“We’re in a bullish market right now, but it will not last forever," he says.
Developer Mike Balanky urges action – now – on Downtown development.
“There’s got to be a sense of urgency when it comes to real estate development,” Balanky, a Jacksonville native, told the Southside Business Men’s Club last week.
He told that the business group that 2005-07 were bullish years for real estate development, followed by the 2007-09 Great Recession whose effects lingered much longer.
“Unfortunately, we ran into a recession and here we are, 12 years later, basically right where we were in 2007,” said Balanky, 61, founder and CEO of Chase Properties.
His warning is that it – a recession – can happen again.
“We’re in a bullish market right now, but it will not last forever. And in real estate development, I believe that time guts a deal,” he said.
Among Balanky’s prominent developments are Deerwood Lake in Southside; the 21-story San Marco Place residential condo tower where he, his wife and his parents live; and the Kings Avenue Station hotel development and proposed tower of up to 40 stories.
He said what’s needed is critical mass, reaching the point where there’s enough development to perpetuate itself.
“Money begets money, development begets development, but you’ve got to have initiatives in place to drive that,” he said.
Balanky believes four components are the drives: Synergy, vision, opportunity and execution.
“If we can find a way to harness these things together, I think we can really see Downtown Jacksonville become what we all hope and dream it can be,” he said.
Here’s what he means.
Synergy is not waiting on one development to start on another.
Balanky said the Laura Street redevelopment is an example. He said the “one street at a time” transformation concept that also was tried in other cities. “How long ago did we do Laura Street? Twelve, 15 years ago? That’s pretty much all that’s happened down there for the most part up until the last year or so.”
He used his Deerwood Lake residential and Publix Super Markets Inc. – based retail center in Southside as an example. He worked with neighboring landowners, developers and homeowners to create the infrastructure to encourage critical mass.
Another example is the Southbank Kings Avenue Station area, with the Jacksonville Transportation Authority’s Skyway station and parking garage. Balanky developed a twin-flagged hotel development there with a Hilton Garden Inn and Homewood Suites.
He unsuccessfully pitched vacant land there to JEA for its headquarters and now envisions up to a 40-story office, hotel and mixed-use development on the site, along Interstate 95.
“We think by the end of the year we’ll have an announcement to make,” he said.
The garage, hotels and mixed-use tower “will help create synergy with what is going to happen over there,” he said.
It’s next to The District, a proposed 30-acre residential, hotel, retail, entertainment and office center proposed by developer Peter Rummell and business partner Michael Munz. Balanky had been involved before Rummell bought his share.
Vision requires those who can see and follow through on their plans.
“We need to be able to visualize the right projects Downtown that help create synergy and critical mass,” he said.
Balanky cited the number of Downtown residences that city leaders have long said are necessary to attract stores.
“We don’t think we’ve got to get to 10,000 residential units before we can get the retail to happen, because a lot of the residential people won’t come if there are no retail services,” Balanky said.
“We’ve got to be able to talk to all of the residential users at once about how we’re going to create this critical mass simultaneously,” he said.
Balanky listed developer Steve Atkins and The Barnett and Laura Street Trio project; Jacksonville Jaguars owner Shad Khan and the Shipyards and Lot J mixed-use proposal; and others for vision with their properties.
A convention center continues to be considered on the Northbank, which means Balanky isn’t giving up on his proposed “Jag-Wire.” That’s the gondola he envisions to connect the Southbank and Northbank across the St. Johns River.
“That’s still on the drawing board,” Balanky said. “If we get a convention center, we’ll see that gondola happen.”
He also credited Jacksonville Transportation Authority CEO Nat Ford for the planned Bay Street Innovation Corridor, a 3-mile project featuring autonomous transit, Smart technologies and connections with bus and skyway infrastructure.
Balanky said public-private partnerships are a key to opportunity. “When you’re going into an area that you’re trying to reposition, like Downtown that’s struggled and been dormant for a long, long time, it’s risky for developers,” he said.
“So developers need the city to invest in itself by putting some of their own money and skin in the game,” he said.
Balanky said city and public entities own surplus properties – what he called “an amazing amount of available land, available buildings.”
“Jacksonville has got some of the of the most undeveloped riverfront in any city of its size in the nation,” he said.
“We’ve got to make sure that we do it right because this is a one-time opportunity.”
From a developer’s perspective, time is a commodity. Vision without execution, Balanky said, is hallucination.
“We’re not going to waste our time on a project if we can’t readily tell exactly what’s in it for us, what it’s going to cost, what it’s going to take to get across the finish line,” he said.
That key is the request for proposals, the process by which governments ask for developers to bid on properties and their plans for it.
“Most cities, including Jacksonville, are not very good at doing RFPs,” Balanky said. “This is not being critical of anybody. We just have to refine this process.”
He recommends that government agencies identify the surplus properties they want developed.
“All these surplus properties are costing the city and taxpayers because they’re having to pay insurance and maintenance costs for them to sit there, and they’re creating blight, vagrancy,” he said.
He advocates that commercial real estate brokerage firms be engaged to identify the uses for the properties, and government can create incentives packages for them.
“The brokers can advertise to the world,” he said. “Jacksonville is on the map right now from an investor’s standpoint.”
The government entities that own the properties share in the proceeds and land returns to the tax rolls, he said.
Deals will hinge on the RFP, which must “be written in such a matter that in 15 minutes I can read that RFP and I know exactly what’s in it for me,” he said.
Incentives must have timelines to create urgency with developers.
“The longer we wait, the closer we get toward that next downturn.”
Once a deal is financed and under construction, he said, “you can blow right through a recession.”
Balanky also advocated for media to track those deals to create accountability. “It’s how we keep the urgency there, it’s how we keep the accountability there,” he said.
Asked about The Jacksonville Landing, the Northbank riverfront shopping plaza that the city seeks to demolish, Balanky suggests restaurants, offices, residential, a bandstand and space for the annual tree lighting.
“It’s one of the best pieces of properties down there,” he said.
Balanky said Downtown development requires a champion, such as City Council member Laurie Boyer, who was chosen as the next CEO of the Downtown Investment Authority, or city chief of staff and soon to be Chief Administrative Officer Brian Hughes or Mayor Lenny Curry.
“It is going to take political will,” Balanky said, urging that they “commit 100% to get behind it, to where we let the developers know that there’s political will here.”