June 14, 2006 Wednesday

Firm bullish on city's office market;

Despite dreary forecast, company invests in several First Coast sites

By: Joe Light

According to analysts, Jacksonville has one of the weakest commercial property markets in the nation. But one out-of-town commercial real estate company has bitten off a huge chunk of local office space - $71.5 million worth.

Taurus Southern Investments LLC, a Winter Park-based company owned by Taurus Investment Holdings LLC, announced the multimillion dollar closings of several properties on the Southside and near downtown last Friday. The four office parks include Central Park and Central Park East, near downtown, and Greystone Park and The Meridian at Deerwood in Deerwood Park.

The investment firm is taking a step many analysts would raise an eyebrow at. According to Moody's Investors Service, for the fourth quarter of last year, Jacksonville suffered in both the central business district and suburban office markets. Moody's commercial market report for the fourth quarter of 2005 said that Jacksonville's CBD office market had a 22.3 percent vacancy rate, which towered over the 11.8 percent national average. The suburban rate stood at 17.2 percent, slightly up from the national average of 14.6 percent.

Jacksonville's overall commercial market ranked third from the bottom among metropolitan areas. That was actually an improvement from the third quarter, when Moody's named Jacksonville as the worst commercial market in the country.

That did not deter Taurus from busting into the Jacksonville market.

Taurus's purchases are about 65 percent occupied, said managing partner Jeff McFadden. That compares to an average of 92 percent for the other properties Taurus Southern controls, which are focused in the Orlando market.

To bring the occupancy level up, Taurus officials plan to spend $18 million on clean-up and improvements to the buildings.

As to the dreary forecasts, McFadden said he's not buying it.

"There's not that much new product of the type that we bought," he said. "With construction costs what they are, not much more is going to be built either."

He said that he's begun to meet with potential tenants for the property.

Taurus made its first purchase in Jacksonville last fall with the acquisition of the Greenleaf-Crosby building at the corner of Laura Street and Adams Street downtown.

Although the market as a whole might be hurting, office property in certain locations is still hot, said Duke Addison, president of Addison Commercial Real Estate, which brokered the deal.

The transaction was the largest that the local real estate company has ever handled. Deerwood Park in particular seems to perform well, he said.

Construction of new office space built at the request of companies is strong, but few investors are building space to lease, said Dave Auchter, vice president of The Auchter Co. Auchter is also president of the Northeast Florida chapter of the National Association of Industrial and Office Properties.

He said that while his company worked on several buildings for investors between 2000 and 2004, now the company has no large office buildings in the pipeline that hadn't been ordered by companies.

Auchter also said that the office market has seemed to stretch beyond traditional areas into suburban counties.

"We've been building to suit for companies like Fidelity National Financial, Harden insurance, and Everbank," he said. "But as far as speculative buildings go, there really hasn't been anything."

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