YE Jax Report - Walchle Lear

3Q 2014
MULTIFAMILY REVIEW
JACKSONVILLE, FLORIDA
JACKSONVILLE MULTIFAMILY MARKET
RECENT ECONOMIC NEWS
Investors remain bullish on the Jacksonville apartment
market due to high demand fueled by job and
population growth. Competition for deals with
reasonable yields has intensified in Jacksonville, with
institutional, regional and foreign buyers alike.
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Third quarter overall market occupancy rose to 93.3%.
Multifamily remains at the top of investors wish list and
robust pent-up demand continues to fuel acquisitions.
Transaction volume has maintained its upward trajectory
given the large amount of capital chasing deals and
favorable financing.
The low interest environment and strong pricing has
further compressed cap rates. Pricing has become
especially aggressive for "A" assets, driving yields lower.
As a result, there has been increased buyer activity and
competition for all age groups.
Over 18,000 jobs were added since August 2013. With
more people entering the workforce, unemployment
dropped back to 5.8% in August, a 10 basis point drop
since 2Q 2014. Job opportunities have increased rapidly
during the past twelve months.
Values are at an all time high and annual rent growth is
expected to be within the 3%-5% range, similar to
previous quarters.
Fierce competition has led to lenders loosening up their
underwriting standards. Interest rates are very attractive
and interest only periods have gained more popularity.
Jacksonville will benefit from strong employment and
household formation, which will continue to drive
apartment investment in the near term.
Sawgrass Marriott in Ponte Vedra Beach purchased by a New York REIT
General Dynamics IT to hire 100 at One Imeson
Deutsche Bank opens international branch; will add 200 jobs
JEA Downtown site planned for a Healthy Town concept
• GE will build a plant in Cecil Commerce Center; adding 500 jobs
• Quadrant building off Butler Blvd. sold for $24 million
• Flagler Center Suburban Office Park sells for $133 million
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EverBank Center sold to Miami-based investor for $47.4 million
Developer optimistic about new plans for Jacksonville Landing
JEA site development on Southbank could spur up to 3,500 jobs
Developer closes on former Jax Bch site to build apartments
Trader Joe's in Jacksonville Beach opened first week of October
Economic boost expected for Mayport as amphibious ships arrive
Jaxport has created 24,000 jobs during last 6 years
Jaguars owner is expected to unveil his Shipyards plans in October
UF Health to build 92-bed hospital tower on Northside; opens 2017
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Fairlead closes on Gran Avenues Park Office Portfolio
Parmenter Realty Partners sell Bank of America Tower for $88 million
Multiple developers looking at land for next phase of Town Center
Pre-construction begins for the St. Johns River Deepening project
$30 million intermodal facility for Jaxport will be ready by next year
JACKSONVILLE ECONOMIC INDICATORS
Population
% Change from Previous Yr.
Per Capita Income
% Change from Previous Yr.
Employment
% Change from Previous Yr.
2015
2016
2017
1,437.0
1,458.9
1,481.4
1.5
1.5
1.5
$45.7
$47.8
$50.2
4.1
4.6
5.0
641.2
657.3
671.5
2.5
2.5
2.2
* Source: UCF's Florida & Metro Forecast - July 2014 (Figures in thousands).
www.multifamilybrokers.com
3Q 2014
MULTIFAMILY REVIEW
OCCUPANCY RATE & RENTS
Employment and population growth continue to fuel
demand for apartments and push occupancy higher.
Millennials preference for rentals and a robust local
economy have also contributed to a higher demand.
Rent growth is expected to remain within 3%-5%, while
value-add investments continue to achieve the highest
rent growth in the market.
NOTABLE STATS
Job Growth
18,000 Jobs Since Aug 2013
Rental Growth
3%-5% Average Growth for
Most Properties
Population Growth
17,000 New Residents During
Past 12 Months
APARTMENT COMMUNITY SALES
A total of 42 apartment communities (11,291 units) and
over $676 million have sold year-to-date. High volume of
B/C quality assets and few “A” core transactions has
resulted in lower average per unit pricing. A few other
properties are expected to close before year end,
including recently constructed properties. Sellers
continue to enjoy more leverage in pricing negotiations.
Cap rates for most age groups are now at or below 6%.
A great amount of capital continues to flow for
Jacksonville apartments, with foreign investors having a
strong presence in the area.
Statistics
2010
2011
2012
2013
YTD 2014
Sales (millions)
$163.6
$381.2
$672.0
$810.0
$676.1
Per Unit (thousands)
$54.3
$47.5
$62.4
$66.6
$59.9
Units Sold
3,011
8,027
10,776
12,178
11,291
Number of Deals
23
38
48
58
42
Cap Rates
2010
2011
2012
2013
YTD 2014
2010+
6.50
N/A
N/A
5.50
5.00
2000+
6.50
5.90
5.90
5.80
5.40
1990's
N/A
N/A
6.40
6.00
5.80
1980's
7.75
6.75
6.50
6.25
6.10
1970's
9.00
8.00
7.75
7.30
6.80
DEVELOPMENT ACTIVITY & SITES
Pent-up demand, higher rents and strong absorption
are all contributing factors for the recent construction
boom in Jacksonville. Occupancies are climbing as a
result of limited new supply during the past five years.
