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Once sleepy suburb set for commercial explosion

By Priscilla Goudreau-Santos

Florida Real Estate Journal

Jacksonville's Northside market - or North Jacksonville, as economic leaders prefer it to be called - has been undergoing a residential renaissance over the last few years that has spurred retail development in the once sleepy suburb best known for its paper mills.

Desired by many as a place to call home, the area is now poised for a huge commercial take off as shipping carriers Mitsui O.S.K. Lines Ltd.

and Hanjin Shipping Co. Ltd. pull into port soon and the new Mitsui TracPac Container Terminal opens next year.

The swift-moving undercurrent of port activity spells an explosion of jobs in the area, both direct and indirect, and in housing and retail demand. Mitsui alone will bring an estimated 2,000 direct jobs and 3,000 indirect jobs. There's also feverish interest by supply chain logistics companies to expand in Jacksonville, as well as increasing demand for industrial land at the port, Cecil Commerce Center and other area industrial parks.

All told, officials estimate that the port will be moving more than 2.56 million 20-foot container units by 2011 - about triple the city's current cargo traffic and placing Jacksonville among the top 10 ports in the county. The Hanjin and Mitsui deals are expected to have an initial

$1.9 billion impact on Jacksonville and may be the harbingers for other large shipping lines anchoring at JAXPORT. This prospect looks very likely as the East Coast benefits from a rebalancing of major getaways away from clogged California megaports.

"The port activity is the biggest driver for our industrial market right now and is driving sales of industrial land," said John "J.R."

Richardson, SIOR, president of Grubb & Ellis/Phoenix Realty Group. "Land that would have sold for $40,000 an acre five years ago is now selling for $170,000 an acre, and the asking price for some areas is as much as $250,000 an acre."

The difference in price, he says, is development rights and if they're not in place, the price goes down to anywhere from $60,000 to $150,000 per usable acre. Grubb & Ellis has brokered several of these deals in the last six months. Richardson and Bryan Bartlett, SIOR, vice president of industrial, recently helped broker a deal for 66 acres for Alta Lakes Commerce Center, a five- to six-building, 870,000sf industrial park developed by Cabot Properties that's set to come online by the end of 2008. The new industrial park is within two miles of the new TracPac/Mitsui Port Terminal and the existing Blount Island Port Terminal.

"It will be distribution space, and the first of several buildings will be available by the end of '08," he said. "What's driving the prices is the difficulty in getting the zoning and development rights or concurrency. After the Mitsui announcement two years ago, it took developers awhile to figure out our market, and now they're working through the process. In the more immediate future, there are several developers starting new projects in Westlake Industrial Park. And road construction will happen in order to accommodate all the new port activity."

JTA does plan to widen a 2.2-mile stretch of Heckscher Drive between Drummond Point and August Drive from two to four lanes early next year as part of the Better Jacksonville Plan. Because the road project passes through property that may be the site for the new Hanjin terminal, JAXPORT is actively working with JTA (and will pay as much as $20

million) to add to the project's scope. The port proposes a 1,900-foot-long overpass so that containers can pass underneath to and from ships without crossing a four-lane road.

The JTA road-widening project, set for completion in fourth quarter '09, includes a new bridge crossing the Broward River and one crossing Dunn Creek, as well as converting from two to four lanes between them.

JTA is also studying the area east of I-95 and SR 9A and southward that will be completed by the end of the first quarter of '08, according to John Davis, JTA chief engineer. And, he says, DOT is about to begin a project and environment study along SR 9A from Dames Point to I-95. "I anticipate it will take them a year to 18 months to complete, and we should finish our study soon. We're primarily anticipating the container port traffic that will start slow and continue to increase. By the time the Mitsui port levels out in about three years and is at full capacity, then that's the time that the Hanjin traffic will begin, and we're trying to determine how best to prepare for it," Davis said.

JAXPORT is also doing some studies, he says, and is now working on details with the JTA. "Initially, we're about to begin construction of the widening of Heckscher and the overpass may be part of it, and DOT and JAXPORT are working together to modify SR 9A and Heckscher Drive to accommodate more traffic. Plans include adding southbound exit ramps to make the crossing of Heckscher easier and less congested to accommodate more truck traffic, and adding northbound left turn lanes from Heckscher to SR 9A and additional entrance ramps to accommodate the increased truck traffic."

Also in the news for North Jacksonville is a 1,400-acre, mixed-use development under way by Sarasota-based Benderson Development Company at Pecan Park Road and I-95. "It's one of the largest transactions to take place on the Northside in the last couple of years and, probably, in the whole city. The project will include retail, office, residential and probably hotels and restaurants. Usually there's a cluster of commercial highway and tourist uses and banks, too, to service the community, and big boxes like to locate near interchanges," said Gary Montour, senior vice president and retail and office specialist with Colliers Dickinson.

Montour continued, "River City Marketplace has probably been the most active in retail growth, but I think the explosion at the port will drive jobs and a population surge that will bring increased demand. At River City, most of the parcels are sold and the spaces are leased up, and we're selling another nine acres at International Parkway and Airport Road on the southeast quadrant. We're selling that as small parcels for uses such as restaurants, office and retail, and there's a little town called Yulee that's starting to take shape."

He predicts that all the land east of I-95 and over to Yellow Bluff Road will see an explosion and continue to fill up, and at that point, there will be more need for housing.

Stanton Hudmon, CCIM, partner with Pine Street/RPS LLC, agrees and is developing Yellow Bluff Square, a 24,480sf retail center with an outparcel at the intersection of Yellow Bluff and New Berlin roads.

Similar to the design of a traditional neighborhood development, the center is designed with the buildings along the road and parking in the back.

"The city came up with the Northside Vision Plan to determine the best use of land for commercial uses and we designed the center with certain aesthetic features so as to comply with the new plan that the city hopes will ultimately prevent urban sprawl," said Hudmon.

He says that in addition to Mitsui, what's spurring Northside's appeal is the beauty of the area. "Some of the prettiest land in Northeast Florida is here. Northside had a negative stigma 20 years ago that it's finally shedding. A new person coming to town would only see the area's beauty. Residential hasn't really slowed here, and Mitsui will employ about 2,000 people who will want to live in the area."

Pine Street/RPS plans on doing more development in Northside, and Hudmon believes there's more capacity for retail. "Our center at Yellow Bluff is getting more attention than others - the activity is good. It's completed, and we're now leasing. I think the area is going to continue to grow, and there's more retail development coming and another grocery will be out there before long. "Walgreen's is going up right across the street from us, and all the nationals want to be at River City Marketplace (and most of the ones that didn't get in, wish they were).

They're getting in the high $20s (psf) now for rental rates, which is the pretty much the top of the market."

Copyright @2010 [InsightRealty Group, Inc.]. All rights reserved.
Revised: February 10, 2010 .

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