courtyard) which could dilute from attempts to reinvigorate Hemming Plaza

[duvaldude08]

I work on the southbank. Before I bought my house on the WESTSIDE, I was agressively trying to find something like near downtown, and found nothing. If I were still in the apartment hunt, I would be jumping on this right now. There is demand for this type of housing downtown. People just want something affordable to rent, versus a condo you have to pay half you life savings as a down payment and go broke trying to pay mortgage.

[PeeJayEss]

yeah...the difference is that Portland's IS downtown....this is just one more programmed space (like the Landing courtyard) which could dilute from attempts to reinvigorate Hemming Plaza

What "attempts" do you speak of? Is the park owner (city) actively trying to get this place programmed 365 days a year? DVI does some (Art Walk, Friday picnic), but what about the City or JAXPARKS? All they talk about is getting rid of the homeless. Its like free marketing for not going to Hemming. You can't even find an official schedule ofevents happening in Hemming, so how can you decide when to go there?