Citing a strong Gate Parkway office market, Chestnut Hill Investments partners J.J. Conners and J.T. Thornton want to develop a potential $30 million project.
Conners, principal with Chestnut Hill and Fairlead Commercial Real Estate, said the group expects to buy about 15.5 acres at southwest Gate Parkway South and Burnt Mill Road in the first quarter of 2015.
He said the group could develop two three-story, 90,000-square-foot buildings on the property. He said he could hold both for build-to-suit tenants, build one as a speculative office building or do nothing and watch how the market progresses.
The property could be held for later development or even sold.
“The Jacksonville office market is still soft but there are areas of real strength,” Conners said, specifically referring to the Gate Parkway and Butler Boulevard area.
His location is near the office park leased by Deutsche Bank, which is expected to develop an office campus to consolidate and grow its Jacksonville presence.
Jacksonville Planning Commission approval last week for a minor modification for the property raised speculation that the buyer might be working on a deal with Deutsche Bank, but Chestnut Hill’s project is not designed for any specific tenant.
Deutsche Bank leases about 300,000 feet of office space among the Meridian Business Park at 5022 Gate Parkway and in Butler Plaza at Butler Boulevard and Interstate 95.
The bank started operations in Jacksonville in 2008 and is expected to grow its local workforce to at least 1,600-1,800 employees by the end of 2016.
Conners said the $30 million estimate includes the purchase price, construction and tenant improvements to both buildings.
The property is owned by Miami-based Space Coast Credit Union, which took title to it in March. Property records show it had been owned by a group based in Miami Beach and St. Thomas in the U.S. Virgin Islands. That group bought it in 2007 from the Skinner family for $7.3 million.
Duval County property records show the vacant commercial property carries a 2015 market value in progress of $4 million.
Conners said Class A office space in the Butler and Baymeadows area market is about 93-95 percent occupied with little
new development to meet demand.
A third-quarter market report by the Cushman & Wakefield of Florida Inc. real estate company showed a 14.5 percent overall vacancy rate among offices in the Butler/Baymeadows area, compared with 17.6 percent among all suburban space.
Counting Downtown, the overall office vacancy rate was 19 percent, a rate influenced by a 22.1 percent vacancy Downtown in the Central Business District. Within Downtown, the rate was 26.2 percent rate on the Northbank and a low 11.5 percent on the Southbank.
Conners is an active Jacksonville investor and developer, including in the office market.
Fairlead Commercial Real Estate made its first Jacksonville acquisition in late June with the $23 million purchase of three 80,000-square-foot buildings in Gran Park at the Avenues.
ROC II Fairlead Gran Park at Avenues LLC bought the buildings at 7406 and 7411 Fullerton St. and 10199 Southside Blvd. from FDG Avenues II LLC, which is a successor company to Flagler Development Co. and before that, Gran Central Corp.
Bridge Investment Group Partners, managers of the ROC Funds, is Fairlead’s equity partner.
As Fairlead Florida senior managing director, Conners said then that the three buildings were 90 percent leased. Primary tenants include Florida East Coast Railway, Progressive Insurance and Value Options, he said.
Duval County Clerk of Court records show Fairlead bought three parcels that comprise the buildings and a little more than an acre of vacant land, totaling almost 36 acres.
Fairlead Commercial Real Estate LLC is based in Atlanta and has offices in Jacksonville, Hong Kong and Singapore, according to fairleadcre.com.
Conners founded Jacksonville-based Chestnut Hill Investments in July 2006. He previously worked for Flagler Development Co., a Jacksonville-based subsidiary of Florida East Coast Industries, and AEW Capital Management in Boston.
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