The Ford on Bay

[jaxlongtimer]

^ The #1 issue here, does the City have this near the top of their CAPEX priorities?  Or, if they do, the money to pay for this project?  If not, don't count on this vision playing out for now.  Better to just make it all green space and deal with it when circumstances change.  We should be pushing developers back from the river anyway and save the river for public projects such as green space or a public building like a convention center, in due course.

I will add that there are so many parcels downtown already in play, how many more can be developed at this time.  I don't see the market able to absorb at the pace everyone is pushing for.

[Jax_Developer]

There will continue to be zero serious interest in these properties until the Jail has a plan. You can blame leadership, economics, etc… none of that matters. At the end of the day, development is all about making money.

You can cite other markets & examples but they mean absolutely nothing in the context of our DT. At the end of the day, we don’t have the corporate climate nor the density of high paying jobs to make downtown development feasible for these luxury properties.

(Some people will bring up Gateway & quite literally don’t understand how different that project is across a multitude of factors.)

“Hey boss, got a great deal in Jacksonville. It’s waterfront & has a great location. Only downsides are that we have to be market leaders on rents & it’s directly next to a jail with no plan of moving.”

It’s just not even a conversation right now - no different leadership would change that in the short-term. We can all pray for better financial markets & for the Gateway team to take on a big challenge. Otherwise, there is genuinely no conversation here for the next several years.

[vicupstate]

(Some people will bring up Gateway & quite literally don’t understand how different that project is across a multitude of factors.)

Care to elaborate?

[Jax_Developer]

(Some people will bring up Gateway & quite literally don’t understand how different that project is across a multitude of factors.)

Care to elaborate?

Gateway purchased a parking garage which they are using as a shared parking area for the multitude of buildings planned near the pearl street district. The buildings that Gateway has planned only provide minimal retail parking. This single item reduces their per unit cost by $25k+ per completed unit.

Moreover, as the Jaxson highlights quite often, Gateway is a cluster of developments. The assemblage took years! When a developer does that, they almost always *can* receive an equity bump for simply holding the land. Not to mention completing assemblages.

Meaning... Gateway specifically is a product of a very large & convenient parking garage (that meets all code requirements for shared parking agreements) & they secretly worked over the past 4+ years to buy up assemblages that are simply worth more now than when they purchased it.

The Ford on Bay will not receive either of those benefits. The developer there will need to provide 250+ parking spaces likely, and they will end up paying market pricing on the land - unless we subsidize it. Which affects the last point, that Gateway got a great incentive package because they didn't need benefits for the land or the parking as badly as a one-off development would. They are *likely* receiving more incentives, proportionally, for the vertical piece than any other development which has to deal with significant costs & hurdles with horizontal costs (including acquisition).

[vicupstate]

(Some people will bring up Gateway & quite literally don’t understand how different that project is across a multitude of factors.)

Care to elaborate?

Gateway purchased a parking garage which they are using as a shared parking area for the multitude of buildings planned near the pearl street district. The buildings that Gateway has planned only provide minimal retail parking. This single item reduces their per unit cost by $25k+ per completed unit.

Moreover, as the Jaxson highlights quite often, Gateway is a cluster of developments. The assemblage took years! When a developer does that, they almost always *can* receive an equity bump for simply holding the land. Not to mention completing assemblages.

Meaning... Gateway specifically is a product of a very large & convenient parking garage (that meets all code requirements for shared parking agreements) & they secretly worked over the past 4+ years to buy up assemblages that are simply worth more now than when they purchased it.

The Ford on Bay will not receive either of those benefits. The developer there will need to provide 250+ parking spaces likely, and they will end up paying market pricing on the land - unless we subsidize it. Which affects the last point, that Gateway got a great incentive package because they didn't need benefits for the land or the parking as badly as a one-off development would. They are *likely* receiving more incentives, proportionally, for the vertical piece than any other development which has to deal with significant costs & hurdles with horizontal costs (including acquisition).

I could easily see the city giving the land to a Ford on Bay developer and paying for a garage as well, provided it was of significant size.

[jaxlongtimer]

I could easily see the city giving the land to a Ford on Bay developer and paying for a garage as well, provided it was of significant size.

^ I would hope that would never happen as it would only show how incompetent and desperate DIA is to just get things done for the sake of doing them.  The lack of master planning is inexcusable and creates these "desperate" deals.  Riverfront land downtown should be the crown jewel of the City and should never have to be "given away" to developers.  Sit on it and develop the rest of Downtown and then bring this property online as a public lands centerpiece to NE Florida in due course.  Or, alternatively, make it a premium public space now that creates demand for development inland that is in proximity like most well planned cities might do.

We have to be only City around that so devalues our public waterfront.  Just crazy stupid.

[Jax_Developer]

I could easily see the city giving the land to a Ford on Bay developer and paying for a garage as well, provided it was of significant size.

