Jacksonville, Fl

Multi-Family Market Summary Spring 2015

2

JACKSONVILLEIntroduction

CAPSTONE APARTMENT PARTNERS prides itself on the continual value contributions we are able to offer our industry, and thus we produce periodic Multi-Family Market Summaries to further inform the clients and industry we serve. Capstone believes that this market snapshot will be beneficial to current owners, operators, investors, and other industry professionals who are active in the Jacksonville, FL MSA as well as others who are looking to break into this market.

FLORIDA TEAM

Orlando Office111 N. Orange Ave. Suite 1125

Orlando, FL 32801

Tampa Office208 N. Armenia Ave. Suite B

Tampa, FL 33609

ContentsIntroduction 2

Market Commentary 3

Economic Overview 4

Sales Transactions 5

Development Pipeline 8

Why Choose Capstone? 9

Enon WinklerPartner

407.616.0250enon@capstoneapts.com

Jad RichaInvestment Advisor

727.282.5547jad@capstoneapts.com

Brian HunsickerInvestment Advisor

727.631.5870 bhunsicker@capstoneapts.com

Deucie Bies Investment Advisor

407.470.9030deucie@capstoneapts.com

3

JACKSONVILLEM

ARKET C

OM

MEN

TARY

Quality of Life

As a rapidly growing municipality, Jacksonville has become a recognized leader in residential and commercial growth. What makes Jacksonville such an attractive place to live, is its mild climate, reasonable cost of living and high quality of life. The region features a myriad of parks and preservation lands, miles of beaches and waterways, a major symphony orchestra, and access to professional sports and entertainment facilities downtown. It is home to the 2005 Super Bowl champions, the Jacksonville Jaguars and is known as a sports-loving city. Annually, residents enjoy a variety of special events hosted by the city. Overall, Jacksonville is a great place to live, raise a family, work, and start or expand a business.

Doing Business in Jacksonville

Rated by Expansion Management Magazine as a popular location for corporate expansions and relocations, Jacksonville continues to increase in stature in the national and international marketplace. Its status as an intermodal transportation hub and a leading distribution center, with a transportation network embracing port and air cargo facilities, rail and trucking routes is a major attraction to companies. GE Oil and Gas recently announced plans for opening a 510,000 square-foot facility that will bring 500 new jobs to the area. The region boasts

a strong workforce of 585,900. The unemployment rate has fallen to 5.5% compared to 11% at the height of the great recession. Job growth is expected to continue for the region going into 2015.

Tourism

Jacksonville is perfectly situated along the Atlantic Ocean in northeast Florida. The city's robust culture and paradise beaches have a lot to offer visitors. It is also the perfect leisure destination for visitors looking for an affordable yet luxurious vacation. It is a great destination for anyone doing business as it offers a variety of venues to host conferences and meetings.

Multi-Family Fundamentals

Demand for apartments continues to remain healthy in the Jacksonville area with positive absorption of 610 units over the past six months and 2,132 units over the past year. The vacancy rate continues to improve market-wide to 6.7%. The development pipeline remains in-line with market demand with 1,873 units currently under construction and 694 proposed in the region. The Central and Baymeadows submarkets make up 60% of the units under construction in Jacksonville. Same-store rents are up 3.1% from last year. Capstone anticipates vacancy rates will continue to improve, and that rents will grow 2.5% - 3.5% in the next 12 months.

Apartment Comparison by ClassClass Units Vacancy Rate Avg. Sq. Ft. Avg. Rent Avg. Rent/Sq. Ft.

Lease Up 875 17.9% 1,056 $1,275 $1.21A (1-5 Years in Age) 5,087 5.7% 1,072 $1,190 $1.11B (6-15 Years in Age) 15,597 5.8% 1,061 $976 $0.92C (16-30 Years in Age) 25,188 6.2% 946 $862 $0.91C- (30+ Years in Age) 25,001 8.0% 929 $708 $0.76Stabilized Averages 70,873 6.7% 974 $856 $0.88Totals/Averages 71,748 6.9% 975 $861 $0.88

4

JACKSONVILLEEC

ON

OM

IC O

VER

VIE

WEmployment

The unemployment rate in Jacksonville is 5.5%, which is lower than the state and national rate at 5.8%. The market has experienced positive job growth of 25,000 jobs over the past year.

