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For downtown living, Jacksonville developers favor apartments, not condos

Still for sale, Berkman Plaza II's destiny may be foretold

Posted: May 3, 2014 - 6:04pm  |  Updated: May 3, 2014 - 6:25pm
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(left) The completed Berkman Plaza tower with (right) the Berkman Plaza II project stalled while under construction.  Times-Union
Times-Union
(left) The completed Berkman Plaza tower with (right) the Berkman Plaza II project stalled while under construction.

The saga of Berkman Plaza II is moving into its next phase. The half-finished downtown tower is now owned by the construction company that built what there is of it.

But Choate Construction of Atlanta is trying to sell it, and from what COO Mike Hampton has heard so far, the interest is in finishing it as apartments, not the condos that were originally planned.

“Everyone who is calling is talking about rentals,” Hampton said.

But what are the prospects for an 18-story apartment building downtown on the river?

“We’ve gotten a lot of inquiries on it,” said Brian Moulder, who specializes in multifamily properties for CBRE commercial real estate brokers. “It’s a great project. There’s not many waterfront opportunities like this in the Southeast. The infrastructure has been checked out by numerous engineers. It’s solid concrete.

“I think the everyone agrees the highest and best use is apartments.”

Moulder brokered the $53.3 million sale last year of The Strand, a 28-story apartment building on the Southbank. And though the Miami buyer, Crescent Heights, is well known for converting apartments to condos, Moulder said The Strand will stay as apartments.

“It’s just not the time for condos,” he said.

Choate won a $10.2 million judgment in its suit against the developer, but Hampton said he doesn’t expect to get that much when it sells.

But he pointed out that it could be purchased and completed for less than building a similar tower from scratch.

Alex Coley, principle with NAI Hallmark Partners, is seeing two sides of multifamily construction at the moment. 220 Riverside, a 294-unit apartment complex near downtown, is nearing completion.

A little farther out, work has just begun on Beach Riverside, a 16-story condo tower on the river.

Coley said different construction methods used in apartments like he’s building at 220 Riverside and a tower like Berkman dictate different rental rates.

The seven-story 220 building, which falls into the mid-rise category, can be rented for about $1.50 per square foot per month, Coley said.

“But if you were to use the rigid construction you need on a tower, your rents are going to have to rise to $2 a square foot. And I don’t think you can make those numbers work.”

Bradley Coe, director of multifamily investment services for Colliers International, isn’t sure that Berkman II will work as an apartment tower, either.

“I think absorption will be slow,” he said. “You’re going to have to have some patient money.”

Moulder disagreed.

“There’s only 281 units,” he said. “And I think that’s certainly feasible. I think they have the rights to go higher, but 281 is a good number. I don’t think you want to go north of 300.

“But they’ll be absorbed. There’s nothing else like it downtown. If you look at what’s happening to the Laura Street Trio and elsewhere, everything is moving to the central business district.”

Jacksonville has seen a burst of new apartment complexes over the past few years, filling what many are calling a pent-up demand created by a long stretch when few were built.

Almost all of them are going to the Southside around Butler Boulevard, Gate Parkway and Baymeadows Road East.

Fort Family Investments is building the third complex there in the past two years, and with rents in the $1.05-$1.15 a foot range, business has been good. Occupancy at Cabana Club is at 96 percent. Hacienda Club is at 63 percent and isn’t finished. Spyglass is just underway.

But Abe Fort, director of development, isn’t sure about downtown.

“If we felt like people wanted to live there, we’d be interested,” he said. “There’s certainly a demographic that wants to live there, but I don’t think it’s a large percentage.”

 

Roger Bull: (904) 359-4296

Comments (2)

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johnctaughtme
13261
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johnctaughtme 05/04/14 - 07:02 pm
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Premium Member

Not to worry about the

Not to worry about the developers "Noillusions". So many of them have quickly been able to turn properties with a high vacancy rate into Section 8, or some other HUD or public housing.

Noillusions
3180
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Noillusions 05/04/14 - 02:43 pm
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Shouldn't the headline

Shouldn't the headline read:

For downtown living, Jacksonville developers favor apartments, not condos...residents prefer neither!

Just look at the dt population...or lack of it.

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