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Apartment Boom: Why multifamily investors are flocking to Jacksonville (Courtesy of the Jacksonville Business Journal) — Every couple of weeks, Mark McGregor and Jonathan Tauber board a plane in Los Angeles and fly to Orlando, then get in a rental car and drive two hours to Jacksonville. 

The goal: find First Coast multifamily properties to buy. 

The pair are the co-founders of Westmount Square Capital, and they say they believe in Jacksonville as a long-term growth market with enormous opportunity in the multifamily sector. 

“Pound for pound, you just can’t find a better (city) in terms of economic opportunity, demographic changes, in-migration and most importantly, affordability, than Jacksonville,” McGregor said. “We love all of those dynamics, and we’re ultimately in it for the long run.”

Since August, Westmount and partner Miramar Capital have invested more than $50 million in the Jacksonville metro, buying two apartment properties that give them more than 400 apartment units in the area. They say their goal is to own 2,000 units within the next two years.

“Ultimately, long term, we’d like to be one of the larger holders of apartments in Jacksonville,” Tauber said.

They’ll have a lot of competition in reaching that goal. There’s an influx of investors from outside of Florida looking for multifamily property as an investment, with McGregor and Tauber indicative of a broader trend of investors from other parts of the U.S. coming to invest their dollars in Jacksonville apartments properties.

Over the past few years, Jacksonville has quietly become one of the top performing apartment markets in the country. The area’s apartment rents are increasing and so is the number of renters. More renters are renewing their leases, and investors are seeing return on their investments more quickly. In these metrics, Jacksonville is outperforming many other markets.

Also attractive to investors: the Jacksonville metro area’s population growth, job growth, and relative affordability when compared to other cities.

Taken as a whole, the numbers are turning heads, leading to an influx of money that could play a big part in Jacksonville’s growth into a next tier city in years to come.


Boiled down to its simplest terms, the reason for the influx is basic supply and demand: People are moving to the Jacksonville area and need places to live, but the metro has a limited supply of homes for sale, which has driven home prices up and subsequently driven people to rent.

And with that growing pool of renters has come huge increases in how much apartments can charge — which makes for a higher return on investments in such properties.

Jacksonville rental rates grew 23% from the start of 2020, according to CBRE, although the area’s average of $1,353 per month is still below the national average of around $1,577 per month. A recent report from CBRE shows that Jacksonville is the No. 3 market in the U.S. when it comes to rental rate growth, second only to Phoenix and Tampa.

It’s Jacksonville’s similarities to top market Phoenix that helped convince McGregor and Tauber to give the First Coast a look after their experience managing a California multifamily portfolio and working in acquisitions for a Los Angeles real estate development group.

“If you’re on the West Coast, you’re very familiar with Phoenix,” Tauber said.

Starting in the mid 2010s, the multifamily sector in Phoenix exploded as an influx of new residents led to increasing rental rates, which in turn spurred investors to buy existing properties and developers to build new ones.

Yardi Matrix data shows that multifamily sales totaled more than $8 billion in Phoenix from January to September of this year alone, and the market has more than 30,000 new apartment units under construction.

Tauber said he did an analysis that showed Jacksonville stacks up favorably to Phoenix when it comes to net in-migration, employment diversification, and overall demographic trends.

“Is Jacksonville in 2021 like Phoenix in 2018? Potentially,” Tauber said.

While it’s hard to nail down exact numbers, some sources have estimated that around 50 people move to the Jacksonville area every day.


With that influx of people has come an influx of investors.

Data from real estate brokerage Walker & Dunlop shows total sales of $2.2 billion in the Jacksonville multifamily market in 2021 so far. There have been a total of 77 transactions in the market.

That’s a more than 25% increase over 52 transactions for $1.7 billion in Jacksonville in 2020.

In all, more than 15,000 Jacksonville area apartment units have changed hands this year.

“I’ve never seen anything like it in the 20 years that I’ve been here in Jax and in multifamily,” said Brian Moulder, who with Dhaval Patel is the Walker & Dunlop team in the area, involved in many of the largest investment transactions this year.

The largest transaction by per unit price in Jacksonville this year was the sale of Terrabella, a development built in 2020 near the Intracoastal Waterway that sold for $82.5 million in August. That deal set the current record at more than $326,000 per unit.

That was just a few weeks after Drift at Town Center East sold for $301,000 per unit.

