Global licensed sports merchandise marketer Fanatics Inc. is vacating a distribution center in Westside Industrial Park and relocating most of the 150 employees there to a larger center on Commonwealth Avenue.
Aside from the Westside Industrial Park, the company continues to lease almost 750,000 square feet of office and warehouse space in Jacksonville, where it employs a workforce of about 1,500 people.
Industry sources close to the deal said Fanatics is leaving the center because landlord Pattillo Industrial Real Estate significantly raised the rental rate.
“It would be inappropriate to comment on business terms discussed privately with our customers,” said Peter Anderson, vice president of new investments for Westside Industrial Park landlord Pattillo Industrial Real Estate,
“Jacksonville industrial rents are lower than any other major Florida market so rent costs are rarely the reason tenants leave our market.”
He referred questions to Fanatics.
A Fanatics representative declined to comment.
Anderson said Fanatics has leased 270,000 square feet of space at 4300 Bulls Bay Highway since 2014. He said the company notified Pattillo it will not renew the lease.
“We appreciate and value our relationship with Fanatics,” Anderson said.
When it signed the lease, a Fanatics spokesman said it was for Fanatics’ in-house apparel division, including merchandise personalization and customization.
Fanatics in Jacksonville
Fanatics, with its roots in Jacksonville, leases a 58,000-square-foot headquarters building at 8100 Nations Way in Cypress Point Business Park in South Jacksonville, and two more Cypress area offices totaling about 100,000 square feet.
It leases an e-commerce distribution center at the Commonwealth Distribution Center at 5245 Commonwealth Ave. in West Jacksonville. That is about 6 miles south of Westside Industrial Park.
Commonwealth landlord DRA Advisors, based in New York City, says on its website that the warehouse is 588,267 square feet. Fanatics has been there since 2010.
Fanatics, founded in 1995 by brothers Alan and Mitchell Trager with a store in the Orange Park Mall, is valued at $27 billion as it continues to expand its businesses, according to financial news reports.
The Tragers sold the company in 2011 and it now is part of a Philadelphia-based holding company called Kynetic.
Fanaticsinc.com describes the company as “a full-scale global digital sports platform and globally recognized consumer brand that is focused on serving more than 81 million fans and over 900 leading sports properties.”
It maintains more than 50 offices and facilities worldwide.
Its Commerce headquarters is at 8100 Nations Way in Cypress Point Business Park in Jacksonville.
Other headquarters are Betting & Gaming, Collectibles and Candy Digital in New York City; Brands in Tampa; European in Manchester in the United Kingdom; and Asia in Tokyo. The West Coast Innovation Center is in San Mateo, California.
Fanatics has posted accounting, marketing, operations, human resources, technology, software engineering and other job openings for Jacksonville.
It says it has more than 9,000 employees, “and hundreds of partners, suppliers, and vendors worldwide.”
In 2015, Fanatics said it intended to consolidate more than 300 employees from several offices around Jacksonville into the Cypress Point Business Park building.
It had been maintaining its corporate headquarters in the Commonwealth Avenue warehouse.
Westside Industrial Park
Pattillo is listing the former Fanatics property for lease starting September 2022.
Anderson said Pattillo looks forward to bringing the property back to the market.
Industrial vacancy rates are low for warehouse properties as demand continues from companies that lease distribution center space.
“We have strong prospect interest in 4300 Bulls Bay Hwy due to the value it offers,” Anderson said.
He said the 270,000-square-foot building can be doubled in size on the 40- acre site, offers cross-dock trucking and can accommodate 400 auto spaces.
Anderson said industrial rental rates have increased in Jacksonville but remain lower than most of the state and coastal U.S. markets that compete with Northeast Florida.
“The rental rate we can offer at this building to Fanatics or whoever would be lower than the rate in other comparable markets,” he said.
Anderson said rates depend on lease terms and property improvements.
“Would rental rates have increased from what they were paying? I would expect so, but we are finding that our rents are very competitive with the rest of the competing municipalities,” he said of the Fanatics lease.
The JLL real estate firm found that as of the fourth quarter of 2021, Jacksonville’s direct asking industrial rental rate was $5.57 per square foot.
That compares with $10.32 in Miami; $7.32 in Orlando; $6.86 in Tampa; and $5.75 in Nashville.
The Jacksonville rate was higher than what JLL found in Charlotte at $5.07 and Atlanta at $4.57.
Low vacancy rates also influence rents as tenants compete for less available space.
JLL found that Jacksonville’s industrial vacancy rate of 4.3% is midstream of that of competing cities.
It compares with 2.6% in Miami; 4.9% in Orlando; 3.4% in Tampa; 4.8% in Nashville; 5.5% in Charlotte; and 3.6% in Atlanta.
JLL reported that nationwide, vacancy dropped at year-end to 3.8%, the first tine it was below 4%.
“Powerful fundamentals observed in 2021 resulted in extraordinary net absorption, exceptionally low vacancy rates, and record setting rental growth,” JLL reported.
“Pressure to move goods with competitive delivery times expanded demand in 2021 with aggressive leasing by Logistics and Distribution companies and 3PL providers.”
It said nationwide average rents were reported at $7.11 per square foot, up 11.3% from year-end 2020.
