Downtown commercial real estate market heating up

Three major office towers and two four-star, large-scale hotels are now for sale in Downtown Jacksonville, a great indication that investor demand in the River City’s urban core is growing. Similar to demand for residential spaces throughout Downtown, private capital and institutional investors appear to be looking into Downtown Jacksonville as a financial opportunity, setting it apart from comparable cities.

20120907-DSC_3766_67_68_69_70_webCurrently owned by Eola Capital, the Wells Fargo Tower, 37 stories tall with more than 890,000 square feet, has already created “terrific interest from both private and capital sources,” said by Mike Harrell, senior vice president of CBRE Group Inc., in a recent Jacksonville Business Journal article. El-Ad Group’s EverBank Center, 32 stories tall with more than 900,000 square feet, is also on the market. And, announced just last week, the Bank of America Tower at 42 stories and more than 730,000 square feet is also looking to sell.

Within the last seven months alone, the Downtown market saw three major office buildings change hands:

  • The Aetna Building, 22 stories with 610,000 square feet and a nearly 100 percent occupancy rate, was sold to IP Capital Partners LLC for $55.5 million.
  • The Life of the South, 73,000 square feet, was sold to Eugine Profit, a former NFL player for $3 million.
  • The Grover Stewart Building, a historic Downtown building with 54,000 square feet built in 1925, was sold to Michael Upchurch, CEO of Downtown-based Delta Settlements, for $1.7 million.

So, how does Jacksonville’s Downtown commercial market compare to other cities with similar size?

  • In Orlando, the only major commercial tower sold within the last two years was the Bank of America Tower, with more than 840,000 square feet, selling for $75 million, according to the Orange County Property Appraisal Office.
  • In Charlotte, The Hearst Tower at 322,000 square feet and the One Wells Fargo Tower at 686,000 square feet, were each sold for $25 million, reported by the Mecklenburg County Property Appraisal Office.
Hyatt Regency Jacksonville Riverfront hotel

But office towers are not the only buildings generating real estate buzz in Downtown Jacksonville. According to the Jacksonville Business Journal, two of Downtown’s largest hotels, the Wyndham and Hyatt, are also looking for buyers.

Looking at the real estate market in residential, commercial and hotelier properties, it’s possible our city is seeing a trend in demand for the Downtown Jacksonville area. From the proposal of a new Jacksonville Landing to the Brooklyn residential projects now under construction, we’ve seen the real estate market show greater signs of life since the recession. Part of this could be that the market is changing due to the recent economic recovery, people have money to invest and they believe Downtown is coming back. This can only mean good things to come for Downtown development and, in effect, Downtown revitalization.