HVS Market Pulse: Gainesville, FL
There’s more to Gainesville than football, which says a lot when the University of Florida (UF) Gators have won eight SEC titles and three national championships. Gainesville serves as the commercial center for the North Central Florida region.
By Brad Hoban, Senior Project Manager, Tampa
The following is a brief overview of the commercial development throughout Gainesville that have prompted the influx of new supply.
UF Health Expansion
A 174-room UF Health Guest House is currently under construction and anticipated to open in April 2020. This property will benefit from its location near UF Health Hospitals. UF Health, encompassing the University of Florida Health Science Center and UF Health Shands, is one of the Southeast's premier health systems. Construction of a $415-million, 540,000-square-foot expansion of the UF Health Shands Cardiovascular and Neuroscience Hospital was completed in 2017. The nine-story expansion included 21 new operating rooms, 216 inpatient beds, laboratories, and a 212,000-square-foot parking garage.
University of Florida
A 146-room Aloft Hotel opened in September 2018 at 3743 Hull Road. The hotel is expected to ramp up quickly given its proximate location to the University of Florida (UF). The institution, which was founded in 1853, enrolls over 50,000 students annually. UF, which sits on 2,000 acres and comprises over 900 buildings, offers 16 colleges and 150 research centers and institutes. The University has an annual economic impact exceeding $8 billion. Special events such as football games, graduation ceremonies, Parents' Weekend, and Reunion Weekend routinely sell out lodging facilities in the city.
Innovation District & Downtown
In 2018, a 144-room AC Hotel by Marriott opened at 530 West University Avenue. Furthermore, a 135-room Hyatt Place is proposed development on a site to the northeast of the intersection formed by Southwest 2nd Street and Southwest 2nd Avenue. Both hotels are anticipated to benefit from the University of Florida and Santa Fe College Blount Center, coupled with development near Downtown Gainesville, most notably Innovation Square. Innovation Square is a 40-acre urban master plan, located between Downtown Gainesville and UF, that will eventually host over 100 private companies, UF-based start-up businesses, classrooms, and research facilities, as well as restaurants, retail space, and residential units. Its concept is to fuse research and education with the private sector, spurring growth of the technology sector and creating a live, work, and play community that fosters innovation. Since 2011, the University has focused on creating and growing the Innovation Hub, a 40,000-square-foot facility that serves as an incubator for over two dozen startups; in 2017, a new wing, with nearly new 100 office areas, was added. The Innovation Hub employs approximately 260 and is anticipated to experience rapid growth in the near term. Furthermore, in 2018, Santa Fe College announced an expansion of its Blount Center in Downtown Gainesville with a $36.4 million building that will feature classrooms, incubation spaces, and lab suites; the new building is scheduled for completion in the spring of 2021.
Retail Development - Celebration Point & Butler Plaza
The Drury Inn & Suites opened in 2017, followed by the Fairfield Inn & Suites by Marriott, Hotel Indigo, and the dual-branded Staybridge Suites/Holiday Inn Express & Suites that opened in 2018 near Celebration Pointe and Butler Plaza. Furthermore, new supply is in the early development phases on a site located near Interstate 75 and State Highway 24. These hotels are expected to benefit from Celebration Pointe, a mixed-use, 225-acre development at the intersection of Interstate 75 and Archer Road, which opened in 2017. Celebration Pointe will include 300,000 square feet of retail space, restaurant, and entertainment space; approximately 1,000 multi-family residential units; and Class-A office space. To the southeast of Celebration Pointe is Butler Plaza North, an outdoor shopping plaza that opened in 2016; it is 95% occupied by retail and restaurant tenants. Adjacent to Butler Plaza North is the Butler Town Center development, which opened in 2018. The new complex comprises 350,000 square feet of retail space, ten restaurants, a movie theater, and over 200 residences.
The near-term outlook is best described as cautionary, despite the anticipated healthy increase in demand levels as a result of commercial activity related to the education, retail, IT, and healthcare sectors. Occupancy is anticipated to decline as the influx of new supply is expected to outpace demand levels. Meanwhile, local hoteliers are anticipated to continue to discount average daily rate (ADR) as they focus on maintaining base occupancy levels, creating a temporary ADR ceiling. However, the long-term outlook for the market is positive. Once the new supply is absorbed and occupancy levels stabilize, the previous ADR ceiling will no longer hinder the market.
Brad Hoban, HVS Tampa Senior Project Manager, works on hotel consulting and valuation assignments for clients in Florida and across the Southeast. Brad formerly worked as an auditor with Ernst & Young within the real estate segment for public REITs and private funds, which encompassed a variety of assets including residential, commercial, and industrial properties.More from Brad Hoban