In yet another development along Western Way in Baymeadows, a West Palm Beach investor expects to spend at least $2 million to buy and convert an old warehouse.
Elite Stor Capital Partners LLC bought a former bank-records storage center and plans to convert it into at least 500 climate-controlled storage units, possibly including several for wine cellars.
Benjamin Macfarland III, managing partner with Calidus Holdings LLC and founder of Benjamin Macfarland Co. LLC, said Monday that Baymeadows is a growing market and he was looking for more distressed properties in the area that could be used for self-storage. The acquisition is his first in Jacksonville.
Elite Stor Capital Partners LLC, managed by Macfarland, bought the 44-year-old building at 8539 Western Way for $1 million in July.
The structure is at least the sixth property in the Western Way area to be bought, renovated or remodeled, including several industrial buildings put to new use. For example, a technical school was created, a hotel is being renovated and a brewery opened.
Industrial specialist Ladson Montgomery, senior vice president of Newmark Grubb Phoenix Realty Group, said the Western Way warehouse deals are driven by availability.
“It’s a good location,” he said, explaining it’s off Interstate 95, has a convenient entrance and exit, has access to a large Southside labor force, and “timing was right for the area.”
He said the buildings there also tend to be larger, which allows for bigger blocks of space in the Southside market.
The Jacksonville industrial market holds a stable outlook. Both the CBRE Inc. MarketView and the Cushman & Wakefield MarketBeat said the Jacksonville industrial market is showing signs of improving fundamentals.
“Stable sale activity is a sign of investors’ confidence in the future of the market,” CBRE said in its third-quarter report.
CBRE said at least nine active users were in the market for at least 100,000 square feet of space. If demand continues, vacancy rates will continue to decline, leading to speculative development.
Jacksonville’s overall third-quarter industrial vacancy rate is 9.4 percent, while the Southside rate is 7.9 percent, CBRE reported.
Cushman & Wakefield reported a third-quarter overall rate of 9.7 percent, with Southside at 8.5 percent.
“Cushman & Wakefield anticipates the market’s momentum to remain positive through the end of the year and into 2015,” MarketBeat said.
Macfarland said his project should open by the end of the first quarter next year.
Calidus and Macfarland have partnered to own and manage about 200,000 square feet of self-storage in the Florida market and have completed more than $150 million in transactions.
Loopnet.com, a real estate website, said the vacant office-warehouse has been used for records storage by Wachovia, which has become Wells Fargo. The Duval County Property Appraiser reports a 2015 assessed value in progress of $2.1 million.
Elite Stor Capital Partners bought it from CWCapital Management LLC of Bethesda, Md., which took title to it in 2011. Macfarland said he bought the property from a servicer.
Elite Stor Capital Partners deeded the property to Elite Stor Western Way Jax LLC. Macfarland is its agent.
Property Appraiser records show the 72,702-square-foot, single-story building is on 3.3 acres. Elite Store Western Way applied for a building permit to demolish the interior for build-out of climate-controlled storage units at a project cost of $100,000. The city issued a permit in August for a $250,000 re-roofing project and another roofing permit this month for $53,300.
Macfarland said the total conversion and infrastructure would cost about $1 million, making the deal a $2 million investment. “There’s quite a bit of work to be done,” he said. Atlantic Coast Roofing & Construction is the contractor.
Wine cellars are popular in some of his other properties, Mcfarland said, and he is considering installing climate-controlled units for that use at the Western Way project if there is demand.
Macfarland said there are a lot of wine collectors in South Florida that don’t have enough space at their homes for their bottles and he is testing the North Florida market for that demand.
“This way, it is commercial-grade storage and there’s always somebody there every day, and a generator there to back up,” he said.
Macfarland said he is looking at a few more deals of distressed properties in Jacksonville for self-storage projects.
Other property sales and renovations on Western Way during the past two years include:
• Veterans United Craft Brewery built out space for a brewery in the Lake Pointe South center at 8999 Western Way.
• Two former Mercedes-Benz buildings at 8813 and 8873 Western Way were bought, one for use as the J-Tech technical and vocational school and the other for use by Petroleum Containment Inc., which sells fuel containment sumps.
• Conser Properties LLC bought 8451 Western Way to relocate its Mayflower moving agency from leased space in West Jacksonville.
• At 9300 Baymeadows Road near Western Way, Embassy Suites Jacksonville is remodeling in a more than $13 million renovation that should be completed early next year.
• And last year, 4 Rivers Smokehouse opened its first Jacksonville restaurant in the former Roadhouse Grill remodeled at 9220 Baymeadows Road.
Phoenix Realty Group was involved in both the Conser and Mercedes-Benz buildings deals.