LIVE BLOG: MOBILITY FEE MORATORIUM: Rules&Finance Committee

[simms3]

^^^Then why don't they live DT already?  In my opinion DT apartments are CHEAP relative even to peerish cities of Charlotte, Nashville, Austin.  There are vacancies.  Look, if the demand for downtown apartments/condos were there, we'd see buildings going up.  Fact is, there are plenty of people who have done their homework and concluded that there is no demand for downtown living in Jacksonville (even at the height of the boom, investors trying to do downtown living went out of business because they got burned!).  Chalk it up to whatever you want, but I think there needs to be a strong population of young professionals working downtown for there to be demand to live downtown.

And having 2 parents and all of their friends who moved to the beach rather than Peninsula (where we actually now know 3-4 couples who are empty nesters, but also have places at the beach), I'd say in Jax where there is a fabulous set of beaches there is almost no reason to "empty nest" to DT.  If you are 60, retired, and looking for a new cool urban spot to live...you're going to get a condo in a larger city, not in Jax.  Fact.

[jcjohnpaint]

It is not the same cost.  It is about 500 more and you lose a room compared to the SS (given the same amenities).  For someone that works in the SS, why would you drive more, pay more, and loose space.  Although that is the price you have to pay to live in the city, but divide is a little too extreme.  I guess that also get into how cheap things are built in the SS.  I don't know if you would want that fabric in an inner city. 

[thelakelander]

^That was my issue when I moved to town. The urban core simply didn't offer the vibrant atmosphere I was looking for that would justify paying more.  That was 2003. It's ten years later, nothing much has really changed and now my kids are to the age where schools matter.

[Tacachale]

There's also the issue of lack of residential downtown. What's there now stays about 90% full. More people would move there if there were more options. Unfortunately the last administration stopped putting an emphasis on supporting new projects. Even still, many people are moving to the neighborhoods right around downtown like San Marco and Riverside where housing is available. I'm sure there are plenty of examples on this forum of people who live in the urban core even if they work on the Southside or elsewhere.

[simms3]

There's a huge cost gap in Jacksonville (and really anywhere) between urban living and suburban living, which requires well paid young professionals, which Jax doesn't have an abundance of.  But what I was saying was that DT Jax living compared to DT Charlotte living or DT Nashville living or certainly DT Austin living is cheap.

[simms3]

What's there now stays about 90% full.

And traditional stabilization for most class A or infill multifamily deals is 95% physical occupancy, so if that's the case, as limited as downtown rentals are, there is still a lot of vacancy.  Strong markets/submarkets are posting 3-4% vacancies now, even in areas with tons of apartments and a hefty pipeline.  You can't get rent growth if you're properties stay at 90%, even amidst no new neighboring deliveries.

More people would move there if there were more options.

Look, there are enough developers and investors out there scouring the map for opportunities to capitalize on this multifamily boom anywhere.  If there is one product type where capital groups are willing to shell out money anywhere, it's multifamily, and Jacksonville is a top 40 market in FL...so you know people have looked (in fact as evidenced by SS construction and 220 Riverside).

The simple fact is that vacancy rates, growth rates, job growth, and other fundamentals have been poured over by outside investors and lenders multiple times each year for the past forever.  The consensus is quite obviously that there is no demand for downtown living, otherwise in this heated market where even tiny cities are seeing new construction of expensive infill you would see more activity.

Demand is when there are waiting lists for 1BRs (as in Midtown Atlanta) or when you have to be interviewed to get an apartment and 50 other people show up for an undisclosed open house (as in SF).

When you have 90% or even 95% occupancy and no rent growth and there are still concessions being offered, the proof is in the numbers that there is no demand.  If there were, the Strand, 101 East, and the Carling would all be 98-100% right now (especially at those rates!...you can't get those rates in other cities).

[simms3]

11 East Forsyth

127 Units

2 units available now or in next 2 weeks, if you're looking at an April move-in you'll have 4 additional options.  98% occupancy.

