Market Report

Northeast Florida

How Apartments Are Leading a Property Rebound in Jacksonville

Digested From "Several Commercial Real Estate Sectors Rebound in Jacksonville"

Jacksonville Business Journal (07/05/13) Kritzer, Ashley Gurbal

Northeast Florida's commercial real estate market continues to show definite signs of an upswing. Multifamily housing continues to be the darling of Jacksonville's commercial real estate market. More than a dozen new apartment communities are now under construction locally. While the region's overall office vacancy rate is close to 23 percent, states CBRE Group Inc., the in-demand office parks around the mixed-use St. Johns Town Center have vacancy rates less than 10 percent. Meanwhile, supply is tightening up in the region's retail sector mainly because there has been very limited construction of new space.

North Central Florida

The Preiss Company, one of the nation’s largest and fastest growing student housing owners, developers and managers, announced that it has acquired the 240-unit/770-bed Canopy Apartments, a student housing complex located less than one mile from The University of Florida in Gainesville. The property was purchased for $36.25 million from a private investment group. Comprised of five, three-story buildings, the property is located at 4400 SW 20th Avenue, less than five minutes from campus. It is Preiss’ sixth acquisition in the past 12 months and brings to 32 the number of student housing properties owned by the company.

"This acquisition marks another important step in our national expansion program," said John Preiss, chief investment officer, The Preiss Company. "This is our first Florida property and extends our portfolio from the Sunshine State along the Eastern Corridor to Pennsylvania and complements our growing portfolio in the Midwest and Southwest. The Canopy is our sixth acquisition/development/financing transaction in the past 12 months, totaling more than $350 million in activity. We have an aggressive appetite for additional acquisition and development, as well as to expand our third-party management."

Preiss noted that the company acquired the four-year-old property below replacement cost. "With interest at historic low rates and attractive real estate pricing in multiple markets, we have an extensive pipeline and currently are well along in negotiations on a number of properties," Preiss said. "We see continued consolidation in the industry by larger companies like Preiss who have access to capital, sophisticated operating systems, and the ability to achieve immediate economies of scale. The current state of the industry matches up well with our growth strategy of acquisitions, development and third-party management."

The student housing complex was brokered by HFF, a division of HFF, Inc., led by managing directors Brian Kelly and Troy Manson and senior managing director Manny de Zárraga. In addition, HFFS, the company’s capital markets services division, led by managing directors Timothy Joyce and Stephen Skok, arranged a $26.4 million, 12-year, 4.5 percent fixed-rate mortgage loan with M&T Realty Capital Corporation (FNMA).

Canopy Apartments is located on 16-plus landscaped acres. The apartments consist of two-, three- and four-bedroom floor plans, offering approximately 1,100 to 1,600 square feet of space. Each fully furnished apartment features granite countertops, premium stainless steel appliances, nine-foot ceilings, full-size washers and dryers, 42-inch plasma televisions and private bathrooms for each bedroom. A partial list of amenities include a zero-entry, lagoon-style swimming pool, study rooms and cyber center, grilling area, gym-quality fitness center, clubhouse with gaming area, indoor basketball court, two volleyball courts, virtual golf course, tanning beds and complementary cable and Internet service.

"The property, built in 2009, enjoys an excellent reputation in the University of Florida campus community and currently has a 95 percent occupancy rate," Preiss said. "We are implementing our proprietary management systems to further enhance operations, student-tenant satisfaction and occupancy. We already are 85 percent leased for the fall semester and anticipate leasing out shortly."

Central Florida

Avalon Park will host a Ground Breaking on Thursday, Aug. 1, to showcase a new four-story building with 95 new rental apartments at The Flats at Avalon Park, located in the heart of Downtown Avalon Park, Orlando.

Stephanie Hodson, vice president of marketing for Avalon Park Group, said refreshments will be served at the event from 11:30 a.m. to 1:30 p.m., and the public is invited to attend.

Hodson said the new building, with 100,000 square feet of space, will complete the third phase of The Flats at Avalon Park, which will total 232 apartment homes.

Avalon Park Group partnered with sitEX Properties AG, a Swiss real estate investment company headquartered in Basel, to develop the third phase of the Flats at Avalon Park.

Bay Area

Marcus & Millichap Real Estate Investment Services has announced the sale of the Mayo Drive Apartments, a 32-unit apartment portfolio located in Crystal River, according to Richard D. Matricaria, regional manager of the firm’s Tampa office. The asset sold for $610,000.

Michael Donaldson, senior associate in Marcus & Millichap’s Tampa office, represented the seller, a financial institution. New Miami International Realty represented the buyer, a limited liability company based in Florida.

The Mayo Drive Apartments are located at 8570, 8590 and 8710 West Mayo Drive in Crystal River, and were offered as a portfolio of 32 apartment units in three different buildings on three different parcels of land. All three buildings are less than a tenth of a mile from each other and all are located off U.S. Highway 19.

