1H 2014 | INVESTMENT
Commercial property sales in the Jacksonville region totaled $1.40 billion for the first six months of 2014, substantially ahead of the mid-year 2013 pace of $858 million. In fact, we will blow out the 2013 annual figure of $1.8B and have already exceeded 2012’s $1.4B annual figure. The darling of the lending community, multi-family, led the way in 2012 and 2013 but apartment sales thus far in 2014 were dwarfed by retail investments and office building sales, the latter two product types including two behemoth transactions. Still strong, hotel sales and net-leased assets rounded out the major product types followed by warehouses. The Jax investment sales market is on fire to say the least, and look for it to continue as investors seek secondary and tertiary markets like Jacksonville for opportunities as the first-tier cities have simply gotten too expensive and in many buyers’ opinions, overheated, er, overpriced.
GENERAL MARKET INDICATORS
1H-2014 Forecast
GENERAL CAP RATES
“A” ASSET CAP RATES
ACCESS TO DEBT
ACCESS TO EQUITY
QUICK UPDATES - NORTH FLORIDA
• A 50% stake in the St. Johns
Town Center sold to RREEF for a reported $375,000,000, or a
4% cap rate
• Well Fargo Center traded for
$79M+/- or $116/SF for the tower
• Jacksonville’s largest hotel, The
Hyatt Downtown (966 keys), sold for $53M±
• The distressed Regency Square mall (excluding a couple of anchor boxes) sold for about
$13M, or about $14/SF
• 18 apartment communities sold for an aggregate of $259M
The office sector, at some $365M for the first half of the year, was led by the Greenfield purchase of the Liberty Property Trust portfolio (that actually closed December 30) and included assets in multiple states. The allocations for Jax included about $245M for about 2.1M square feet for a portfolio that consisted of about 45% mid-rise suburban product and about
55% single-story flex product, plus some 115 acres of excess land for future development. The other big sale (actually a recapitalization) was the iconic 1970s Wells Fargo Center building that traded in June at a reported $75.3M or $116/SF; $79M including two parking garages. In addition, Regions Bank bought a small building downtown at about $137/SF; the 1970s Life of the South building sold at $42/SF, and Parkway bought out its partner, DRA Advisors, on the JTB Center off J Turner Butler Boulevard at about $134/SF. Also in June, Atlanta-based
Fairlead Commercial Real Estate and Bridge Investment Group of Salt Lake City teamed up to buy three suburban office assets, Gran Park at The Avenues, at about $23.1M or $94/SF from Fortress/Flagler Development. Lastly, though not counted in our first half 2014 totals, the 42-story Bank of America Tower downtown sold in early July at about $88M or $118/SF to California-based Hertz Investment Group. Another tower is under agreement to be sold for its value-add opportunity.
Some 18 apartment communities sold for a volume of $259M thus far in 2014, it actually lags considerably the $415M recorded in the first half of 2013. The big transactions were Villages at Baymeadows and Villages at Casa Del Mar purchased by Harbor Group International at a combined $84M, or about $80k/unit. Other deals included Landmark at Maple Glen in Orange
Park for $29.8M or about $83k/unit, and Canopy at Belfort Park at $110k/unit, or $21.2M.
Lastly, Aventine at Town Center was purchased in June by Carroll Organization out of Atlanta for about $40.9M or $128k/unit.
Eight hotels sold in the period, led by the Hyatt Regency downtown at $53M or $55k/key. A1A
Beach Blvd sold at about $9.75M, with the rest being small limited service hotels. Three deals are reportedly under contract to close later in 2014 - the Marriott Courtyard and Residence
Inn both at the airport, and the Wyndham on the Southbank.
www.colliers.com/jacksonville

RESEARCH & FORECAST REPORT | 1H 2014 | INVESTMENT | NORTHEAST FLORIDA
Retail investors have been busy with 17 properties selling, totaling $460M, led by the St. Johns Town Center transaction when RREEF/Deutsche Bank bought Ben
Carter Properties’ 50% interest in the development; the reported cap rate was an astounding 4%, for one of the premier lifestyle centers in the nation. Phillips
Edison bought two centers as part of a 5-asset portfolio from Invesco; St.
