Cushman & Wakefield: Jacksonville’s looking good
The 40 percent occupancy of the newly renamed Prominence office park in Baymeadows sounds like a weak number but it could be very strong news for the property's owners, Crocker Partners.
In a market outlook webinar Tuesday, the Cushman & Wakefield real estate firm emphasized the lack of large blocks of available space in core submarkets in Jacksonville, especially the Butler and Baymeadows area.
Prominence has both.
Crocker Partners announced Monday that Prominence, the former Freedom Commerce Centre, can offer more than 200,000 square feet of contiguous office space.
And Prominence, at 8001 Baymeadows Way, is in the Butler/Baymeadows submarket, which Cushman & Wakefield tagged as the most active in the Jacksonville market.
Boca Raton-based Crocker Partners bought the 54-acre, seven-building, 752,154-square-foot property in December 2012.
The deal preceded Cushman & Wakefield's 2013 market analysis, which was discussed Tuesday along with the 2014 outlook.
The company talked about U.S., regional and local performance, and Jacksonville has a positive outlook.
According to Cushman & Wakefield:
• Jacksonville's unemployment rate has fallen by 1.7 percentage points over the past 12 months to 5.8 percent.
• In 2013, Jacksonville had the strongest level of office leasing activity in the past five years and more than double the amount of activity recorded in 2012.
• Since the height of the recession, the office vacancy rate has dropped by 25.9 percent.
• Investment sales activity surged in 2013 with more than 4.3 million square feet of office space trading hands.
• The limited supply of large blocks of available space in core submarkets has increased the potential for new development.
The firm found that the overall office vacancy rate was 18.6 percent at year-end and that is expected to drop more.
A separate report found that the Central Business District vacancy rate was 18.4 percent, while the suburban rate was 18.7 percent.
Looking closer found that the Northbank Downtown rate in the central district was 21.3 percent, while the Southbank was 11.1 percent.
Butler/Baymeadows was by far the largest submarket, with almost 10.5 million square feet of inventory. It was 15.9 percent vacant.
Overall asking rents average $17.31 a square foot. That's down from $18.77 in the fourth quarter of 2009.
Jacksonville is considered a tenant's market, meaning that companies needing to lease space likely can negotiate favorable deals. As occupancy increases, that could change.
Large tenants likely will need to work with a developer on a build-to-suit project.
Cushman & Wakefield noted Jacksonville's job growth from Bank of America, Vistakon and Deutsche Bank and considers Nordstrom's market entry with a full-line upscale department store as a sign of market strength.
Meanwhile the Central Business District Downtown continued to face challenges, such as the upcoming departure of AT&T from the EverBank Center.
Overall, Cushman & Wakefield said market expectations throughout the Southeast are that tenants will continue to "maximize efficiencies," meaning they will seek efficient space at the best cost in the most convenient market.
Cushman & Wakefield expects a strong pipeline of tenants, healthy leasing activity, a pickup in construction, and strong investment sales.
The business services industry continues to be an active tenant market, along with health care and related companies.
The U.S. economic recovery is entering 2014 in its best condition in three years and the Southeast is reaching full-fledged expansion, Cushman & Wakefield said.
Looking at the Southeast markets it covers, it determined when economies should regain strength.Jacksonville should reach full recovery by Sept. 30, 2015.
Sorrel apartments OK'd for construction
More dirt will soon be turned at northwest Kernan and Atlantic boulevards, where the $14 million Sorrel apartments are being built near the shopping center that will add Earth Fare and Belk stores.
The city approved construction Thursday of the 290-unit Sorrel apartment complex at 12001 Abess Blvd.
Morrow Construction Co. Inc. of Stockbridge, Ga., is the contractor for 13 buildings.
The project comprises eight apartment buildings, a maintenance building, a trash compactor, a bath house, a mail kiosk and a leasing office.
DD Jax-Kernan Partners LLC owns the property and is developing the project. Plans also refer to the project as Villages at Kernan, designed on 14.5 acres behind the commercial center that features LA Fitness and Academy Sports.
That's also where a Belk department store and Earth Fare grocery store are planned.
The full Sorrel project is shown on permit applications as a $20 million project comprising the apartments, a clubhouse and a recreational area, including a pool and cabana.
The first phase was designed as eight buildings — five with 43 units each and three with 25 units. Plans call for 117 one-bedroom units, 132 two-bedroom units and 41 three-bedroom units.
Davis Development, also based in Stockbridge, Ga., bought the property in August. DD Jax-Kernan Partners LLC, a Davis company, paid $3.48 million for the property, which was sold by Atlantic North LLC.
Davis and Morrow are sister companies.
Developers Toney and Eli Sleiman are managers of Atlantic North.
Plans filed with the St. Johns River Water Management district say a second phase to be developed on the remaining portion of the 35-acre site will consist of another 300 units. It does not specify details about that phase.
The davisdevelopment.info website describes the company as a multifamily housing developer based in Atlanta. With Morrow, it develops, builds and manages upscale apartment communities in the Southeast, Midwest and Southwest U.S.
Including Jacksonville, the company lists 16 communities as "coming soon" among seven states. The other Florida sites are in Destin and Sarasota.
Downtown McDonald's sold to investor
The McDonald's restaurant Downtown at 253 E. State St. has been sold to an investor.
A deed made Jan. 15 shows The Szabo Trust of Newport Beach, Calif., acquired the property for $2.175 million from Market MCD LLC, based in Charleston, S.C.
Market MCD LLC is affiliated with Twin Rivers Capital LLC, led by developer J.J. Lamberson of Charleston.
MCD was formed solely to build the restaurant in 2013. Property records show the site as an almost 4,000-square-foot building on 0.78 acre.
Aldi plans Middleburg store
Aldi, the no-frills supermarket that was started in the same family that created Trader Joe's, filed plans for a store in Middleburg at 1702 Blanding Blvd., in front of the Lowe's home improvement center.
Upham Inc. civil engineering filed plans with the St. Johns River Water Management District for the project on a 2.24-acre outparcel. Plans show a 17,018-square-foot Aldi.
The applicant is Jason Povlick, director of real estate for Aldi (Florida) LLC in Haines City.
Aldi focuses on a streamlined selection of products and it leases shopping carts for a refundable quarter. With stores in Central and South Florida, sources have been saying the chain has been looking for sites in Northeast Florida.
Overall, Aldi has more than 1,200 U.S. stores in 32 states, mainly from Kansas to the East Coast. It has added 80 stores a year, on average.
Aldi entered Central Florida in 2008 and now has about 60 stores among 45 cities, including Ocala and Daytona. Its Central Florida distribution center is in Haines City.