Again, supply and demand is at play: The huge demand for a relatively small number of existing Jacksonville multifamily properties is making deals competitive, driving the prices up.

Information from NAI Hallmark showed that during Q3 of this year, the overall price of investment sales averaged $147,000 per unit.

John Rutherford of NAI Hallmark was the broker for Westmount Square Capital’s acquisitions as well as several others throughout the metro area.

“Most investment groups are realizing that due to the strong rent growth and occupancy, their expected year 5, 6, or 7 returns are being achieved in year 2 or 3,” Rutherford said. “That pushes more groups to sell earlier and coincides with groups that may have been on a 5-to-7-year hold cycle for increased volume in the sale cycle.”


Underpinning all of the activity are strong fundamentals in the multifamily sector.

With the influx of renters, the amount they’re paying each month for a apartment is being driven up — but renewal rates have also increased, meaning that the higher rates aren’t driving people away.

The income level of renters has also jumped in concert with overall economic growth.

“Jacksonville found itself ranked No. 1 in the nation, per RealPage, for percentage income growth earlier this year at 9.1 percent year over year,” Rutherford said. “While that is incredible to hear, rental rates have grown upwards of 20% over the last year. What we’ve found, though, is that income growth in Jacksonville far outpaced rent growth for the better part of the last decade, allowing for better affordability in the rental market than most similar sized markets in the Southeast.”

Rutherford said this means the Jacksonville market still offers rents at or below the recommended 30% rent-to-income ratio for many renters.

“For the upcoming year, while we don’t expect to see continued 20% annual rent growth, we still expect rents in Jacksonville to increase as the demand for rentals remains very strong,” Rutherford said.

Data from Yardi Matrix shows that Jacksonville is one of the U.S. metros with the strongest economic growth in 2021. The metro added 54,077 to its labor force in 12 months, up 6.9%.

Moulder said the other factor to consider is that renewal rates for apartment renters are getting stronger, too.

“Before the pandemic, renewal rates for apartments used to be around 50% for renters after their first year. Now it’s more like 65% or 70%,” Moulder said. “Sometimes people pay more rent to stay where they are.”


If renters do want to move, the options available to them will be increasing, as the investments in existing properties and the growing rental market spurs more development.

NAI Hallmark estimates put the number of apartment units under construction in the Jacksonville area at around 4,000 to be delivered in 2022, and 6,000 to be delivered in 2023 and into 2024.

Compare this to the 3,500 to 3,700 or so that were in the pipeline going into 2020 and 2021, and you can see that Jacksonville is just scratching the surface of meeting its apartment demand.

One of the biggest projects in the pipeline is Bainbridge Avenues Walk, which will bring 372 units to the Mandarin submarket. Another big development is San Pablo Apartments in the Beaches submarket, with 304 units.

A number of projects are also underway in the urban core, with close to a thousand units in the pipeline. Birmingham, Alabama-based Harbert Realty Services and Corner Lot Development are underway on The Hendricks at San Marco, which will include 133 units. Just blocks away, the 1230 Hendricks Avenue apartment development is bringing 345 units to the former site of the Florida Baptist Convention building.

Although it may seem like the First Coast couldn’t possibly need all these apartments being built, the reality is that there still aren’t enough apartments being built to meet demand. A conservative estimate is that Jacksonville is building at about 3% of its overall apartment inventory of around 100,000 units.

Jacksonville is a top market when it comes to existing apartment performance, it isn’t a top market for apartment construction. This could begin to change in coming years as the area’s performance draws more developers.

“I anticipate that we’ll see further multifamily development outside of the I-295 corridor as Jacksonville continues to grow,” said Rutherford. “Areas such as Fleming Island, St. Johns County, and Nassau County will be the beneficiary of continual growth.”

It seems certain that apartments will continue to play a big role in the growth of Northeast Florida.

Yet another outcome of Jacksonville’s multifamily activity may well be harder to measure: it could bring to the area more people who believe in the future of the First Coast.

“We have the St. Johns River, and we’re an NFL city… we have so much going for us. People are starting to see that,” Moulder said.

McGregor and Tauber say they are huge fans of Jacksonville and they expect the frequency of their trips to the area should increase as they continue to get to know–and love–the city.

“We are absolutely long-term believers in Jacksonville,” Tauber said. “We’re in Jacksonville to stay.”