Panel: Good, bad in city real estate
There was an agreement that the long-term outlook is good.
Published: Friday, January 22, 2010 at 6:01 a.m.
Last Modified: Friday, January 22, 2010 at 12:25 a.m.
While Gainesville as a whole hasn't been hit as hard by the recession, professionals in commercial and residential real estate commiserated Thursday night about the blows they have taken and some bright spots they see on the horizon.
A panel of 20 Realtors, developers, builders, bankers and other professionals in real estate spoke at the first Gainesville Town Hall Meeting organized by commercial Realtor Beau Beery of AMJ Inc. and hosted by University of Florida Friends and Alumni of Real Estate at Villa East, formerly the Savannah Grande. About 250 were in attendance.
Among their conclusions:
Business closures mean that more office and retail space is empty, fetches lower prices and takes longer to lease.
Home builders are building lower-priced homes.
Apartment complexes are giving more concessions such as multiple free months and lowering rental rates.
Ever-changing laws on land development stand in the way of economic development.
Panel members did point to some glimmers of hope, however:
Growth in the medical fields has provided some respite in the commercial market.
Activity is starting to pick up from buyers looking at commercial and residential real estate. There are even small signs of life in the high-end home market.
Those with money to spend are getting bargains on all kinds of properties.
The longterm outlook is positive for those who can hang in there. In the meantime, rising unemployment and a tight lending market are still in the way of recovery.
A common theme of the more-than-two-hour presentation was the difficulty government regulations can have on development.
Home builder Adam Bolton of Robinshore Inc. said the only feasible land development projects in home construction are on land purchased years ago under older regulations.
Fred Henderson of the Henderson Land Trust said that even with the proper zoning and utilities in place, he can no longer guarantee to potential land buyers how soon they will be able to get through the ever-mounting rules on issues such as transportation and environment to develop the property.
Developer Andrew Hodor said deadlines on land-use changes often force developers into bad projects to get what return on investment they can.
City of Gainesville Planner Lawrence Calderon said zoning rules are in response to the general public's demand for a certain quality of life and a growing awareness of environmental issues.
He encouraged those in attendance to participate in the city's process to update its land regulations.
Two developers said they have difficulties leasing second-story space, while Calderon pointed out that newer city rules require second-story space in many projects zoned for mixed use as part of a "new urbanism" concept.
Realtor Mike Ryals said while government wants mixed use - that includes residential, office and retail - banks are loath to finance such deals because they are unproven.
Rob Johnson of Florida Capital Bank said mixed use is very challenging to finance even in good times.
He added that despite impressions to the contrary, banks are eager to lend money, but are very cautious and want to lend to proven money makers rather than take a chance on deals that could put them out of business.
Apartment managers said three months of free rent was common in 2009 and that someone even offered six free months.
By-the-bedroom properties in particular are way overbuilt, said Phil Wagner of Trimark Properties. One saving grace is that the transient student population brings a new batch of renters who don't know the market.
Eric Blevins of the Collier Companies said they are starting this year with lower rent rates and working harder on renewals.
Andy Hogshead, also of Collier, said the long-term outlook for rentals is good locally since the large wave of students will remain renters for the first 10 years of their working lives, instead of buying a home as they would have in the past.
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