Cross Regions Group President and CEO David Ergisi developed a strategy to convince international investors to spend in the Jacksonville market.
He eases them in through the more familiar South Florida.
“Jacksonville doesn’t exist in the international market. I hate to say it. The reason why I opened my office in South Florida is to get people comfortable with Florida in general,” Ergisi said Aug. 22 during a panel discussion at the Northeast Florida Chapter of the Appraisal Institute.
The panel also featured Chase Properties President Michael Balanky; Sleiman Enterprises Director of Development Michael Herzberg; and Ryan Hoover, president of Vestcor Companies subsidiary TVC Development Inc. The companies are based in Jacksonville.
Ergisi, who is from Turkey and has an office in Istanbul, said he has “more than half-a-dozen” partnerships with Turkish and Israeli investors who acclimated to Florida through his offices in Miami and Boca Raton before coming to Jacksonville.
“I tell them I have operations in South Florida, which I do, and they get comfortable. We sit down at the table and start developing opportunities from the investment perspective and returns,” Ergisi said.
“We look at potential developments or existing property in Jacksonville and look at the returns … compared to the South Florida market, quickly there’s a big difference,” he said.
Jacksonville city government and business leaders are trying to recruit international investment to Northeast Florida. Representatives of the Jacksonville Aviation Authority and JAXUSA Partnership traveled to the Paris Air Show in June to recruit multinational companies.
The Jacksonville Jaguars have played one regular-season game per year in London since 2013. Team President Mark Lamping says that helps boost the city’s international profile.
“Once they (investors) get to Jacksonville, I show them the numbers. They are very savvy and smart people,” Ergisi said. “They don’t want to take any escalated risk. They want better returns. Here, we’re able to accomplish that.”
After forming his first commercial real estate development company in 2007 and working in the investment division of Colliers International Group Inc. from 2011-14, Ergisi founded Cross Regions in 2014.
Ergisi said nearly 80% of his development portfolio is in medical real estate. His latest project is the proposed 132,000-square-foot Duval Station at River City Marketplace medical hub near UF Health North. Cross Regions paid $1.6 million for the 9 acres at northeast North Main Street and Max Leggett Parkway to develop medical offices and retail space.
The company also proposes a medical and retail center in St. Johns County — The Fountains at St. Johns along County Road 210 West.
Ergisi said the nature of the medical profession — spending years building a base of patients and a practice — makes medical services more reliable tenants then retail outlets.
He said he anchors many of Cross Regions’ developments with services that can better weather market downturns.
“The reason I like it is because it’s more stable than being in commercial real estate in my opinion,” Ergisi said. “Physicians don’t pick up and leave.”
Hoover explained Vestcor’s model for seeking low-income housing tax credits from the state of Florida to have an affordable housing focus.
Vestcor developed affordable and workforce housing Downtown with its “Loft” brand in LaVilla, Brooklyn and a proposed project in the Cathedral District.
Hoover said the most competitive award is a 9% tax credit because it covers 70% of the development costs.
Herzberg said Sleiman is looking at a more service-based anchor concept for its shopping center developments, such as grocery stores, to offset competition from online retail.
Herzberg also highlighted the two-story, 8,200-square-foot building that Sleiman bought at 1974 San Marco Blvd.
He said the 94-year-old building in San Marco Square still needs a tenant. The company paid $3.2 million for the property Aug. 15.
Balanky spoke of the health of Jacksonville development in light of a possible economic slowdown.
Balanky said developers in Northeast Florida have “at least” until the end of 2020 before a recession and he sees Jacksonville in a better position than before the 2007-09 financial crisis.
He said retirees relocating to Florida will choose regions with lower costs of living which, he says, will be advantageous for Jacksonville.
“The average income-to-home price ratio is 25%” in Jacksonville, he said. “Miami is 82%, so you’re going to see a lot of flight from areas like that to areas that are more affordable.”
City Council President Scott Wilson introduced legislation authorizing the city to appropriate $12.46 million from a Florida Department of Transportation grant to demolish a portion of the elevated concrete Hart Bridge Expressway.
Wilson introduced Ordinance 2019-611 on Aug. 22 at the request of Mayor Lenny Curry.
The $38.9 million project, expected to be completed by the end of 2021, will remove the ramp at Liberty Street between Gator Bowl and A. Philip Randolph boulevards, bringing a portion of the expressway to street level.
City and FDOT officials plan to create an intersection at Gator Bowl Boulevard and install traffic signals and pedestrian and bike paths as “traffic calming improvements,” according to documents from the Mayor’s Budget Review Committee.
Officials want to remove the physical barrier between parking Lot J near TIAA Bank Field and the Shipyards, east of Berkman Plaza II to WJCT Studios, and south of Bay Street and Gator Bowl Boulevard to the St. Johns River.
Jacksonville Jaguars owner Shad Khan has proposed a $2.5 billion redevelopment of both sites.
City Council held its first reading of the bill Tuesday night.
As the Council prepares to debate the legislation, three firms submitted bids Aug. 22 for construction engineering and inspection services for the project. The city has not awarded a contract for the project.