Multiplayer Type Lag

I host a minecraft server for 1 friend and I on my local machine which is by far powerful enough for the task. The problem is that I am experiencing lag on the same local machine that is consistent with that of someone trying to play on a poor connection. With lots of rubber-banding and low response time when I break a block etc.

Steps to Reproduce:
1. Make a vanilla minecraft 16w06a server.
2. connect to it on the same machine that is hosting it.
3. notice block break lag and other type lag.