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vicupstate

Business Journal looks at Downtown Housing

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Not a lot of new info. but some interesting comments. The Plaza at Berkman is 68% sold, a fair number of which are second homes or investments. 8 of the 20 townhouses at Berkman have sold, but that doesn't appear to include one closed last week that is listed in the "Transactions" section.

The article speculates that the new Southbank projects will provide significant competition to the Northbank projects.

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I believe the downtown luxury market is on the verge of possibly being over built. Hopefully the competition created by the Southbank projects will force more developers to produce more affordable projects in the Northbank.

A good city to study that booming with market rate downtown housing projects is Orlando. The units are selling like hotcakes and the city isn't contributing one cent in incentive money. There's definately a fairly large ignored market for local downtown housing priced below $180k.

According to a market analysis study I conducted over the past couple of months, whoever decides to cater to this market, stands to make a lot of money while quickly raising the overall vibrancy, image, and appearance of the Northbank at the same time.

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I like all of the projects we're getting so far. The amount of historic renovations in Jacksonville is very impressive. Hopefully, we'll see more moderately priced projects pop up. I'd like to see some townhomes, in the LaVilla and Cathedral area.

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Given the fact that The Plaza at Berkman, San Marco Place and The Peninsula have all had great sales experiences, I don't think the luxury market is being overbuilt. However, I strongly believe that the more affordable market is being completely ignored thus far. I'm hoping that the Aetna twin towers will start the ball rolling in that market.

The 323 Duval office condo building is tentatively pricing their units at $200 a square foot, with no incentives from the city. Meanwhile, downtown residential units are much closer to $300 a square foot, with city incentives.

With numerous cities that I have followed, there is a familiar pattern of downtown housing. Initially there is no product, then the first project or two is somewhat reasonable, but because the market is new, they get a tepid response initially.

Afterwards, the first projects fill up, and then the next projects are luxury (or at least luxury priced) only.

Lakelander, what are the price ranges of the Orlando projects that you have been following?

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Given the fact that The Plaza at Berkman, San Marco Place and The Peninsula have all had great sales experiences, I don't think the luxury market is being overbuilt.
Right now sales are great, but I was considering the luxury market once projects like San Marco Riverwalk, Haskell, and Berkman II come on line. Haskell and SMR alone will add nearly 3,000 waterfront residential units. Depending how fast the come on line & the Shipyards thing, it could get pretty bloated.

Lakelander, what are the price ranges of the Orlando projects that you have been following?

It was announced in the paper today that the city is entertaining offers from three different development gruops for a mixed use tower on city owned land downtown.

The city's requirement is that the residential component must have 20% of the units priced at a level affordable to households with incomes under $50,000 a year.

Other affordable priced projects in downtown Orlando include:

Park North at Cheney Place

This condo-conversion project with prices ranging from $100k-350K sold over 90 percent of its 303 units during its first weekend of sales. About 24 buyers were waiting for the doors to open when sales started last Friday.

The Vue

This 35 story tower has condo prices starting in the $180s. Its scheduled to start construction by the end of the year. This project's developers visited Jax a couple of months ago to view land for a potential project here. One of the sites mentioned was the old courthouse site.

The Metropolitan at Lake Eola

Once known as the Sheraton Four Points Hotel, this 128 unit condo conversion's prices started at $150k, far below the average Orlando home price of 185k. 460 people had already called to put their names on the priority buyers list two weeks before the sales office opened in March. The project sold out months ago and construction is well underway.

Projects like these are one of the main reasons why Orlando's downtown is one of the state's most vibrant at street level.

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Thanks Lakelander for the info. My thoughts...

Two of the three projects that you mentioned were conversion projects. All things being equal, these are usually significantly more affordable than new construction or rehab projects. Per square foot, buying something already built is always cheaper than new. Unfortunately for Jax, there are no existing apartment complexes that are available for conversion in the downtown area.

The other project you mentioned says it's starts in the 180s. That almost always translates into "we have studios that are 600 sq. feet with the worst view for $189,900 and the next size up is 15 grand (at least) more ". Sometimes there is literally only one or maybe two such units available.

As long as there are buyers for the higher price levels, there is not much incentive to build more affordable units, especially in the early stages of an area's revitialization.

In time, the more affordable segment will sprout up, but most likely it will be in LaVilla, the Cathedral district or perhaps the part of Brooklyn west of Riverside Ave.

Thus far, the downtown for sale market has been riverfront, or at least riverview focused, that makes affordability close to impossible.

The Aetna twin towers project, called Waterside, is the best chance for affordable units downtown. The starting price points they have mentioned were $150,000 or $170,000. I also hope that someone will make a proposal to the city to build a significant number of units at the current library site. As an inducement for incentives, perhaps they will include some affordable units.

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Thanks Lakelander for the info.  My thoughts...

Two of the three projects that you mentioned were conversion projects.  All things being equal, these are usually significantly more affordable than new construction or rehab projects.  Per square foot, buying something already built is always cheaper than new.  Unfortunately for Jax, there are no existing apartment complexes that are available for conversion in the downtown area.

This clearly shows why the city should be giving incentives for market rate housing instead of riverfront luxury developments, especially on the Southbank.

However, there are several properties away from the river, like the pink apartment tower on Ashley St, the old JEA tower, the old hotel on the corner of Main & State Streets, etc. that could be considered for condo-conversion.

As long as there are buyers for the higher price levels, there is not much incentive to build more affordable units, especially in the early stages of an area's revitialization.
The incentive for developers to build more affordable units could come, if the city stops giving out incentives for luxury housing. Top priority should be given to projects "not" located on the river, but within the core. Its well known that the stronger affordable housing market exists, no its up to the city to turn developers on to catering to it.

In time, the more affordable segment will sprout up, but most likely it will be in LaVilla, the Cathedral district or perhaps the part of Brooklyn west of Riverside Ave. 

Thus far, the downtown for sale market has been riverfront, or at least riverview focused, that makes affordability close to impossible.

I'm currently in the early stages of planning a small contemporary rowhouse project in LaVilla, without help from the city. With land prices around $15/SF, its almost impossible to buy land, build and sell a residential unit for under $110 - $120/SF. Other than city incentives, the only way to get costs down, would be to shrink the unit sizes down, buy cheap materials, or purchase property too far away to contribute to the revitalization of downtown.

While land is cheaper in Brooklyn, its also a much risker situation, because of its limited connection to the river and downtown, limited parks & recreational space, as well as the large road construction projects that will take years to complete. Until the city addresses these issues, I wouldn't expect to see much residential development take place there.

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^^

Lakelander,

I agree with the comments in your post. As for the Ashley St. tower, it is currently used as housing, but I believe it is HUD rentals. As far as condo conversions, I was primarily speaking of existing apartments that convert to condominium. Since they already are residential, they can and usually are priced more affordable. Such projects don't require a full rehab, just some relatively minor updating/upgrading. I especially agree with your point about the city putting incentives into affordable units further from the river.

Please check your PMs. Thanks.

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