Khan: Downtown's Laura Street Trio redevelopment deal 'alive but on life support

[dougskiles]

I'll say the same thing here, I mentioned in the thread about the Haydon Burns Library being purchased for non-profit uses. We should be careful about attempting to dictate specific uses in privately funded projects.  Those guys should put whatever in there that makes it feasible for this development to get off the ground.  As long as it engages the street, pays property taxes and fits within the overall vision of a vibrant downtown, there should not be a problem.  One the major reasons we've failed with downtown redevelopment in the past is because we've micro managed the private sector's innovation and creativity to the point to where most take their money and investment elsewhere.

100% agree.

[thelakelander]

I'm just giving you a hard time.

Lol, I actually enjoy these types of discussions.  I've always viewed them as a way to learn more and a process that exposes unique and innovative ideas.

Developer puts a restaurant there, I will go. But I probably won't drive past my 2 or 3 favorites to get there, unless the food and experince is spectacular. A cool and unique space reminiscent of 'Zabar's meet's Fresh Market' I could see going to on a weekly basis.

Without a specific reason to go there, I doubt I'd pass a couple of Publix's to spend time in a 'Zabar's meets Fresh Market'.  I also wouldn't eat at a restaurant of any kind on a routine basis or else I'd go broke real quick.  I've never had a bad meal at Ruth Chris but I only go there once or twice a year. However, downtown and the community are bigger than me and my personal preferences. So, I'd be a big advocate of both concepts if various development groups are willing to spend their funds to enhance downtown and the urban core.

[simms3]

If a project in the Trio works out (to me the Barnett Bank building is pretty, but boring and cookie cutter as far as old buildings go), then I'm sure it could attract investment advisors such as my own firm, which has successfully closed out 5 opportunity funds where each asset is co-invested.  We do projects like this in our sleep and have serious capital backing.  Jacksonville has not been a target opportunistic market previously for us, and will never be a target market for any of our core/institutional funds.  All it takes is one successful project to prove that the market can pan out should other opportunities arise.

While we have all agreed (or most of us anyway) that market forces, ownership, etc will presumably determine the building use, I do think that in this country's most progressive city developers rarely if ever have that luxury.  The San Francisco Planning Commission determines every detail for every site in the city what can be built on the site.  It even goes so far as to determine the design.  The entitlement process here is extreme...a developer will essentially buy a set of plans that already come with an architect and blueprints, so it's quite the opposite of "free market forces".  That being said, while the development system out here is quite "socialist", it's run by very smart socialists who obviously do a much better job than the "capitalists/free market" types in Jax or other cities who can't get their act together.  Proof that any system is only as good as the people running it.

[downtownjag]

$3 million for this project is $3 million too much. Its just a mistake to think $3 million on a project thst will cost between $40-$70 million is anything more than a drop in the bucket.

Not a knock on the project but the inefficiencies inherent make it risky to begin with. One Plan called for a new residential building on the dirt on Adama which would help capture efficiencies with the project as a whole. the Floorplates are awful.

A good indicator will be to see if Hallmark does in fact get the $1.34 PSF they're asking. I believe the trio project was previously modeled around $1.05 PSF? If hallmark gets it and proves the demand is there, and I think they will, it definite helps the trio project.

I'm praying its a huge success I'd love to see it happen and in my opinion is the indisputable lynchpin for future residential development downtown.

[simms3]

^^^HALLMARK IS PROFORMA-ING $1.34 AVG RENTS???  WTF, PREVIOUS PROPOSALS OF TRIO CONSIDERED $1.05?

I have been so long removed from such a small, cheap market these numbers don't compute for me at all (and I do have an idea about Nashville, Austin, Raleigh and Charlotte...)

[downtownjag]

Lol guessing on trio, but yeah and Strand ownership is consistently getting higher than hallmark for their one beds and studios

[downtownjag]

No concessions on strand either

[simms3]

Still, someone take all of the land that was transacted with the $3M.  I bet we're talking at least a few acres...even at 2 acres you're still talking a land deal of $34/sf, which seems like a steal to me.  Prime land in Miami and Atlanta will trade for $200-400psf, prime land here in SF will trade for $4,000psf (a parcel a block away from my office tower just sold for this amount last week).

So you pay $34/sf for the most prime land in the city, have some improvements on them at low or no tax basis, and can sit and wait for the right partner(s) to come along to redevelop the sites.  Doesn't sound like a bad deal to me.

