Downtown Investment Authority and Related Group say deal close on 24-story luxury high-rise

A proposed 24-story luxury apartment building on the downtown Southbank still is in play for a development deal with the city, even as the volatile real estate market caused the demise of plans for two other skyline-defining residential towers.

The Related Group won approval last October by the Downtown Development Review Board for a wave-like design for the apartment building that would go on the old River City Brewing restaurant site between Friendship Fountain and the Acosta Bridge. The approval of the design set the stage for Downtown Investment Authority staff to negotiate a development deal and bring it to the DIA board.

Six months later, the Downtown Investment Authority and Related Group say those talks are ongoing.

“We’re in active conversations, and I expect a term sheet to be to the board in May,” Investment Authority CEO Lori Boyer said.

A statement from Related Group said it “strongly believes in a bright future for Jacksonville and the local consumer demand for high-end luxury rental housing” in downtown.

“We have been working diligently to find an appropriate financial structure that will meet the city’s investment objectives and will allow us to move forward with our riverfront Icon project,” the statement said. “We believe we are very close to a solution that will work for the city and provide the catalyst necessary to bring our Icon product to Jacksonville.”

Icon is a brand that Related uses for its luxury apartment developments.

The design approved last October for the tower would have 410 apartments, a 511-space parking garage, and 4,600 square feet of restaurant space. The restaurant on the riverfront would have both indoor and outdoor seating.

High-rise developments present a challenge

Two other proposed residential high-rises for city-owned land in downtown haven’t moved forward because of rising construction costs and interest rates. The 44-story American Lions tower was proposed for part of the riverfront land where The Jacksonville Landing once stood and an 18-story apartment building called The Hardwick was slated where the old county courthouse was demolished.

Related Group, based in Miami, said in its statement that like other residential developers across the country, it’s facing headwinds in doing new projects.

“We admittedly have had many market forces to overcome on most all of our proposed projects throughout the country, including prolonged increases in interest rates, construction costs and insurance premiums, while rents have declined in most of our markets including Jacksonville,” the statement said.

The company said those factors have caused sharp reduction this year in new apartments coming online, and that will help correct the market so demand will resume in the future.

Mayor Donna Deegan: Time for other options for restoring Laura Street Trio in downtown

The city owns the land where Related would build its tower, but it’s a more complicated situation than the other city-owned parcels at the former sites of the Landing and old country courthouse. The owner of River City Brewing had a long-term lease to use the land for the restaurant and parking. Related Group bought out that lease so it now holds the right to use the land. The company tore down the restaurant to make way for the apartment development.

The restaurant was an aging building but it was one of the few spots in downtown for waterfront dining.

The Downtown Investment Authority is considering construction of a city-owned building for another restaurant in that same part of the Southbank riverfront where Friendship Foundation is located. The board will vote at its meeting Wednesday on building a restaurant with 1,800 to 2,400 square feet of indoor space and about 4,000 square feet of outdoor space for dining. If it’s built, the authority would lease the space to a business that would operate the restaurant.

Boyer said according to a market study commissioned by the authority for downtown dining, there would be enough business for both that restaurant and another one nearby in the Related tower.

“They looked at the restaurant in the new high-rise — which is more of a full-service, higher-end restaurant — compared to a very small parcel that is part of a park and did not feel they would cannibalize one another, and there was a current market for both of them,” Boyer said.

Urban living: Downtown Jacksonville on cusp of 10,000 residents. Is it enough to be an all-hours place?

The Investment Authority also has been considering a change in incentive policy that could make it easier to justify incentives for high-rise apartments in downtown.

The incentive policy generally requires a dollar-for-dollar return on city incentives by generating new tax revenue from developments. In calculating what the return is, the city will project what the new tax revenue will be over a 20-year period.

The authority has been examining a change that would use a 30-year time period for projecting new revenue from high-rise developments. Those high-rise structures cost more to build per square foot because they use concrete and steel, but they benefit downtown by increasing population density and stronger buildings will last longer.

“What we want is to encourage a more dense product that more efficiently uses the limited amount of land we have downtown,” Boyer said.

The authority is not considering a change in how long it would provide incentives. Currently the city will give tax rebates for up to 20 years for city taxes generated by new development. That 20-year limit would remain.