You can get a 16th Fl 2BR/1BA for $1,190 (970 SF, or $1.23psf)

You can get a 4th Fl 2BR/2BA for $1,176 (1,005 SF, or $1.17psf)

PH3 from $1,697 (1,224 SF, translates to $1.39psf)
PH7 from $2,147 (1,720 SF, translates to $1.25psf)

I've seen the PHs, they are pretty spectacular!

The Carling

100 Units

6 available in now or in next 2 weeks, 8 available within the month.  94% occupancy.

You can get an 8th Fl 2 BR, 1,045 SF for $1,282 (or roughly $1.23psf)

The Strand

295 apartments

17 apartments available now, an additional 16 apartments coming available for move-in within 3 weeks.  94% occupancy.  Looks like rents have gone up, as well.

The most expensive 2BR I saw was a 28th Fl unit, 1,343 SF, $2400 available in 24 days ($1.79psf)
Other than that I saw plenty of spacious 2BRs in the $1500-$1700 range

The most expensive 1BR I saw was a 20th Fl unit, 990 SF, $1,840 available May 7, $1.86psf
Other than that it seemed most 1BRs were in the $1300-$1500 range, and they are as spacious as a 2BR in larger cities

The most expensive studio I saw was 6th Fl unit available May 7 for $1300 (651 SF, $2.00psf).  My studio is 400 SF and is considered spacious here, LoL...and I pay close to $3,000 for it and there's no heat/AC, fancy finishes, etc (but then this is SF...would expect that here)


So it does appear there are limited options, and certainly DT living is more expensive than in suburbs, but if ya'll want DT living, you're going to have to realize that rents have to come up even further to justify construction and that Jax will need to find a way to build an economy that provides $65-$90K jobs for fresh college grads, LoL, and $90-$150K jobs for MBAs.

For comparison, the latest apartment tower to rise in Austin was underwritten with $2.25psf average rents across the board (studios, 1BRs, 2BRs, and the 2nd/3rd flor 3BRs, high floors, low floors, SW corner views, NE corner lack of views, etc).  This is a "budget" highrise, too.  That would mean that 28th Fl 2BR at the Strand would come up from $2,400 in Jax to $3,022 (and this being a spectacular top floor apt would be likely higher than avg PSF for building, probably go for $3500 in Austin).  Those studios would come up from $1100-$1300 to $1400-$1600.

[thelakelander]

There's a huge cost gap in Jacksonville (and really anywhere) between urban living and suburban living, which requires well paid young professionals, which Jax doesn't have an abundance of.  But what I was saying was that DT Jax living compared to DT Charlotte living or DT Nashville living or certainly DT Austin living is cheap.

There's a larger gap in vibrancy. Money wasn't the reason I chose not to live in or near DT Jax when I moved to town.  It boiled down to a lack of available housing options and an atmosphere that wasn't worth paying more. I mean, when you locate in an urban spot, you expect to pay more for less living space but the surrounding vibrancy, transit options, parks, culture, etc. is supposed to balance that out.  We're still working on the "surrounding" part here.

[Tacachale]

^That's what I'm trying to get at, although I'd add that the lack of available residential certainly impacts the surrounding vibrancy.

Simms, there's certainly demand for living in downtown Jacksonville, but it's not enough for developers to justify new projects without incentives. Something to remember is that there was very little residential in the downtown core (or the Southbank even) before about 10 or 15 years ago. Unlike a number of other cities, we're building that aspect from scratch. Starting in the 1990s the city incentivized new and adapted residential and hundreds of units were successfully added (11E, the Carling, the Strand, Churchwell Lofts, the Peninsula, Berkman, and probably several more, those all completed in the last 10 years).

Unfortunately the last administration stopped focusing on downtown and incentivizing new projects, and then the financial crisis killed the remaining ones in the pipeline. Charlotte was doing the same thing at the same time (and probably before), except they didn't stop in the middle. At this point Uptown Charlotte has achieved a level of vibrancy that creates a market for more of the kind.

In short, there's demand, but nothing is likely to happen without the city taking a proactive stance on bringing more residential development downtown. And before Lake adds the addendum, yes, there are plenty of smaller  things we can do in the intermediary to increase the vibrancy of what we've got.