Jacksonville Major Employers (non-government)Rank Company Industry Employment

1 Naval Air Station Military 25,240

2 Duval County Public School Education 14,480

3 Naval Station Mayport Military 9,000

4 City of Jacksonville Government 8,820

5 Baptist Health Healthcare 8,270

6 Bank of America Financial 8,000

7 Florida Blue Healthcare 6,500

8 Mayo Clinic Healthcare 4,970

9 Citi Financial 4,200

10 JP Morgan Chase Financial 4,200

Wages & Population

There are 586,900 employees in the Jacksonville MSA who earn a mean hourly wage of $20.38 and an average annual income of $42,380. In comparison, the state and national annual income averages are $41,140 and $46,440, respectively.

Historical Population2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Jacksonville (City) 778,078 786,938 798,494 805,325 809,891 813,513 823,291 829,065 836,608 842,583

Jacksonville (MSA) 1,222,731 1,248,524 1,279,132 1,301,097 1,316,528 1,328,144 1,349,095 1,361,316 1,378,040 1,394,624

Florida 17,375,259 17,783,868 18,088,505 18,277,888 18,423,878 18,537,969 18,846,054 19,083,482 19,320,729 19,552,860

Source: U.S. Census Bureau

Recent Employment Announcements

GE Oil and Gas has announced plans to open a 510,000 square-foot manufacturing facility at AllianceFlorida Cecil Commerce Center in Jacksonville. They will add 500 new jobs over the next three years.

Deutsche Bank has opened an international banking office in Jacksonville with plans to add 200 high-paying jobs over the next three years.

Volkswagen Group of America is moving its southeastern U.S. import and distribution facility to the Port of Jacksonville. More than 100 jobs are expected to be created by the expansion.

5

JACKSONVILLESA

LES TRAN

SAC

TION

SSales Transactions: 2014 and 2015

Community YOC City Sale Date Units Sale Price Price Per UnitPark South at Deerwood 1983 Jacksonville 1/23/2015 240 19,560,000 $81,500