Johns Plaza anchored by Winn Dixie and
Deerwood Lake Commons anchored by
Publix; the portfolio also included Heath
Brook Station, a Publix-anchored deal in
Ocala. Lastly, the non-anchor controlled parts of the struggling Regency Square
Mall sold at about $14/SF to a buyer from New York; also Toronto-based Slate
Properties bought Oak Hill Village in the
Southwest at $90/SF or about an 8.1% cap. Two centers reportedly remain under contract: Shops at Julington
Creek anchored by The Fresh Market and
Riverside Center and a Hobby Lobby/
Big Lots center in St. Johns County under contract to Blackstone as part of a
79-asset national portfolio.
Ben Carter sold his 50% stake in the St. Johns Town Center to Simon Property Group, who will continue to manage the center. The St. Johns Town
Center is Jacksonville’s premier retail center and commands the highest retail rental rates in the city. The center is an open air mall and features a blend of big box retail and high end shops and restaurants. The sale was for a reported $375,000,000 which equates to a 4% Cap Rate.
Colliers sold a Walgreens in Gainesville, FL to an out of state investor at a 5.59% Cap Rate, with matching back up offers. The WAG is absolute NNN leased, with guaranteed income thru 2033. This store was built in
2008 and is 14,820 square feet and is across from a
Publix anchored shopping center.
Some $95M in eight properties sold, ranging from a Davita Dialysis building in
Arlington (reported 6.9% cap), a Walgreens
(5.6% cap rate), the Pinnacle Insurance building off of Belfort (8.2% cap), to a couple of single-tenant warehouses and a single tenant GSA building for $14.2M or almost $300/SF. Over one-half of the total, however, was the re-sale of the State Farm Operations Center in
Baymeadows that Lone Star sold to an
Arizona-based partnership for $46M or about $153/SF. Two other sizable NNN transactions were the sale (via auction) of the 108,000 SF Home Depot box at
Orange Park with about three years remaining on the lease and traded in May at $9.65M, or a 12.3% cap; the other was the $14.5M sale of 4055 Deerpark Blvd. in
Elkton, a 247,000 SF Class B warehouse net-leased to Tree of Life (organic foods) with 7 years remaining on the lease term and trading at an 8.9% cap.
Drug stores, banks, and auto parts stores are all trading at historical low cap rates, making now a great time to be a seller.
Seven office-warehouses or distribution centers sold in the first half of 2014, mostly in the $2M to $4M range, and most were bought by owner occupants.
Several large transactions have occurred in 1H-2014 in downtown Jacksonville. Flagler purchased the largest hotel in North Florida for $53±M,which equates to $54,865/key. The Wells Fargo Center, a class A, 37 story office tower on Jacksonville’s Northbank traded in Q2 for $79M± or $116/SF.
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RESEARCH & FORECAST REPORT | 1H 2014 | INVESTMENT | NORTHEAST FLORIDA
While medical office remains white hot nationally, just a single MOB sold in recent months in the Jacksonville market: Colliers brokered the sale of the 2-story Bahri Dental building for
$3.15M or $59/SF from Principal Financial that had foreclosed on the asset; it was 83% leased at the time of sale; the buyer was one of the tenants.
Three larger land transactions occurred, totaling about $7.4M and ranging from a $1.9M site in the Beaches submarket at about $35k/unit for a mixed-use residential development to the
$3.5M purchase of a commercial site in the Orange Park/Southwest area at about $7/SF.
Only two properties of any significance sold: the former Southern Bank Building in Ponte Vedra, at about $265/SF; and a retail building formerly occupied by Staples that U-Haul bought from
Wells Fargo at $61/SF. Colliers brokered the sale of the Staples/U-Haul deal, representing
Wells Fargo in the transaction.