[simms3]

We're all on the same page here...look urban living doesn't have to be downtown, but it will come downtown when jobs for young people come downtown.  Downtown usually isn't the cool place to live anywhere...but those who do live in business districts desire convenience to JOBS.  Look...either focus on bringing high paying jobs for young people downtown (because families and people over 35 *do not* live downtown unless they are mobile executives who need a "pad" close to their office), or focus on tourism.  The city has failed on both parts.

I'd call Brooklyn, LaVilla, Springfield, etc all part of downtown (springfield has a different dynamic, but nonetheless).  Most people aren't thinking "I'll live in Brooklyn right next to downtown and then commute down to Gate Parkway"...most people will choose an apartment down there if they work down there.  That's how it has always worked, that's not showing any signs of changing.  Family types will always choose a family friendly neighborhood with SFR over an apartment if they can...and lots of young people in Jax seem to be inclined to live in houses, as well, rather than apartments.  A mentality/local thing.

We hired someone from Hong Kong who went to Carnegie Mellon/London School of E and did a stint with an I-Bank in Charlotte...that's your urban renter profile in new age cities requiring "new" ground up infill for urbanity.  In Nashville substitute I-Bank for creative or PR firm.

Also...money.  Even existing apartments downtown are far more expensive than anywhere else in the city...but in reality they should be even more expensive...and so if only young people are going to be renting, these need to be *highly paid* young people.

I only draw conclusions based on actual downtown resi assets I have worked on in multiple markets...of course things might work differently in Jax.

[thelakelander]

DT Jax already has jobs that employ educated people.  I don't know what the percentage is but there is a presence. Sure, it could use more but its not as if Jax is starting from scratch. If the Norfolks, Greenvilles, and St. Petersburgs, etc. can find success in attracting more residential in and near their DTs with less jobs than Jax, then Jax should be able to do better than it's currently performing.  WHile more jobs are important and should continue to be a goal, I still believe there are a lot more factors at play that leads to why Jax has failed in areas where it should exceed.  Bad public policy and a lack of vision are two that come to mind that should be easy to incrementally address. For me, it will be interesting to see what impact 220 Riverside will have on the multifamily housing market in DT. By the same token, it will also be interesting to see what happens in the Southside when all the new multifamily developments are complete.  There, I truly question if we have the demand to meet the extra supply coming on line.

[Bill Hoff]

I thought this article was timely: http://bettercities.net/article/reports-sprawls-death-are-exaggerated-19844

Basically says that sprawl will continue by default until public policy is changed (ie, mobility plan).

[dougskiles]

#1 factor in promoting sprawl are the tax depreciation laws.  Back in the 50s Congress allowed building owners to accelerate depreciation for physical improvements (buildings and equipment).  Mainly it was intended to help factories.  Because land values cannot be accelerated on the depreciation schedule, guess what happened?  New commercial growth went to areas where land was cheap.  Shortly afterwards, the suburban shopping mall was born.  The rest is history.

[bill]

When you have 90% or even 95% occupancy and no rent growth and there are still concessions being offered, the proof is in the numbers that there is no demand.  If there were, the Strand, 101 East, and the Carling would all be 98-100% right now (especially at those rates!...you can't get those rates in other cities).
[/quote]

And those only worked because of huge subsidies.

Simms-what do you think of 220 from a success standpoint? The developer would not quote me a psf number but gave me projected rents. Simple math puts it well above $2.00psf.

[Ocklawaha]

I'd call Brooklyn, LaVilla, Springfield, etc all part of downtown (springfield has a different dynamic, but nonetheless).  Most people aren't thinking "I'll live in Brooklyn right next to downtown and then commute down to Gate Parkway"...most people will choose an apartment down there if they work down there.  That's how it has always worked, that's not showing any signs of changing.

When Ennis and I were doing research for our book 'Reclaiming Jacksonville,' I stumbled across a document in the library that defined downtown's borders as Myrtle on the west, the Jacksonville Terminal and river as the south, State Street on the north, and Talleyrand on the east.  If we tossed Brooklyn and the Southbank into the mix and used such boundaries as the definition of downtown for the purpose of credits, incentives, transit, development, etc. we might create a whole different look to our urbanized zone.