Closure of the private 48-year-old University Club of Jacksonville opens the door for prime room-with-a-view office space in one of the city’s signature towers.
Dallas-based ClubCorp Holdings Inc. told members Wednesday night it would close the club on the top two floors of the 28-story Riverplace Tower on Dec. 20, citing but not elaborating on “a business decision.”
That prompted building owner Lingerfelt CommonWealth Partners to make a decision of its own — to convert the floors into about 22,500 square feet of premier office space.
“It’s a really, really good opportunity for us,” said John Mason, senior vice president of asset management for the Glen Allen, Va.-based group.
Leasing agent Kaycee Gardner said Thursday the club’s location would be “the best office space in town” as it provides 360-degree views of Downtown, San Marco and beyond.
“It’s going to be very unique space,” said Gardner, senior vice president with JLL, which handles the building’s leasing and marketing on behalf of Lingerfelt CommonWealth.
It also is a structure without a lot of full-floor availability. Other than the club, just one full floor remains available for lease — the sixth floor, with 17,500 square feet.
Oliver Barakat, senior vice president of the CBRE Inc. real estate firm, said the building has had success leasing to national and local companies. Mason and Gardner said the tower is 80 percent leased.
Tenants include Ameris Bank, the anchor tenant whose name is on top of the building, as well as Adecco Group North America, Macquarie Group, Gatlin Development Co., the Rogers Towers law firm and, soon to move in, St. John & Partners.
Gate Petroleum Co. sold the property to Lingerfelt CommonWealth Partners in late 2014. It was built in 1966 as the Gulf Life Tower at 1301 Riverplace Blvd.
Barakat expects the build-out will be costly because of the conversion from a private club and dining space into office use. “But I think it will be a successful endeavor,” he said.
Office vacancy rates have fallen below 8 percent on the Southbank while rental rates average $21-$22. Gardner predicts rates for the University Club office space will reach the mid $20s, which she calls a premium rent.
Gardner said the 27th floor, which is the club’s main dining room, lounge and event space, comprises 14,147 square feet.
The 28th floor, used as a men’s athletic center, is about 8,357 square feet.
Gardner and Mason envision a single tenant for the two floors.
Marketing is beginning, but neither said a tenant has been identified. Renovations would start when a lease is signed. Floor plans already are available.
Mason said the ground-floor concourse fitness center will continue operating. He said he was considering options about who would operate the 5,500-square-foot facility.
While the Southbank office market is tightening, that will change when Aetna leaves 170,000 square feet in the Aetna building as it moves to the suburbs. But that won’t be until August, while the University Club space will be vacated by year-end.
Why did it close?
ClubCorp and University Club executives have not responded to numerous questions about the size of the membership and staff.
University Club board member Ron Moody said there are about 925 dues-paying members and about 50 employees.
University Club Board of Governors Chairman Matt Shirk said Thursday that ClubCorp was renegotiating the lease, but he didn’t know the details about why it decided to close the Downtown institution other than it was a business decision.
Mason said Lingerfelt CommonWealth had intended to renew the lease and invest capital into the deal, but then learned ClubCorp did not want to do so.
Mason said the landlord was “absolutely not raising rates” for the club and said there would have been a reduction in occupancy costs.
“It would have been more economically beneficial to them,” he said.
Gardner said ClubCorp’s decision was not related to the lease rates.
Mason said the decision was made at ClubCorp’s corporate level “and there was nothing we could do to change their minds.”
ClubCorp Communications Manager Patty Jerde said Thursday the lease was set to expire this year. “And after friendly and productive discussions with the landlord, we worked together to provide for an end date that would allow our members and employees to have time to transition,” she said.
She would not provide comment about specifics of the business decision.
The Wednesday letter, from ClubCorp Regional Vice President Everrett Butler, said the group enjoyed a positive and supportive relationship with the landlord and its neighbors.
It said the decision to close wasn’t an easy one, but was necessary.
