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A rendering of East San Marco at Hendricks Avenue and Atlantic Boulevard.
Jax Daily Record Tuesday, Mar. 22, 201612:00 PM EST

'It's been a long time coming'; construction on East San Marco project should start late summer

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This time, it appears all systems are go for construction to start in late summer for the long-awaited Publix-anchored East San Marco retail and apartment development.

Completion of the estimated $60 million development is expected in late 2018, when the 239 apartments on top of 46,000 square feet of retail space will be completed at the corner of Atlantic Boulevard and Hendricks Avenue.

Publix Super Markets Inc. will anchor it with a 32,500-square-foot store, finally making real a deal that first surfaced in 2002. Another five to seven retail shops, including a chef-driven restaurant, are possible to round out the retail space.

“It’s been a long time coming,” said Jim Thompson, executive vice president of operations for Regency Centers Corp., which owns the property and will run the retail portion.

The site is a block east of the San Marco Square shopping and entertainment district.

“We think that this product is going to be very well embraced by the local community. We think it is going to enhance the already existing charm of the retail on the Square,” Thompson said Monday.

The development will anchor what Thompson considers to be the “Main and Main” location in San Marco.

Jacksonville-based Regency Centers LLC announced today that ArchCo Residential LLC, Whitehall Realty Partners LLC and Bluerock Residential Growth REIT Inc. are partnering to develop the 4.33-acre mixed-use project on the vacant site.

Atlanta-based ArchCo and New York-based Bluerock will buy the property from Regency and develop it.

Thompson expects ArchCo and Bluerock to acquire the land in a joint venture late this summer just before the ground-breaking. They will then own and manage the residential portion of East San Marco.

Regency Centers, which owns and operates shopping centers across the country, will buy back the ground-floor retail space and lease it to tenants. It also will retain ownership of two small parking lots.

Jacksonville-based Whitehall Realty, which has been working on the project, struck an arrangement with ArchCo “to be boots on the ground,” Thompson said.

According to Regency Centers, the 239 apartments will comprise 141 one-bedroom, 76 two-bedroom, four three-bedroom units and 18 studios.

Jason Jacobson, regional partner for ArchCo Residential, said rental rates typically are not set until 60 to 90 days before occupancy, but ArchCo expects the monthly rents on one-bedroom apartments would range from $1,200 to $1,500 and two-bedroom units would be $1,800 to $2,000.

No contractor has been chosen for East San Marco. ArchCo intends to bid the project in late spring or early summer.

Units will feature nine-foot ceilings, although top-floor units would feature 10-foot ceilings. Apartments will have solid surface countertops, stainless steel appliances, ceiling fans and state-of-the-art telecommunications, including USB charging ports and choices in service for cable, Internet and phone.

The apartments also will feature an expansive outdoor courtyard with a pool and outdoor social area that includes a gourmet kitchen. There also will be a 24-hour fitness center, business center club room and a rooftop patio.

A dedicated and secure residential garage will be available for residents and guests, as well as an automated package storage system.

As approved by the city, the main part of the structure will be six stories high and cascade down to five and four stories. The building will wrap around the parking deck, whose ground floor will be used for Publix and retail customers.

Thompson said stacking apartments over a ground floor of retail space is a complex project. He said that type of construction is used in major metropolitan areas, “but in Jacksonville, you don’t see it very often.”

ArchCo Residential and co-developer Whitehall Realty Partners will be responsible for the overall construction.

Jacobson said Whitehall Realty, with its long history on the project, will continue as part of the development team, particularly to advise on local issues related to compliance with the existing Planned Unit Development ordinance and the design of a future townhome component.

Thompson said ArchCo was the “perfect choice” for the residential operations “of what we are hoping will become a powerful addition to an already great neighborhood.”

He said Publix will bring the right merchandising mix to the area — a trendy shopping, business and residential community where historic riverfront homes, high-rise apartments and condos, hotels, single-family houses and other residences are miles from a major full-service grocery store.