The 32 apartment units consist of 13 studios, nine one-bedroom/one-bathroom units and 10 two-bedroom/one-bathroom units, all situated on a total of 2.71 acres of land. Two of the buildings were constructed in 1985 and consist of frame construction with vinyl siding, and the third building was built in 1988 of frame with aluminum siding.

"Being a foreclosed property, Mayo Drive was one of the few remaining fully vacant communities that offered tremendous upside by way of lease up," said Donaldson in a statement. "Our marketing campaign generated substantial interest and we ultimately closed with a cash buyer at an exceptional price for an REO in the Crystal River submarket."

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Marcus & Millichap Real Estate Investment Services has announced the sale of Monaco Villas, a 106-unit vintage apartment community located in Tampa, according to Richard D. Matricaria, regional manager of the firm’s Tampa office. The $1,750,000 sales price equates to $16,509 per unit.

Casey Babb, a CCIM and senior multifamily specialist, and Luis Baez, associate in Marcus & Millichap’s Tampa office, had the exclusive listing to market the property on behalf of the seller, an Ohio-based partnership. The buyer, a private investor based in Canada, represented itself internally.

Monaco Villas was built in the 1970s and is located at 14323 Lucerne Drive in the university submarket of north Tampa. This gated community has a mix of one- and two-bedroom townhomes and flats, situated on a 5.53-acre rectangular site. Area amenities include an on-site leasing office, a swimming pool, laundry center and tennis court. Also included in the offering is a 1.0 acre parcel at 1501 Skipper Road, which currently services a landscaping business.

"Monaco Villas suffered from low occupancy and was only 18 percent at the time of sale," said Babb in a statement. "However, the investor market viewed this as an opportunity, as evidenced by the 16 written offers we received.

"The buyer pledged a six-figure, non-refundable deposit and closed within 30 days of signing the contract. Distressed multifamily opportunities are few and far between but remain one of the most attractive for most investors," concluded Babb.

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Marcus & Millichap Real Estate Investment Services, the nation’s largest real estate investment services firm, has announced the sale of Green Oaks, a 100-unit multifamily property located in Tampa, according to Richard D. Matricaria, regional manager of the firm’s Tampa office. The $4,170,000 sales price equates to $41,700 per unit.

Francesco "Frank" Carriera and Michael Regan, vice president investments in Marcus & Millichap’s Tampa office, represented both the seller and the buyer, private investors based in Florida.

Green Oaks was built in 1983 and is located at 3801 West Tyson Avenue. The property consists of eight two-story buildings on six separate parcels, totaling approximately 2.83 acres. The buildings are comprised of one- and two-bedroom units. Amenities include two on-site laundry facilities and ample parking. Roofs were replaced in 2012 and 70 percent of the units were remodeled in 2012.

Southeast Florida

The Boca Raton office of Atlanta-headquartered ARA recently brokered the sale of Quiet Waters at Coquina Lakes (200 units) in Deerfield Beach and The Fairways of Carolina (208 units) in Margate. Quiet Waters at Coquina Lakes, built in 1995, was 95 percent occupied at the time of sale. The Fairways of Carolina, built in 1993, was 96 percent occupied at the time of sale.

The Boca Raton-based transaction team of Principals Avery Klann, Hampton Beebe and Richard Donnellan represented a pension fund advisor in the sale. San Diego, Calif.-based Fairfield Residential, among the most experienced multifamily real estate operating companies in the United States, was selected as the buyer.

The properties have been institutionally owned by the same owner for the past 12 years, and select units have been renovated over the last two years in order to achieve rental premiums.

"The acquisition represents a tremendous opportunity to gain significant market share within the strong performing northwestern area of Broward County (Fort Lauderdale MSA). Both garden-style apartment communities are well-positioned, offering excellent value-add opportunities, top-quality concrete block construction and stabilized long term historical occupancy," said Avery Klann, lead advisor on the transaction.

Quiet Waters at Coquina Lakes features 20 percent townhome units and is located only one mile from Quiet Waters Park, a 427-acre park which includes five lakes, miniature golf, camp sites, swimming, bike trails, fishing, water skiing and picnic areas. Amenities include a renovated clubhouse (2005), gated entry with coded directory, business center, pool with heated spa, playground, fitness center, indoor air-conditioned racquetball court, lighted tennis court, detached garages and carports, car care area and valet trash.

The Fairways of Carolina is beautifully landscaped and adjacent to the Carolina Golf Club, which provides golf course and lake views. The current owner replaced the roof in 2006 and has completed upgrades on 36 units (17 percent) over the last two years, including new granite-look laminate countertops, new cabinet door fronts, stainless steel appliances, new carpeting, six-paneled interior doors throughout, new kitchen/bath/entry lighting and plumbing fixtures, new ceiling fans, faux wood blinds throughout, white vinyl verticals and decorative track lighting in dining rooms.