ClubCorp has been working on its financial performance and promoted a new president in June to help drive strategy.
The publicly traded company announced a 3.9 percent increase in revenue for the first half of the year, which ended in June. It also reported a narrowing in its net losses — from $4.5 million in the first half of 2015 to $2.56 million this year.
ClubCorp owns or operates more than 200 golf and country, business, sports and alumni clubs in 26 states, the District of Columbia and internationally, serving more than 430,000 members with 20,000 employees during peak seasons.
A town hall meeting for members is scheduled at 5:30 p.m. Sept. 28 and will include representatives from ClubCorp and its three suburban Jacksonville area country clubs, which members could join.
Employees could be in demand
ClubCorp said it would refer its employees to other clubs in the area and to industry colleagues.
Candace Moody, CareerSource Northeast Florida vice president of communications, said there should be positions available.
“The market is really strong right now for restaurant, leisure, hospitality and all of that growth,” she said.
Moody said the restaurant market was booming. “I don’t think it will be any trouble absorbing the employees,” she said.
The closing of the University Club leaves The River Club as the only private club at the top of a Downtown high-rise. The River Club occupies the top two floors of the 35-story Wells Fargo Center on the Northbank.
Gate Petroleum Co.’s Governors Club comprises The River Club, Epping Forest Yacht & Country Club, The Lodge & Club at Ponte Vedra Beach and the Ponte Vedra Inn & Club.
“We are certainly sorry to hear of the closing of the University Club. They have been a good competitor in the marketplace through the years as we both sought to build our membership bases,” said Gate Petroleum spokeswoman Misty Skipper.
Skipper said Gate is hiring at its clubs and the positions are posted on hospitalityjobsonline.com.
Tenants to miss the club
Christopher Hazelip, a shareholder with Rogers Towers, said as a longtime member of the club, he was extremely saddened to hear of its closing.
“Over the years, the employees and I have become friends, as they have with many members, and the excellent service they provide and the banter we share always brings some joy into my day,” Hazelip said.
He said what made him most proud to be a member was the club’s racial diversity.
“Its commitment to be ‘inclusive’ was not just an aspirational goal — it was a fact evident at every lunch and breakfast. My sincere hope is that other Jacksonville social and country clubs follow this pioneering example blazed by the University Club,” Hazelip said.
Andy Cheney, president of Ameris Bank, said it was disappointing to hear that such an iconic club was closing after 48 years, but respects ClubCorp’s need to make a decision.
“I’m confident the owners of the building will go forward,” he said.
A new tenant in the building hadn’t heard that the club was closing, but expected to be affected.
“I would think that would increase the traffic through my restaurant as well as event opportunities,” said Toben Stubee, who will open the 5Loaves 2Fish Café on the ground-floor concourse level of the tower.
Stubee wants to turn a 10,000-square-foot space into a 174-seat café that should open in late October or November.
He also has catering space on the plaza level directly above the café that can accommodate 250 people.
Groups must find new venue
Weddings, parties, fundraisers and business groups also will need to adjust.
Jonathan Smith, president of the Downtown Council of the JAX Chamber, said the group would be looking for another location.
“To me it’s going to be an exciting change for us. It will give us a chance to try something new,” he said.
He said the council comprises more than 100 members and 30 to 40 of them typically attend when it meets the first and third Friday of each month. He said the group has been meeting at the University Club for three or four years.
Anne Urban, president of Centerstage Entertainment & Event Rentals, said the closing was a significant loss to her industry.
“We have so few river view and riverfront venues and that has been a signature venue for us,” said Urban, who has booked weddings, corporate parties and convention meetings and dinners at the club.
She also uses it to recruit business, with a strategy of dining at the club while overlooking EverBank Field and the heart of the Downtown skyline.
At the same time, Urban considers the closing as a possibility.
“It certainly opens up the opportunity for somebody to purchase property on the Southbank and open up something good,” she said.