“We’ve been committed to this site since 2006 and look forward to serving the beautiful San Marco community,” said Publix spokesman Dwaine Stevens in the news release. That’s the year that Regency Centers and The St. Joe Co., the former developer, announced the project.

Regency Centers said announcements of more retailers will be made as leases are signed. He said Regency Centers would like to see a chef-driven restaurant on the corner and possibly one more casual restaurant.

“Other than that, we want to complement the existing retail users on the square,” he said.

According to Regency Centers, the project should generate 120 jobs during the initial construction.

A long road to San Marco

This deal brings the 14-year process to a conclusion after several attempts. Initial discussions began by at least 2002, when the property was owned by SouthTrust Bank, that a mixed-used development at the site could include Publix.

Thompson said The St. Joe Co., formerly based in Jacksonville, and Regency formed a joint venture to buy the property.

They closed on the deal about 2007-08.

He said Regency and St. Joe were focused on condominiums rather than apartments to stack above the retail space. Then the recession hit.

“We were at the altar ready to start construction,” Thompson said. They decided to put the project on the shelf and hold onto the land.

“It was a good thing because the entire market crashed,” he said.

Whitehall Realty joined the team in 2013 to buy and develop the property and then sell the retail portion to Regency.

In 2014, Regency bought out St. Joe’s interest. St. Joe had relocated its headquarters to the Panhandle area in 2010.

City Council enacted ordinances in March 2014 allowing development on the property of 280 apartments, up to 63,000 square feet of commercial space, including Publix.

However, in April 2014, Whitehall Realty withdrew from the deal as the residential development partner, saying it could not line up financing at the time.

The project regained traction last year. Thompson said last May the property was under contract with a residential developer to build the apartments and retail center. Regency would buy the retail portion.

He said the deal could be completed by early 2016 and he identified John Carey, founding partner of Whitehall Realty Partners LLC, as the local partner with the unidentified residential developer.

Carey said at the time financing had been arranged and the capital partner would be identified soon. He said ground-breaking was expected early this year.

Thompson said Whitehall, ArchCo and Bluerock created a working relationship at least eight months ago.

“The right decision is rarely an easy one, and we made some tough decisions over the years with East San Marco,” Thompson said.

He said he believed the development will be the best outcome, in large part because of the partners’ dedication to the project.

“After 10 years, you just get real excited,” Thompson said.

***

East San Marco partners

ArchCo Residential LLC

• Atlanta-based firm founded in 2013 by CEO Neil Brown to develop multifamily projects. He spent more than 17 years with Archstone Residential, until the company was bought by Equity Residential and AvalonBay Communities.

Bluerock Residential Growth REIT Inc.

• New York-based real estate investment trust focuses on acquiring Class A institutional-quality apartment properties in growth markets that appeal to renters.

• According to its annual report to the Securities and Exchange Commission, its portfolio as of Dec. 31 comprised interests in 20 properties, primarily in the Southeast, totaling 6,449 units.

Regency Centers Corp.

• Jacksonville-based company was founded in 1963 as Regency Square Properties by Martin and Joan Stein.

• Went public in 1993 in an initial public offering and became Regency Centers.

• Portfolio comprises 318 properties of more than 42.8 million square feet of space in top markets across the country.

• Has developed 221 shopping centers since 2000 representing an investment at completion of more than $3 billion.

Publix Super Markets

• Had 2014 sales of $30.6 billion and operates 1,111 stores in Florida, Georgia, Alabama, Tennessee, South Carolina and North Carolina.

• Lakeland-based company is privately owned and operated by its 179,000 employees.

Whitehall Realty Partners LLC

• Jacksonville-based company founded in 2006 and has developed apartment and memory-care projects, among other deals.

• John Carey, its founding partner, formerly was president and COO of Flagler Development Co. He and his business partner, Marc Munago, moved their headquarters last year from Five Points to a building they bought along Atlantic Boulevard, near the East San Marco site.

[email protected]

@MathisKb

(904) 356-2466

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