Remaining projects entering the development pipeline
are not expected to impact rent growth. Lower yields
on core assets have also driven developers to continue
building.
While other markets move toward oversupply,
Jacksonville is still experiencing its expansion phase with
increased occupancies and rent growth. Also, a large
local land owner has released a few commercial
parcels around the Town Center which will generate a
lot of interest and may drive land prices even higher.
www.multifamilybrokers.com
3Q 2014
MULTIFAMILY REVIEW
APARTMENT COMMUNITY SALES
SUBMARKET
NAME
DATE
UNITS
2000's or NEWER PROPERTIES
Southside
1) Four at Deerwood
Aug-14
316
Intracoastal
2) Flats at Kernan (student)
Oct-14
192
Intracoastal
3) Reserve at Wynnfield Lakes
Jun-14
204
Southside
4) Courtney Meadows
Jul-14
276
Southside
5) Canopy at Belfort
Jul-14
192
Orange Park
6) Palmetto at Oakleaf
Jun-14
330
TOTALS
1,510
1990's PROPERTIES
Southside
1) Aventine at Town Center
Jun-14
320
Intracoastal
2) Spinnaker Reach LIHTC ¹
Jun-14
288
TOTALS
608
1980's PROPERTIES
Beaches
1) Remington at Ponte V edra Oct-14
344
Southside
2) Casa del Mar ²
May-14
144
Mandarin
3) Waterford at Mandarin
Aug-14
432
Beaches
4) Island Club at Atlantic
Feb-14
204
Arlington
5) Park at Regency
Aug-14
159
Mandarin
6) V ictoria Park
Sep-14
520
Westside
7) Kingsbury
Aug-14
90
Westside
8) Grassy Pond
Oct-14
88
TOTALS
1,981
1970's OR OLDER PROPERTIES
Southside
1) V illages of Baymeadows ²
May-14
904
Intracoastal
2) San Pablo
Jun-14
200
Orange Park
3) Park at Blanding
Oct-14
117
Arlington
4) Woodcreek
Jan-14
260
Southside Blvd. 5) Auburn Glen
Mar-14
251
Southside
6) Palms at Beach Blvd.
Jan-14
360
Southside
7) Heron Walk
Oct-14
384
Mandarin
8) Woods of Mandarin
May-14
401
Arlington
9) Charter Landing
Sep-14
332
Southside
10) Avesta Kings Trail
Oct-14
320
Arlington
11) Avesta Jax Heights
Oct-14
172
Northside
12) Avesta Highlands
May-14
120
Westside
13) Ortega Pines
Aug-14
152
Southside
14) Arbor Place
Sep-14
206
Westside
15) Colonial Forest
Aug-14
174
Northside
16) Northwood
Sep-14
152
Southside
17) Heather Ridge
Jul-14
120
Westside
18) Cross Creek
Jan-14
292
Arlington
19) Matthews Crossing
Aug-14
1,103
Arlington
20) Riverview
Jun-14
304
Southside
21) Whispering Oaks
Jan-14
128
Northside
22) River Oaks
May-14
288
Northside
23) Highlander
Jan-14
104
Westside
24) Niblick (Cedar Springs)
Aug-14
56
Arlington
25) University Townhomes
Mar-14
200
Arlington
26) Caroline V illage
Jun-14
92
TOTALS
7,192
COMBINED TOTALS
11,291
¹Affordable deal (Sec 42 - tax credits).
²Sold as a 1,048 unit portfolio (Largest sale in Jacksonville’s history).
www.multifamilybrokers.com
AGE
PRICE
PRICE/UNIT
2013
2009
2009
2001
2013
2013
$49,900,000
$29,840,000
$27,250,000
$33,000,000
$21,000,000
$35,000,000
$195,990,000
$157,911
$155,417
$133,578
$119,565
$109,375
$106,061
$129,795
1996
1996
$40,900,000
$13,750,000
$54,650,000
$127,813
$47,743
$89,885
1986
1982
1989
1988
1985
1983
1987
1986
$35,350,000
$12,750,000
$36,300,000
$13,025,000
$8,300,000
$26,200,000
$1,850,000
$1,550,000
$135,325,000
$102,762
$88,542
$84,028
$63,848
$52,201
$50,385
$20,556
$17,614
$68,311
1975
1974
1968
1975
1974
1974
1978
1974
1975
1968
1970
1975
1974
1975
1969
1975
1969
1973
1972
1974
1963
1975
1967
1965
1964
1963
$71,250,000
$12,000,000
$6,500,000
$13,525,000
$11,500,000
$14,300,000
$15,250,000
$15,800,000
$12,818,600
$11,900,000
$6,350,000
$4,200,000
$5,120,000
$6,870,000
$5,500,000
$4,750,000
$3,670,000
$8,710,000
$32,700,000
$8,725,000
$3,500,000
$7,350,000
$2,300,000
$1,050,000
$3,200,000
$1,288,000
$290,126,600
$676,091,600
$78,816
$60,000
$55,556
$52,019
$45,817
$39,722
$39,714
$39,401
$38,610
$37,188
$36,919
$35,000
$33,684
$33,350
$31,609
$31,250
$30,583
$29,829
$29,646
$28,701
$27,344
$25,521
$22,115
$18,750
$16,000
$14,000
$40,340
$59,879
3Q 2014
MULTIFAMILY REVIEW
SIGNIFICANT APARTMENT LAND SALES
#
1
2
3
4
5
Date
Name
Aug-14
SJTC Site
Jul-14
JU land
Jun-14 Dolphin Depot
Jun-14
Loree
Jun-14
JU land
Location
Submarket
Sale P rice
I-295 & Baymeadows Rd.
