Downtown condo competition heating up

[bobliocatt]

EXCLUSIVE REPORTS

Ryan Geddes

Staff Writer

DOWNTOWN -- According to The Plaza Condominium at Berkman Plaza's official Web site, "Jacksonville is a city perched on the edge of greatness."

The same could be said for the luxury residential development, whose 22-floor condo tower on Bay Street remains 50 percent sold after converting from an apartment building in September 2003.

Atlanta-based real estate investors Alan McRae and Will Stolz bought the tower for $46 million nearly a year ago through their McRae & Stolz Jacksonville LLC company. The Harbor Cos., also based in Atlanta, sold the property but retained ownership of an attached marina, a parcel of adjacent land and the development's riverfront townhouses, only 40 percent of which are sold after nearly two years on the market.

Harbor, McRae & Stolz, and now Atlanta-based Coldwell Banker The Condo Store, which markets the property, have long touted the tower as the premier address in Downtown Jacksonville. But the Northbank building that pioneered high-end urban living now faces competition from the up-and-coming Southbank, where a growing number of condo developers are building and proposing similar projects at a rapid pace.

San Marco Place is nearing construction, The Strand is under way and condos in its accompanying tower The Peninsula are being sold, and two more grandiose projects -- a twin-tower concept near the Aetna building, and a multi-tower, mixed-use development near the Radisson Riverwalk -- have been proposed.

"This is the hardest phase of a project -- you have 50 percent sold, but now you have new competition across the river," said Ray Rodriguez, president of the Real Estate Strategy Center of North Florida Inc. "The fact is that every person buying at the Strand is one more person not buying at Berkman. You have to ask, if these are exclusive areas, why are they not sold out?"

While Southbank condo projects wind their way through the Downtown Development Authority, the planning department and the City Council, Northbank riverfront improvement and development projects like The Jacksonville Landing retail center and the Shipyards mega-site appear stalled, creating an atmosphere of uncertainty for a burgeoning urban core.

Southbank developers market their projects as being in "San Marco," hinting at forthcoming Publix grocery stores and restaurants. But Berkman Plaza will have a definite advantage when the marketing machine that is Super Bowl XXXIX comes to town: it is already built.

"The Berkman is in a good position to provide immediate occupancy to out-of-town buyers who don't want to be put on a list," Rodriguez said. "If I were the developer, I would be waiting for a 'Hail Mary' pass."

Carol Crowley and her husband recently moved to Ponte Vedra Beach from Indiana and bought a unit in the Plaza Condominium tower, where units are priced from $200,000 to $700,000.

"We were looking into the Shipyards when we learned the Plaza was going to be converted into condos," Crowley said. "We learned the Plaza would be available [immediately], whereas the Shipyards build-out would be a year or more."

Crowley uses her unit as a second home, venturing into the city "several times a week" for sporting events, arts and entertainment and dining out.

Rodriguez said most luxury condominium buyers and brokers are already familiar with the property and that Berkman's future buyers will likely come from out of the area.

The Super Bowl, and the high-rolling corporate executives it could bring, might raise the property's profile and appeal to relocation buyers comfortable with urban living.

Brad Horner, vice president and director of sales for Coldwell Banker The Condo Store, said the Southbank projects have helped Downtown's, and thus Berkman's, sales momentum. And although the Super Bowl will be a marketing opportunity, Horner said all of The Plaza Condominium's advertising has been concentrated in Jacksonville, not in other markets.

Terry Lorince, executive director of Downtown Vision Inc., said Berkman Plaza needs more time to sell units and that buyers will continue to move Downtown as a more varied selection of housing comes to the Northbank.

"The product on the Northbank is going to be a bit of a mixture, including some of the funkier, older buildings and the new buildings on the river," she said. "But it will be more of an urban experience than the Southbank."

Downtown Vision recently surveyed Downtown's nearly 1,200 residents to gauge their opinion of the neighborhood. The response level from Berkman residents, Lorince said, was "small."

According to deeds filed with the city as of Aug. 31, McRae & Stolz has sold 102 of 206 units in the Plaza Condominium tower, and Harbor Cos. has sold eight of the 20 nearby townhouses.

But only 71 of the 110 townhomes and tower units sold, or 65 percent, are used as primary residences, according to the most recent deed and tax records available. The rest are weekend homes or investment properties.

Of the 102 Plaza Condominium tower deeds that have been recorded, only 69 of those units have homestead exemptions, according to the Real Estate Strategy Center. But Horner said 68 percent, or 140 units, have sold and 85 percent, or 119, of those owners use their units as primary residences.

"There's definitely been a lot of [sales] activity in the past few weeks," Horner said. "The project is definitely on track to sell out in two years if not before."

Horner said The Plaza Condominium would be sold out before Southbank projects like The Peninsula and San Marco Place are even completed.

Wade Hampton, a broker with Manormor Real Estate Inc., said he sold a Plaza Condominium tower unit in 2003 but most of his recent customers have been looking in Riverside and Avondale.

"One of the things that is occurring is that people are looking for condos with views of Downtown -- they are fascinated with that for some reason," Hampton said.

For skyline seekers, Riverside condo projects like Flagship Communities LLC's Villa Riva provide the view with a semi-suburban feel, a quality the Southbank developers hope to mimic.

Horner said he does not consider Flagship's project to be competition for The Plaza Condominium.

"Villa Riva is a different project," Horner said. "It has a different market altogether."

Out-of-towners like the Crowleys are a marketing force of their own, spreading the word to friends and business acquaintances.

Carol Crowley said her friends in Elkhart, Ind., liked her 12th-floor condo unit so much, they recently bought one, too, making it their third home.

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[Urban_Legend]

I notice that many people may buy homes in downtown, but don't live there. They use these condos as vacation homes or Superbowl oppurtunities. Hopefully, we'll get more live-work people moving in, and staying there, contributing to the neighborhood.

[vicupstate]

There is always a component of the market for these large projects that is second or third homes, as well as investment property.

From what I have heard and observed, several of the buyers are from the beaches (ie Ponte Vedra) and the owners spend the week downtown and the weekend at their beach home (must be nice). In those situations, at least they would be downtown for the majority of their time, and would create demand for restaurants, etc. during the week.

From what I have picked up, this is a big component of the Miami high-rise condo expolsion.

As far as the units purchased as investments, those would be leased out. Therefore, they would still be occupied, and still contributing to the population base of downtown. This also allows prospective residents of urban areas to "test the waters" before taking the plunge of buying a unit.

I use to live in a neighborhood very similiar to Springfield in Columbia, SC. Many renters in the neighborhood eventually became owner/occupants. They often rented initially because they were unsure of the area, until they saw it firsthand.

[vicupstate]

From The Daily Record City Notes column...

Downtown Development Authority board chair Bob Rhodes says the City shouldn

[Urban_Legend]

^I totally agree!

[wolfdawg54]

Competition is really good! I love competitive business especially in downtown.