Arelia James Island 2009 Jacksonville 12/3/2014 270 $37,900,000 $140,370

Stovall at Rivercity 2009 Jacksonville 10/30/2014 276 $31,000,000 $112,319

Heron Walk 1979 Jacksonville 10/24/2014 384 $15,250,000 $39,714

Remington at Ponte Vedra 1985 Jacksonville 10/24/2014 344 $35,350,000 $102,762

Jacksonville Heights 1969 Jacksonville 10/15/2014 172 $6,350,000 $36,919

Grassy Pond 1970 Jacksonville 10/13/2014 88 $1,627,500 $18,494

Flats at Kernan 2008 Jacksonville 10/1/2014 192 $29,840,000 $155,417

Mirador at River City 2008 Jacksonville 10/1/2014 276 $31,000,000 $112,319

Casa Grande 1965 Jacksonville 9/29/2014 87 $2,156,000 $24,782

Charter Landing 1974 Jacksonville 9/26/2014 332 $12,885,000 $38,810

Arbor Place 1970 Jacksonville 9/25/2014 206 $6,870,000 $33,350

Kings Trail 1968 Jacksonville 9/22/2014 320 $11,900,000 $37,188

Victoria Park 1986 Jacksonville 9/15/2014 520 $26,200,000 $50,385

Summerwind 1983 Jacksonville 8/28/2014 62 $1,609,600 $25,961

Colonial Forest 1970 Jacksonville 8/20/2014 174 $5,500,000 $31,609

Park at Regency 1985 Jacksonville 8/20/2014 159 $8,300,000 $52,201

Waterford at Mandarin 1989 Jacksonville 8/18/2014 432 $36,300,000 $84,028

Park at Blanding (Bellair) 1969 Jacksonville 8/18/2014 117 $7,200,000 $61,538

Four at Deerwood 2013 Jacksonville 8/14/2014 316 $49,900,000 $157,911

Ortega Pines 1974 Jacksonville 8/14/2014 152 $5,120,000 $33,684

Matthews Crossing 1973 Jacksonville 8/11/2014 1,086 $32,700,000 $30,110

Courtney Meadows 2001 Jacksonville 7/16/2014 276 $33,000,000 $119,565

Canopy at Belfort Park 2013 Jacksonville 7/15/2014 192 $21,319,000 $111,036

Heather Ridge 1969 Jacksonville 7/9/2014 120 $3,670,000 $30,583

Ultris Oakleaf Plantation 2013 Jacksonville 6/25/2014 328 $35,000,000 $106,707

SALE

S TR

AN

SAC

TIO

NS

6

JACKSONVILLESales Transactions: 2014 and 2015

Community YOC City Sale Date Units Sale Price Price Per UnitReserve at Wynnfield Lakes 2008 Jacksonville 6/25/2014 204 $27,250,000 $133,578

Arium Town Center 1997 Jacksonville 6/18/2014 320 $40,900,000 $127,813

Spinnaker Reach 1996 Jacksonville 6/16/2014 288 $13,750,000 $47,743

Ghitas 1962 Jacksonville 6/6/2014 92 $1,228,000 $13,348

Riverview 1976 Jacksonville 6/5/2014 304 $8,834,100 $29,060

River City Place 1975 Jacksonville 6/3/2014 120 $4,200,000 $35,000

San Pablo 1974 Jacksonville 6/1/2014 200 $12,000,000 $60,000

River Oaks 1973 Jacksonville 5/29/2014 288 $7,350,000 $25,521

Villages of Bay Meadows 1983 Jacksonville 5/15/2014 144 $12,150,000 $84,375

Baymeadows 1969 Jacksonville 5/14/2014 904 $71,850,000 $79,480

Avesta Mandarin 1973 Jacksonville 5/14/2014 401 $15,800,000 $39,401

University Townhomes 1977 Jacksonville 3/18/2014 200 $3,200,000 $16,000

Auburn Glen 1974 Jacksonville 3/14/2014 250 $11,500,000 $46,000

Arium Atlantic Beach 1986 Jacksonville 1/31/2014 204 $13,025,000 $63,848

Cross Creek 1974 Jacksonville 1/29/2014 292 $8,710,000 $29,829

Whispering Oaks 1964 Jacksonville 1/27/2014 128 $3,500,000 $27,344

Woodcreek 1974 Jacksonville 1/16/2014 260 $13,525,000 $52,019

Highlander 1970 Jacksonville 1/30/2014 104 $2,300,000 $22,115

The Reserves at Beach Boulevard 1973 Jacksonville 1/1/2014 360 $14,300,000 $39,722Spy Glass Loree 220 Riverside

SALES TRA

NSA

CTIO

NS

7

JACKSONVILLE

259

324

262 271

0

50

100

150

200

250

300

350

Class A Class B Class C AVERAGE

Average # of Units Per Transaction

2009

1989

1973

1983

1950

1960

1970

1980

1990

2000

2010

2020

Class A Class B Class C AVERAGE

Average Year of Construction

$32,912,111

$24,832,143

$11,132,593

$17,619,538

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

$30,000,000

$35,000,000

Class A Class B Class C AVERAGE

Average Transaction Sales Price

$127,692

$75,540

$38,740

$62,255

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

Class A Class B Class C AVERAGE

Average Price Per Unit

Class A represents renovated properties and properties built from 2000-2014, Class B includes properties constructed from 1985-1999, and Class C signifies properties constructed in 1984 or earlier.

