Not since the Great Fire destroyed downtown Jacksonville, Florida, in May 1901 has this sector seen such activity. More than $500 million is being injected into the downtown market, according to Ronald Chase, multifamily specialist with Coldwell Banker Commercial, Nicholson-Williams Realty. He credits Mayor John Delaney and other city officials for having the vision to create The Better Jacksonville Plan in 1999. Additionally, Chase notes, the half-cent sales tax that took effect on January 1, 2001, is well on its way to accruing $2.2 billion for city/county infrastructure improvements over the next 5 years.

The downtown sector is an ideal area in which to invest, Chase says, adding that there are currently three noteworthy, privately-funded projects coming out of the ground. Berkman Plaza took the lead with construction on the first of two 20-story apartment buildings, each consisting of 198 units. A second phase will offer 20 two-story riverfront townhomes. TriLegacy Group's $728 million Shipyards development features a 17-acre public park, a 150-slip marina, 662 residential units, a 350-room hotel, 175,500 square feet of commercial/ retail space and nearly 1 million square feet of Class A office space. Jacksonville-based Vestcor Companies, developer and owner of 14 garden-style apartment communities in the area, joins the foray with its acquisition of 11 East Forsyth, formerly the Lynch building, and The Carlyle, formerly the Roosevelt Hotel. Plans include renovating the buildings into 225 apartment units. Total project cost is $24.1 million, which includes $3.2 million in federal historic tax credits.

"It would be easy and natural for one to surmise that all of the action is in the downtown area, but that is not correct," says Chase. "The southeast quadrant retains its dominant position at the top of the market with nearly 9,000 of the 13,000 units built from January 1, 1995, through the second quarter of 2001." The area commands nearly 70 percent of the market primarily due to the construction of SR 202/J. Turner Butler Boulevard, which connects Interstate 95 with Jacksonville Beach SR A1A. Southside Boulevard (also known as apartment row), located about 1 mile east of I-95, is the most prolific arterial, containing 51 apartment communities and growing.

Typical of the area is Prudential Insurance Company's 1,112-unit Paradise Island. The community offers several floorplans, ranging from spacious 831-square-foot, one-bedroom units, to 1,352-square-foot, three-bedroom units. The two-bedroom, two-bath units ranging in size from 1,100 to 1,300 square feet dominate the community. The unit mix, size and amenities of these mid- to late-1990s communities make them ideal conversions to condominiums. In fact, many communities were built as condominiums, but have been operated as rental communities because of market conditions at the time of completion.

Communities built in the last 3 years are even larger, including 1,600-square-foot, two-bedroom units, and three-bedroom units measuring nearly 2,000 square feet. Rental rates range between $1,600 to $1,800 per month depending on location, view and floorplan.

Overall market indicators are extremely favorable with stable rents and occupancy rates of almost 95 percent. Condominium conversion is beginning to occur in the southeast sector where occupancies are reaching 97 percent and average rental rates are approximately $800 per month. Atlanta-based Julian LeCraw & Company's purchase of Grand Reserve at Windsor Parke Apartments is the initial entrant. The 340-unit project, averaging 1,300 square feet per unit, is located just west of the Intracoastal Waterway. Proposed sale prices of the eight floorplans range from $90,000 to $160,000.

The 192-unit Ocean Links community, originally built as condominiums, rented as apartments. Since then, units at the community, located at SR A1A and Solana Road in Ponte Vedra Beach, have been sold as condos. The one-, two- and three-bedroom homes cost between $90,000 and $180,000.

"Look for the next generation apartment/condo conversion to be by-the-bedroom," says Chase. "Several communities near the Jacksonville campuses of The University of North Florida and Florida Community College are currently renting by the bedroom. Rents average $1.21 per square foot in a 74-cent market."

In support of this concept is Jacksonville-based KBJ Architects, which finalized plans in late July for Florida State University's first new student housing since 1960. Unlike most campus dormitories, this new housing at the main campus in Tallahassee will be apartment-style.

Apartment developers are thinking toward condo conversions. They are eliminating studio/efficiency units from the floorplans and blurring the lines between traditional apartments and hotel/motel development, says Chase. The new generation extended-stay versions by Marriott, Hilton, Holiday Inn and Motel 6, as well as local entrepreneurs, have seized the opportunity to fill this void.


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