by Bradley Parsons
Staff Writer
Jacksonville ranked in the top 30 in a listing of national retail property markets compiled by a leading real estate investment brokerage.
Marcus Millichap has ranked the top 40 retail markets for the last five years as a service to their clients. The firm weighs markets according to their potential to bring in more residents, jobs and income. Jacksonville is one of six Florida cities in the top 30.
Jacksonville is viewed as an emerging market, said Bernard Haddigan, director of Marcus Millichap’s National Retail Group, but it has a long way to go to catch up to markets like Ft. Lauderdale, West Palm Beach and Miami.
“The South Florida area is seen as the gold standard,” said Haddigan.
Although the local market is climbing, Haddigan said Jacksonville is only feeling the ripples of the South Florida real estate splash. Driven by flocks of new residents heading South, the state’s retail market ranks behind only California and Texas.
“Florida’s markets really benefit from their population growth. There’s no state income tax, a lot of people are moving in and Florida’s real estate values have just gone crazy. Jacksonville though is perceived to be one of the softer markets,” said Haddigan.
Millichap will release this year’s rankings at the International Council of Shopping Centers convention in Las Vegas. Haddigan said his firm sells more shopping centers than any national brokerage and said the list carries high regard with retail investors. The Millichap index reports markets where investors are most likely to sell property at a higher price than they paid for it.
Jacksonville’s relatively high vacancies and cheap rents could provide opportunity to investors looking to cash in on Florida’s potential to attract new residents, but are hoping to avoid higher rents in South Florida, Orlando and Tampa, said Haddigan.
“You can go into the best of markets and buy a property that just turns out to be a disaster,” said Haddigan. “Conversely, you can buy in a soft market and get superior returns from a well-researched deal. What we’re trying to do is provide information to let people make smart decisions.
“Because in retail real estate, the informed investor is going to prevail at the cost of the uninformed.”
In contrast to an uncertain stock market, Haddigan described real estate as engaged in a “real bull run right now.” But he said a trend toward suburban retail development didn’t favor urban areas with a lot of vacancy.
High-end urban apartments have struggled nationwide, he said, losing tenants to an exploding suburban real estate market, where a constant supply of new home development awaits residential buyers. Retail has followed those buyers to the suburbs.
“Suburban retail vacancy is really low,” said Haddigan. “It’s in the path of growing consumer spending.”
Haddigan said Jacksonville was on the right track to a downtown retail presence. He said adding housing, and hopefully residents, was the necessary first step. Drug stores, supermarkets and large-scale retail, he said, wouldn’t consider buying in a market that lacks residents. However, for the residential market to prove viable, Haddigan said retail must quickly follow.
In general, he said only a few urban retail markets are thriving. He said Manhattan and Chicago’s markets feature culture and entertainment that attract people downtown even if they don’t live there.
In comparison, urban areas like Atlanta, where Haddigan’s office sits, offer little to draw pedestrians to downtown sidewalks.
“I’ve never been to Jacksonville, but in Atlanta there’s nothing to draw people into the urban area,” he said. “All we have are a bunch of attorney’s offices and government buildings. What are you going to want to go there for?”