^ I would hope that would never happen as it would only show how incompetent and desperate DIA is to just get things done for the sake of doing them.  The lack of master planning is inexcusable and creates these "desperate" deals.  Riverfront land downtown should be the crown jewel of the City and should never have to be "given away" to developers.  Sit on it and develop the rest of Downtown and then bring this property online as a public lands centerpiece to NE Florida in due course.  Or, alternatively, make it a premium public space now that creates demand for development inland that is in proximity like most well planned cities might do.

We have to be only City around that so devalues our public waterfront.  Just crazy stupid.

Yup, this summarizes it perfectly. Gateway is an amazing deal for both sides, because they earned it (in my opinion). Giving away prime DT land & allocating incentives to build parking in our central core, are two of the worst urban development ideas I could possibly think of but that's also why it's possible here (/s - kinda).

Quite literally, if that is the case, it proves my point on the Jail even more. We can't even give away the land adjacent to it, we have to pay to give it away. I've always said, there's development in every direction, but why not the center? A very unusual phenomenon in real estate.

[thelakelander]

I'd like the DIA to not RFP this property......and certainly not give it away for something that won't be much more than subsidized stick frame apartment units. That would be super shortsighted, IMO.

Here's my thoughts on Gateway.

Gateway wasn't around during the pandemic. They've taken less time to be created, assemble property, master plan that property and break ground, than the DIA RFP process for Ford on Bay or COJ/DIA going back and forth with Southeast for Laura Street Trio incentives.

IMO, Gateway is literally showing COJ and the local Jax development community how to get a project off the ground in downtown. A significant part of this is actually doing a little upfront planning, understanding the surrounding context, maximizing existing downtown assets and opportunities in the process and putting together the right players in a development team to bring things to fruition. I wish that project the best and hope many in Jax will take lessons and attempt to apply a similar approach.

[simms3]

I wrote all of the DIA board and staff members in a desperate plea not to bring it to market right now.  Would be disastrous and an embarrassment.

Regarding Gateway Jax, they are also building two buildings that are mostly wood frame (5 floors of stick over 2 floors of concrete).  And the one high-rise.  They have found really good ways to cut costs down AND they received $100M in taxpayer incentives in various formats including some hefty completion bonuses that are cash payments, not just tax abatement.

The tax abatement, the lower-cost type of construction, the utilization of a garage purchased for basically $5K/stall instead of newly constructed for 5-8x that, and the cash completion payments probably allow them to make this project work with Jax rents.

I would like a solid architecture 15+++ story project at Ford on Bay (or the convention center that would work really well there).  This will require expensive construction all around.  To pencil on its own we would need to see $3.25+ PSF rents in our market, and currently our peak rents are barely above $2.50 PSF.  Tampa is popping up towers right and left with rents between $3.50 and $4.50 nowadays.  We just aren't there yet and that's ok.  We will get there and I'm excited enough to see Gateway Jax rise and hopefully the Related project rise, and we still need to fill up the 1,000+ units coming online downtown in the next few months (Artea, One Riverside, Corner on Main, and Union Terminal Warehouse).  That's a huge addition of inventory.  Particularly with One Riverside, achieved rents will be observed.

Finally, hopefully Nick Howland and Will Lahnen and other city council members won't chase ICE away with their cheapness.  I had lunch the other day with someone who said we should be flying up to Atlanta asking ICE what it would take to get them to move the whole thing to Jacksonville's downtown.  That's just not how we play though.  We are always looking to be a cheap, shitty city and we'll never really get where we want to be in short order doing things the way we do them now.

Having all those ICE employees working downtown could result in more young, highly paid downtown residents who can afford high-rise rents.  Oh well...

[simms3]

Oh I forgot to say one thing - this should most certainly *NOT* just be given to Gateway Jax just because they've kind of gotten further to date than other groups.  They have proven they certainly know how to make a splash and drive conversation, but I don't see a tower crane yet let alone a building.  We have A LOT of eggs in that one basket.  I hope they are successful but even if they are over time, they are crowding out potential for other outside investors.  It's not necessarily healthy in my opinion that they control most of the downtown opportunities there are and will be to date.

If the city does anything with Ford on Bay, it should be either to honor the ROFR with Hyatt and build a convention center as originally planned, or bring it to RFP again WHEN the timing and the market are right.  Otherwise just sit on it and use it for concerts as is being done now.

[vicupstate]

Any major project on the Ford at Bay site is going to require a garage, and if the city owned it, they would get the revenue stream to at least cover most of the expense of it.  Jax absolutely would give that site away to a major project, and if they aren't going to hold it for a convention center, that wouldn't be a bad choice given where the city is today. 

[thelakelander]

We do know they can't "give away" the City Hall Annex block because Hyatt would surely take free property. So glad that old deal limits us from totally screwing up those two blocks.