The area around the University of Florida campus is one of the most highly prized locations in Gainesville today.
“We think we have the best location in the market,” said Andrew Young the senior vice president of development for Landmark Properties, developer of The Standard.
“You can’t replicate location,” he said of the spot for Landmark’s 10-story development on West University Avenue across from the UF campus entrance.
Between 2015 and 2017, new housing for 2,500 residents will open — with rents of up to $1,000 per bedroom, said Keith Crutcher of Front Street Commercial Real Estate Group.
The developments include the now open Social 28, an upscale apartment building directly across Southwest 13th Street from Tigert Hall, UF’s administration building.
Extensive retail is also coming, including a CVS Pharmacy in Social 28, a down-sized Publix where McDonald’s now stands and a yet-to-be-named supermarket in the Standard.
CRA Success Story
The landscape was different 20 years ago. The City of Gainesville designated College Park — north of campus — and University Heights — east of campus — as blighted areas in need of redevelopment.
This designation was a prerequisite to creating the College Park/University Heights Community Redevelopment Area — one of four such areas in Gainesville.
CRA districts nationally allow municipalities to spur redevelopment through what is called tax increment financing. This mechanism uses increased property taxes — from properties within the district — paid to the city to fund infrastructure.
In past years, projects in CRA districts that were considered “transformational” could receive property tax rebates of up to 90 percent for a set number of years. Such projects have included Union Street Station downtown and University House at 725 NW 13th St.
“No question, the College Park/University Heights CRA district has worked — slowly but surely,” said Bruce DeLaney, who was the CRA’s advisory board’s first chair and is still active in expanding the area’s infrastructure.
College Park developed following World War II, when UF experienced an infusion of veterans on the GI Bill and buildings were constructed quickly, DeLaney explained.
“Over the years, many of them had become roach-infested firetraps,” he said.
The CRA invested in sidewalks and street lighting, essential components for making the area feel safe and pedestrian friendly, said Lynn Janoski, a CRA project manager. It also provided tax rebates for medium-sized housing developments such as Camden Court and Stratford Court through another program.
When The Standard (then called University Corners) was first proposed more than a decade ago, the city’s CRA Board (which is composed of the city commissioners) approved up to $37 million in tax rebates over 20 years.
After a new developer, Miami-Dade-based Swerdlow Group, bought an option on the project in 2012, it requested that the $37 million continue in place.
The CRA Board said no, agreeing with the CRA staff’s conclusion.
“Given all of the current and planned development in the area, the project was not transformational and could not demonstrate that extensive public assistance was needed to carry it out,” Janoski said.
Landmark Properties, which has been successful in developing projects similar to The Standard in Athens, Georgia, and elsewhere, stepped in.
Landmark was content with a smaller assistance package of $3.1 million in CRA public infrastructure projects, including water and sewer upgrades.
“The CRA grant was important to fix existing infrastructure deficiencies,” said Young. “We’re confident the project will succeed.”
Affluent Student Renters
Landmark’s market research included analyzing UF records of students’ hometowns.
“We looked at the county-by-county median family income,” Young said.
“A large percent of students come from Tampa, Orlando, Jacksonville and southeast Florida,” he said. “While it’s not an absolute measure, given the relative cost of urban living and the concentration of wealth in major metropolitan areas, we think students coming from the major Florida cities implies a level of affluence.”
Parents can afford relatively high rents because other expenses are low for many students, said Front Street’s Crutcher.
“Very smart kids go to UF, and many of them have Bright Futures Scholarships,” he said. “Some families also use Florida Prepaid to help with tuition.”
These factors help family budgets.
“Parents can free up cash to pay a little bit more rent,” Crutcher said.
Will Rents Hold Up?
Crutcher questions whether owners can maintain their projected rents.
“With so many units available, something has to give,” he said. “I doubt if the real rents around campus will be as high as the pro forma rents were.”
John Fleming, managing partner for Trimark Properties, said,”Out-of-town investors may have anticipated replicating the rents that Trimark charges for its stock of nicely appointed University Heights apartments — stock the company has assembled over the past 20 years.”
“They took our rents and extrapolated,” he said.
Those calculations may not add up because some of the developments aren’t comparable to Trimark’s due to limited parking, apartments that feel crowded and other factors, Fleming said.
The emerging abundance of housing near campus will dampen demand away from campus in areas including Southwest 20th Avenue, Southwest 34th Street and Archer Road, Crutcher predicts.
“These areas will be negatively impacted, leading to lower rents,” he said.