[downtownjag]

Lol strand is asking $1.8 PSF on some one beds! Www.skylevelliving.com

[simms3]

Lol guessing on trio, but yeah and Strand ownership is consistently getting higher than hallmark for their one beds and studios

Well, duh.  It's a luxury highrise on top of structured parking...they *should* be hitting close to $2psf for what I would estimate is the construction cost of that thing (a building like that would be getting closer to $2.50 in Austin, $3.00 in Chicago, probably $5-$6+ here in SF).  Also I looked into vacancies...I'm not surprised they aren't giving concessions.  Nobody anywhere is giving concessions right now, in any market.  Forecasters are thinking that with robust pipelines coming to fruition in some cities/submarkets that concessions might "temporarily come back".

[downtownjag]

Na retail in sjtc can sell in the $30's PSF  (i think chic fil a was $34 psf actually)but office development land with entitlements is around $8-10 and maybe $15-20 for retail with major frontage.

I'm optimistic about the deal, don't get me wrong, but it wouldn't be the first place I put money.

[downtownjag]

Lol guessing on trio, but yeah and Strand ownership is consistently getting higher than hallmark for their one beds and studios

Well, duh.  It's a luxury highrise on top of structured parking...they *should* be hitting close to $2psf for what I would estimate is the construction cost of that thing (a building like that would be getting closer to $2.50 in Austin, $3.00 in Chicago, probably $5-$6+ here in SF).  Also I looked into vacancies...I'm not surprised they aren't giving concessions.  Nobody anywhere is giving concessions right now, in any market.  Forecasters are thinking that with robust pipelines coming to fruition in some cities/submarkets that concessions might "temporarily come back".

As for concessions, just letting you know that's net effective. Yeah well look at the 2-3 beds they aren't getting it there. It's more so the demand for those than the Jacksonville market. And lol yeah sure we can talk construction cost but talk to Auchter about that. Hopefully it's indicating pent up demand and hallmark will be successful.

I bet San Fran is amazing. Thats all I have to say about that!

[simms3]

Seriously, Jax is incomputably cheap.  How is that?  I mean I know across all product types that it's typically in the bottom barrel of performance and in the top tier of risk, but is it really that bad?

I was conservatively estimating 2 acres between Barnett and Trio...maybe it's closer to 4?  At 4 acres you're talking $17psf...these are corner DT parcels at Main and Main...that's considered pricey for such land in Jacksonville?  People would pay hundreds of millions of dollars for such land in NYC or SF or Boston.  People would pay enough for comparable land in those cities to full on construct a 1,000 ft tower.  LoL

[simms3]

Lol guessing on trio, but yeah and Strand ownership is consistently getting higher than hallmark for their one beds and studios

Well, duh.  It's a luxury highrise on top of structured parking...they *should* be hitting close to $2psf for what I would estimate is the construction cost of that thing (a building like that would be getting closer to $2.50 in Austin, $3.00 in Chicago, probably $5-$6+ here in SF).  Also I looked into vacancies...I'm not surprised they aren't giving concessions.  Nobody anywhere is giving concessions right now, in any market.  Forecasters are thinking that with robust pipelines coming to fruition in some cities/submarkets that concessions might "temporarily come back".

As for concessions, just letting you know that's net effective. Yeah well look at the 2-3 beds they aren't getting it there. It's more so the demand for those than the Jacksonville market. And lol yeah sure we can talk construction cost but talk to Auchter about that. Hopefully it's indicating pent up demand and hallmark will be successful.

I bet San Fran is amazing. Thats all I have to say about that!

I only assume you're referring to net effectives brotha (not in the brokerage fluff puff business here ).  I've looked at the units and their pricing...I follow the Strand because in my mind it's the only true class A urban multifamily product in the city.  I do hope the Hallmark project is successful and I'm sure it will be...it's basically one of a kind in the city so it is easy to differentiate itself.  If they are below $1.50psf net effective once stabilized at 220 Riverside, I'll be surprised.  I won't be surprised if they deliver/pre-lease with concessions (I'm picturing a free TV, Wifi, gift cards, or something tangible before reduced rent...if reduced/free rent, I think it will speak to sticker shock in the market, which may not be good for urban multifamily going forward).

[downtownjag]

Lol idk my friend. Possibly the nicest and stable office portfolio just sold for about $120 PSF. One park sold for $20 PSF, granted it was almost totally vacant. Unfortunately downtown isn't main and main for us right now but that really is changing and the trio project helps from a vibrancy standpoint.

You know better than most its because there's just no demand for raw dirt downtown. Plus you can launch a bts for mid $20's PSF in the burbs so you're always fighting new construction with surface parking