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NE Florida Industrial/Office Markets Strong in First Half of '17

NE Florida Industrial/Office Markets Strong in First Half of '17

Jacksonville Business Journal - July 7, 2017 - by Derek Gilliam - Full Story Here

Jacksonville's commercial real estate statistics show that both industrial and office properties have produced significant net absorption and strong leasing activity in the first six months of 2017, according to data maintained by Cushman & Wakefield. Kathleen Krilanovich, a Cushman & Wakefield research analyst that focuses on the Jacksonville market, said that both industrial and office stats showed positive improvement.  

Krilanovich noted that VanTrust Real Estate recently broke ground on a 160,000-square-foot office building in the Butler/Baymeadows submarket.

"It indicates strength in the market," she said. "It shows that some developers are confident that the demand is there for new space in the suburban submarkets." Also, vacancy has continued to decline in Downtown and even with Aetna's recent departure from the office tower at 841 Prudential Dr., the "overall sentiment is that the space will be leased in the near future," Krilanovich said.

Overall, Jacksonville's office market has seen 283,515 square feet of net absorption with 603,651 square feet of leasing activity.

The average rent for Class A space in Jacksonville in the first six months was $21.61. She said that Jacksonville's lower than average unemployment figure is also a good sign for the office market.

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Tyler Newman, a Cushman & Wakefield director of industrial brokerage services, said 2017 has been very busy. "There was a lot of activity and a lot of deals have been signed," he said. He said that because vacancy rates are low in nearly every aspect of industrial properties, landlords have a lot of leverage, meaning that any tenants nearing the end of a contract should expect rent increases during negotiations.

There's also talk among industrial land owners of building speculative warehouses, although Newman said that an owner has yet to pull the trigger and commit to building a spec warehouse. And even if they did, it would be nine months to a year before that space would hit the market.

Newman said he expects Class A warehouse space to fall below 4 percent by the end of the 2017.

While the vacancy rate for the overall market is at 5.2 percent, because of strong leasing activity, Newman believes vacancy rates for the market should fall between 4 and 4.5 percent by the end of the year. While many headlines have been made in recent months by Amazon's entrance into the Jacksonville market, Newman said he doesn't believe industrial properties strong showing in the first half of the year can be attributed to an "Amazon effect."

"The activity has been due to a normal, healthy market," he said. "Amazon certainly helps, but the big [warehouses] that they did, did not cause a ripple effect on the rest of the market. Things have been filling up over time and now we are at a point where they are full."

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