8

JACKSONVILLED

EVEL

OPM

ENT

PIPE

LIN

E

Communities Proposed (100 Units and Above)Developer Community Units Road/Intersection Submarket

Perimeter Realty Galleria Club 254 8680 Baymeadows Rd. Baymeadow

Killashee Investments Loree 300 AC Skinner Pkwy./Southside Blvd. Baymeadow

Hallmark Partners 220 Riverside 140 (294 U/C) 220 Riverside Dr. Central

Communities Under Construction (100 Units and Above)

Developer Community Units Road/Intersection SubmarketDavis Development Sorrel 290 12001 Abess Blvd. Arlington

Rhodie Group Gran Bay 272 (38 Complete) Gran Bay Pkwy. Baymeadows

Perimeter Realty Spyglass 252 8540 Homeplace Dr. Baymeadows

Tribridge Residential Bluwater Row 170 711 Beach Blvd. Beaches

Hallmark Partners 220 Riverside 294 220 Riverside Dr. Central

Pollack Shores Brooklyn Riverside 310 100 Magnolia St. Central

Inland Diversified Real Estate Deerwood Lake Lofts 130 4360 Deerwood Lake Pkwy. South

Fairfield Residential Views at Harbortown 155 (143 Complete) 14030 Atlantic Blvd. Southeast

Views at Harbortown

9

JACKSONVILLEW

HY CHO

OSE C

APSTO

NE?

Carolinas Georgia Virginia Tennessee Kentucky Alabama Florida West Virginia

The People Sell the Deal

Capstone’s Southeast & Mid-Atlantic Investment Sales Team is among the market leaders within our industry sector and respective region. We place client service above all else, and can guarantee that no one else will work smarter and harder in achieving the highest level of results for our clients. We don’t rely on a logo to sell the deal, but rather utilize the industry expertise and investment acumen, tremendous drive and work ethic, and unbeatable salesmanship of the team members assigned to each project. At the end of the day, it’s the individuals that drive value and sell the deal, and we know the capabilities of our individual team members are second to none.

Market Expertise & Product Niche

Capstone sits atop the private capital sector of multi-family investment sales for multiple reasons. Our deliberate and concentrated focus and expertise in not just the primary markets of the Southeast & Mid-Atlantic, but also the secondary and tertiary markets within our region, identifies us as the ideal candidate for such assignments. Capstone’s investment sales team has completed a multitude of transactions across the primary, secondary, and tertiary markets of the Southeast & Mid-Atlantic, and our track record of success can be attributed to our comprehensive coverage and expertise among these markets, as well as our relationships with the owners and investors who remain active in this environment.

National Exposure via Cutting Edge Technology

Capstone has developed and maintains industry leading national databases, expansive information delivery methodologies, and various proprietary activity tracking systems. These tools are utilized daily by the investment sales team, analysts, and back-office support staff allowing for optimal operational efficiency. This enables Capstone’s investment brokerage team to spend nearly all of its time servicing clients, interacting with industry players and active asset traders, and promoting transactions.

Reputation and Results

Capstone prides itself on its impeccable industry reputation and the core values and behaviors of the firm that drive daily operations. The firm possesses an unblemished reputation and track record industry-wide, and, as such, the firm’s trusted relationships among the apartment investment community continue to facilitate seamless, fluid, and successful sales transactions.

* Information in this report has been provided by the following resources: The Jacksonville Real Data Report January 2015, Direct Company Contact , OBJ Book of Lists 2013, REIS Report, Costar, Business Journals, Harris InfoSource, Lexis Nexis, LoopNet, Bureau of Labor Statistics, county tax records, and various multi-family industry contacts. Source images provided by James Willamor (cover, pg.2 bottom, left) via https://creativecommons.org/licenses/by-sa/2.0/ and Rob Bixby (pg. 2 top) via https://creativecommons.org/licenses/by/2.0/.