What effect did the Great Recession have on your segment of the real estate industry?
Matovina: The biggest impact has been the shortage of available financing. The lenders who were lending back in the day are coming back out, but most banks are still very reticent about getting out there with spec homes, model homes or land financing. Also, the cash they are requiring builders and developers to come up with to do a project is significantly higher and the terms are tighter.
Heldenbrand: The biggest change on the commercial side has been the access to capital. Ironically the recession made all of the banks much larger. So, the ability to get a very large loan — say $20 million and up — there's a line of lenders that want to do that. The ability to get capital for a smaller-sized projects is very difficult, because of the community banks' challenges. Ultimately, it's going to hurt the entrepreneurial system.
Regarding commercial real estate's recovery in Northeast Florida, which segments have fared well and which have lagged behind?
Heldenbrand: Multi-family developments are still on fire, though perhaps the long-term fundamentals are a concern.
Core retail has done well. The Town Center and new Publix center are doing very well.
Office remains very slow. There's a huge glut of vacancies that need to be worked through. The push for Downtown is great, but in the suburbs, the office market is still very soft.
The ports may help pull up the industrial market, but with Hillwood's ability to be so much cheaper because of its relationship with the city, that's going to make the industrial market very slow.
What has characterized the residential real estate recovery in Northeast Florida?
Pardee: Inspections on family homes are up. A lot of these are for developments that are in progress. Over the next couple of months, look for a lot of new homes to take off.
Jourdan: As homebuilding comes back and pricing becomes higher, the home affordability index is becoming lower. Realtors should emphasize to buyers that the time to buy is now, because next year is going to be even more expensive.
Crocco: In this recovery, the center of the universe has migrated south a bit from Southside Duval to northern, central and southern St. Johns. Those areas will be as important in the coming years to housing as the north side and west side of Duval. The need for commercial and retail is going to shift over there.
Matovina: It's shocking how many places have gone from too many lots to not enough lots out there. From 10 years' worth of lots to, all of a sudden, in some markets, maybe two years or less. There's a mad scramble to find land.
There have been significant price increases over the last year and a lot of that has been cost-push, because subcontractors had been holding prices down for six or seven years.
What trends will affect the commercial market?
Jourdan: An increase in population is going to resume after a pause from the Great Recession. Neighborhoods will become dense and a lot of the peripheral commercial projects will become more viable. Neighborhood centers will be in demand for people who are not willing to travel so far to get goods and services.
Pardee: The area has are a lot of existing commercial buildings that are empty, and the dilemma is whether to build a new commercial property or fill in an existing one and bring everything up to code. The cost of revamping an old building is very dependent on which level — out of three — of alterations is done, because it impacts which codes apply.
The trend lately has been to use existing buildings and perform smaller alterations. But based on conversations with architects, new commercial construction should be starting up a little bit more.
What are the major projects should we pay attention to?
Matovina: Nocatee is the biggest project and it's going to be the biggest for a long time. The developer has done a tremendous job of building infrastructure and amenities, attracting Publix and third-party amenities.
Several St. Johns County projects are winding down, like Aberdeen, which has probably 50 lots left, and Durbin Crossing, which is down to a year or two years' worth of inventory.
Some of the old projects are being revived like Bartram Park, but at the rate it's going, it's not going to be around long.
Hutson's big project, from just south of County Road 210 down to the World Golf Village, should be watched.
Other projects that have been surprising are Old San Jose, which has been a huge success. It will be interesting to see how the $400,000 condos on Goodbys Lake fare.
Heldenbrand: Commercial projects include the already-underway River City Marketplace by the airport. Very few people thought it would be the home run that it was. It's caused the industry to study the demographic research a little differently.
People should stay tuned to Regency Mall, where a big buyer has come in.
Also, pay attention to the Florida 9B story. That highway is going to do a lot to link the homes that are now being built to jobs in Jacksonville.
Who will be our financial partners in this expansion?
Crocco: Public home builders have really taken the reins over the last year, year-and-a-half. That's going to continue in the short term, because they have the ability to buy at today's prices, and if the values need to be reduced, it's not a real out of pocket expense.
Given the growing disparity between pricing and incomes, there will be a time when the private money comes back. Builders will realize they've paid too much, and will either repair that or give property back to the land owner. Then private builders will have the ability to get back into the game.
Heldenbrand: The big money center banks will come in and certainly will help, but for a while it's just going to be the large public developers — that's the way it's looking. For the smaller developers, it'll be a nightmare for sure.
Excess of capital is limited, so financing will have to be a lot more creative. There could be some land banking deals, and a lot of smaller $2 million or $3 million deals for a period of time.
– By Carole Hawkins