Those huge warehouses you pass by while commuting to work are actually some of the hottest real estate in the Jacksonville metro area. The industrial sector of commercial real estate on the First Coast has had a record breaking year … and the year isn’t even over yet. Tyler Newman, managing director with Cushman & Wakefield, told the Business Journal that there are more tenants looking for industrial space in the Jax market than ever before. 

From a square footage perspective, that’s about 6.7 million square feet of interest in the Jacksonville market, which is far and away the most Newman said he’s seen in decades in the industry. Newman does point out that the square footage number can be easily skewed if you have one or two tenants looking for 1 million square feet.

“Leasing activity has already surpassed last year’s total as of the end of the third quarter of 2021,” Newman said. “And historically a lot of deals are done in the third and fourth quarters.” Newman and Cushman & Wakefield director of research for Florida, Chris Owen, said some of the biggest drivers for demand of industrial space in Jacksonville this year have been e-commerce, manufacturing and construction. Numbers from Pitney Bowes put the number of parcels delivered last year at 20 billion, which is up from 10 billion in 2015. That explosion in e-commerce has been like pouring gasoline on a fire when it comes to demand for warehouse distribution space.

Construction demand is where industrial starts to intersect with the First Coast’s booming housing sector. Owen said that as the population growth in Florida as a whole and Jacksonville in particular has taken off, more warehouse distribution centers have been in demand to store construction supplies for homebuilders and multifamily builders. Then from a manufacturing perspective, Newman and Owen said Jacksonville industrial is getting more looks that it might not have historically gotten from users.

Another strong indicator for the market is the area’s lease rates, which for investment grade properties has risen from $3.64 per square foot in 2016 to $4.99 per square foot year-to-date in 2021. Moving into 2022, Newman said he expects industrial to continue to be hot, though it remains to be seen how much new industrial product will be delivered next year. Estimates from Cushman & Wakefield show 27 new buildings in the pipeline, which represents more than 6 million square feet. Industrial developers and builders are of course impacted by supply chain challenges and logistics puzzles just like other builders these days.

"We’ll see if those interested tenants are willing to wait for buildings to be finished and where they end up,” Newman said.

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