We expect the remainder of 2014 to be much the same, with multi-family transactions continuing to steam along, followed by more large office buildings, retail centers and hotels. Look for investors to continue to warm up to Jacksonville for office and retail and flex product, especially well-leased product or value-add opportunities with yields higher than alternative cities. In addition, warehouse users will continue to take advantage of purchase opportunities to control long-term occupancy costs in this favorable interest rate environment.
We advise owners to take a long-term approach – if you might sell in the next 10 years, consider listing now. If you are certain you will hold beyond 2025, re-finance now and take advantage of crazy low interest rates and cap rates. Either way, be a consumer of capital in this frothy buying environment while investors’ compare quality real estate yields with anemic bond and
CD yields. As we finish out 2014, our advice to buyers and lenders is to be on your toes: as quality product wanes, weaker credits will emerge; but investors can still capitalize on a property’s long-term strategic location and an asset with excellent fundamentals; some things, like an “A” location, just don’t change.
United States: 146
Canada: 44
Latin America: 25
Asia Pacific: 186
EMEA: 84
• $2.1 Billion in annual revenue
• 1.46 Billion SF under management
• Over 15,800 professionals
• $75 Billion in Total Transaction Value
FOR MORE INFORMATION:
Scott Rogers, SIOR, CCIM
Vice President of Investment Sales scott.rogers@colliers.com
TEL +1 904 861 1132
Ernie Saltmarsh, IV
Investment Sales Associate ernie.saltmarsh@colliers.com
TEL +1 904 861 1144
Visit our blog at www.jaxcreblog.com
COLLIERS INTERNATIONAL |
NORTHEAST FLORIDA
50 N Laura Street, Suite 1725
Jacksonville, FL 32202
MAIN +1 904 358 1206
FAX +1 904 353 4949 www.colliers.com/jacksonville
Robert Selton, III
Principal & CEO robert.selton@colliers.com
DIR +1 904 861 1111
Scott Rogers, SIOR, CCIM
VP of Investment Sales scott.rogers@colliers.com
DIR +1 904 861 1132
Ernie Saltmarsh, IV
Investment Associate ernie.saltmarsh@colliers.com
DIR +1 904 861 1144
Adrienne Miller
Investment Underwriter adrienne.miller@colliers.com
DIR +1 904 861 1157
About Scott Rogers, SIOR, CCIM: 30 years in the commercial real estate business as an investment sales broker since
1996, and prior to that a consultant, banker, appraiser and trusted advisor to clients across the Southeast. Schooled and trained in Atlanta, and most recently in the Colliers Charleston SC office, Scott recently joined the Investment Sales
Team in the Colliers Jacksonville office working on exclusive listings of office buildings, warehouses and retail centers .
Special Thanks :
>
Douglas Blair | Managing Director of Multifamily Services | douglas.blair@colliers.com | 904 861 1101
> Bradley Coe | Director of Multifamily Services | bradley.coe@colliers.com | 904 861 1158
> Chuck Diebel, CCIM | Principal, COO & Office Specialist | chuck.diebel@colliers.com | 904 861 1112
> Fran Pepis | Principal, CFO & Office Specialist | fran.pepis@colliers.com | 904 861 1110
> Jason Ryals | Principal & Retail Specialist | jason.ryals@colliers.com | 904 861 1136
> Gary Montour, Ed.D. | Senior Vice President & Retail Specialist | gary.montour@colliers.com | 904 861 1116
> Hobart Joost, Jr., SIOR | Principal & Industrial Specialist | hobart.joost@colliers.com | 904 861 1124
> Guy Preston | Vice President & Industrial Specialist | guy.preston@colliers.com | 904 861 1125
Information contained herein has been obtained from the owners or from other sources deemed reliable. We have no reason to doubt its accuracy but regret we cannot guarantee it. All properties subject to change or withdrawal without notice.
NOTE: Information contained in this report has been obtained from sources deemed reliable, but not guaranteed. The information herein is presented without any warranty or representations as to its accuracy. Sources: CoStar Group, Real Capital Analytics & Colliers International
Northeast Florida.
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