University Blvd
1st Street N
AC Skinner Pkwy
University Blvd
Southside
Arlington
Beaches
Southside
Arlington
$9,200,000
$6,990,000
$1,890,000
$5,400,000
$3,325,000
Acres
P er Acre
Units
P er Unit
89.4 $102,908 120
60
$116,500 274
1.35 $1,400,000 54
$360,000 300
15
39
$85,256
N/A
$76,667
$25,511
$35,000
$18,000
N/A
2
5
3
4
1
www.multifamilybrokers.com
3Q 2014
MULTIFAMILY REVIEW
RECENT CONSTRUCTION RENTAL SURVEY
Name
Seagrass
Completed
Occ
Units
Avg. SF
Rent
Rent/SF
2013
93%
396
960
$1,133
$1.18
2013
92%
131
1,169
$1,687
$1.44
2013
93%
300
1,143
$1,343
$1.18
2013
81%
239
1,091
$1,278
$1.17
2013
97%
280
1,086
$1,239
$1.14
2013
76%
316
941
$1,228
$1.31
2014
39%
171
934
$1,313
$1.41
2014
11% *
294
861
$1,445
$1.68
2014
N/A
300
961
$1,358
$1.41
2014
N/A
130
754
$1,150
$1.53
1701 San Pablo Rd. S
Jacksonv ille, FL 32224
5 Thousand Town
5000 Big I sland Driv e
Jacksonv ille, FL 32246
Hacienda Club
8685 Baymeadow s Rd. E
Jacksonv ille, FL 32256
Hawthorne
8150 Point Meadow s Driv e
Jacksonv ille, FL 32256
Lost Lake
8681 AC Skinner Pkw y
Jacksonv ille, FL 32256
Four at Deerwood
4870 Deer Lake Driv e E
Jacksonv ille, FL 32256
Bluewater
711 Beach Blv d.
Jacksonv ille Beach, FL 32250
220 Riverside
220 Riv erside Av enue
Jacksonv ille, FL 32202
The Views at Harbortown
14030 Atlantic Blv d.
Jacksonv ille, FL 32225
Deerwood Lake Lofts
4360 Deerw ood Lake Pkw y.
Jacksonv ille, FL 32256
*Preleased.
www.multifamilybrokers.com
3Q 2014
MULTIFAMILY REVIEW
RECENT NOTABLE WL CLOSINGS (APARTMENTS)
$84,000,000
Largest Sale in
Jacksonville's History
Villages of Baymeadows
1,048 units
Heron Walk
384 units
Arlington Submarket
$1M Cap X Needed
Charter Landing
332 units
Southside
Submarket
Southside Blvd.
Submarket
Southside Blvd. Apartments
251 units
$60,000 per unit
Built 1974
San Pablo
200 units
Southside
Submarket
Arbor Place
206 units
www.multifamilybrokers.com
3Q 2014
MULTIFAMILY REVIEW
RECENT NOTABLE WL CLOSINGS (LAND SALES)
33.38 acres
279 multifamily units
Intracoastal
Johns Creek
65 single family lots
St. Augustine
10.30 acres
21 single family lots
Ponte Vedra Beach
17.55 acres
60 single family lots
Mandarin
1.35 acres
54 multifamily units
Beaches
0.66 acres
26 multifamily units
Beaches
www.multifamilybrokers.com
For Additional Market Information Please Contact:
Bart A. Walchle, x. 201
[email protected]
Ph. 904-241-7600
Cel. 904-994-7600
F. 904-241-7604
Stephen D. Lear, x. 202
[email protected]
Ph. 904-241-7600
Cel. 904-226-3855
F. 904-241-7604
Erik M. Bjornson, x. 208
[email protected]
Ph. 904-241-7600
Cel. 904-699-7582
F. 904-241-7604
Tyler Nilsson x. 205
[email protected]
Ph. 904-241-7600
Cel. 904-477-8929
F. 904-241-7604
Walchle Lear Multifamily Advisors
1506 Roberts Dr. Jacksonville Beach, FL 32250
P. 904-241-7600 F. 904-241-7604
www.multifamilybrokers.com