by Mike Sharkey
Ready or not, Jacksonville is one the verge of having to grow up in virtually every capacity. From landing a National Football League team, to the Super Bowl, to $470 million worth of new public facilities, Jacksonville is being force-fed the future.
And, downtown residential housing is squarely in the mix. Between what’s currently going up and what’s on the books over the next few years, downtown living is starting to enter an unseen realm. For everyone involved — developers, builders, financiers — that’s fine. For too long, living in downtown Jacksonville had a negative connotation. Within a couple of years, having a 32202 or 32207 zip code may carry and aura of prestige.
The Downtown Development Authority recently released a study that indicates living downtown — both on the Northbank and Southbank — is going to come with a price. According to statistics compiled during the lengthy and thorough study, there will be 571 new housing units built over the next few years. Of those 571, a majority of them, 462, will be what the study deems “luxury” units, while the other 99 will be “market rate” units.
(Luxury rate is defined as 120 percent or higher of the average cost per square foot for rental or for sale properties. For example, at market rate a 1,400 square-foot apartment would rent for at least $1,680/month and a 900 square-foot apartment would go for at least $1,080/month. Market rate is defined as plus/minus 20 percent of the average cost per square foot of rental or for sale properties. For example, a 900 square-foot apartment would go for $720-1,080/month and a 1,400 square-foot apartment would for $1,120-1,680/month.)
DDA managing director Al Battle said these rates are comparable to other cities similar to Jacksonville in urban development and maturity.
“I think that’s fine,” said Battle. “We are encouraging residential to happen to help turn over the dynamics of downtown.”
In other words, urban Jacksonville is starting to mature and two obvious things will follow that maturation: downtown will become more affluent and sophisticated commercial development is bound to ensue.
Leading the residential ripening are projects such as 11 E. Forsyth, Berkman Plaza and the W. A. Knight Building lofts on West Adams Street. Those three developments are predominantly rental properties (there are 20 for-sale town homes at Berkman) and they’re partially countered by the 51 for-sale units at Parks at Cathedral.
Battle said it’s not uncommon for a city’s downtown resurgence to be initially spurred by rental units, but for-sale units represent a sense of permanence.
“It’s a more stable environment,” said Battle of a market that’s heavier in for-sale units. “When people purchase something there’s more of an attachment than if they rent. Most markets in their infancy start with rental.”
Monique Elton of Langton Associates was on the benchmark team that compiled the study. She also believes the disparity between for-rent and for-sale properties will ultimately benefit the downtown housing market.
“It’s resulting in the rehabilitation of properties,” said Elton, who can point to the Knight Building as a prime example of that process. She also said the gap between the number of for-rent and for-sale units may close dramatically within the next 5-6 years. “In order to reap all the benefits of the historic tax credit, the property must remain rental for five years. After that, many may convert to for-sale.”
Current downtown housing also shows a wide disparity between market rate and luxury units. Of those already mentioned, Berkman’s 227 units are considered luxury and represent 65 percent of the current market. Looking at projects such as The Strand on the Southbank, The Carlington, The Shipyards and Home Street Lofts in San Marco, the disparity between market rate and luxury units and rental and for-sale properties continues.
According to the study, the local absorption rates will not support any additional luxury units beyond those projects.
“Beyond that, we’ll take a wait and see attitude,” said Battle of approving any more major residential projects. “It represents a maturation of the market.”
Elton said the inevitable reality that downtown is an affluent neighborhood is coming.
“It’s prime property and you have to pay for it,” said Elton of living riverfront. “It doesn’t make sense not to. There are other opportunities for market-rate properties that are affordable. That’s where the DDA and the JEDC [Jacksonville Economic Development Commission] have to say, how do we balance that have a diverse market?”
In the study, the group also examined other cities to determine where Jacksonville stood housing and market-wise. What they found, especially when compared to places such as San Antonio, Orlando and Birmingham, was that urban Jacksonville is actually growing faster than comparable towns.
“We are on a fast pace in terms of units announced and those coming on line. Orlando is similar,” said Battle, adding Jacksonville is geographically positioned to easily alter the disparity between market and luxury units. With a finite amount of available riverfront property, developers will be forced to look inland and at older buildings capable of being renovated.
“We assumed, looking at other cities and through our self-analysis, there are probably more opportunities for market-rate housing,” said Battle. “There’s a healthy inventory of abandoned buildings and parcels available on the infill of downtown.”