by Miranda G. McLeod
Staff Writer
Most professionals in commercial real estate agree: The Mitsui OSK Lines deal with the Jacksonville Port Authority has put Jacksonville on the international commercial real estate map.
But in a market that fluctuates as much as the stock market, big box stores like Wal-Mart and Home Depot, escalating building costs and a shortage of entitled land — that is, land that is ready to be built upon — are also contributing factors to the growing wave of commercial real estate in Jacksonville.
Several members and past presidents of the Northeast Florida Chapter of the National Association of Industrial Properties gathered Tuesday at the University of North Florida for a breakfast and panel discussion on the changes within the industry. It was a progress report on the industry from three past presidents: Hobart Joost of Colliers Dickinson (2001), Chuck Diebel of the Auchter Company (2002) and Michael Shalley of St. Joe Commercial (2003).
All agreed the Mitsui deal, which will bring direct container ship service to Jacksonville from Asia, will be one of the biggest economic engines the city has seen in decades.
Joost quoted one of his peers — John Lining, also a NAIOP past president who spent 15 years at the port with Crowley Maritime — who said Mitsui will be bigger than the pulp mills and is expected to create a demand for four million square feet of distribution space that currently doesn’t exist.
Joost, who is the senior vice president for Colliers Dickinson, said his company is currently working with four industrial development companies that are looking for land in excess of 100 acres. Two are under contract, he said.
“There are more (companies) looking and it’s a result of the Mitsui terminal at JaxPort,” said Joost. “Because of the simple laws of supply and demand, industrial land prices in North Jacksonville have tripled in the last six years.”
It’s more than just Mitsui with its $200 million infrastructure, 1,800 direct jobs and 3,800 indirect jobs, according to Joost.
“It’s a ripple effect,” he said. “Asian shippers are very competitive. More will come.”
Shalley, who is the chairman of the Cornerstone Regional Development Partnership, said that from the Cornerstone Perspective, the deal put Jacksonville on the map for logistics companies, where there was a huge amount of interest.
Two years ago you couldn’t drum it into them, said Shalley. Now there are several interested and he hopes to announce the interested companies in two to four months.
There are also a number of companies looking at Cecil Commerce Center as a place to house facilities, according to Shalley.
“We needed certainty at Cecil,” said Shalley, adding that after voters decided to keep the center, Cornerstone was able to drive the Bridgestone/Firestone deal to Jacksonville, snagging it from Savannah, a competing port city.
“Cecil gives us a one-up to get distribution companies which will spin off,” said Shalley, adding that landing a big-box store such as Wal-Mart would bring significant improvements.
Diebel said the tonnage of construction will double with the arrival of the Mitsui port, which is expected to open in 2008, when combined with Bridgestone Firestone at Cecil.
Bridgestone announced in June it will invest nearly $44 million in a one million square foot distribution center at Cecil Commerce Center North. The project is expected to create 250 new jobs within 36 months of completion of the facility. The project will also indirectly result in the creation of approximately 220 new jobs in the transportation and maritime sectors at the Port.
In the industrial scene, Joost said more than 400,000 square feet of industrial space entered the market in 2001; more than 1.1 million square feet of construction has been completed so far this year with a huge amount in the pipeline.
“It’s a feeding frenzy out there for industrial land,” said Diebel.
But it’s the residential market that is driving things, and rising building costs have inhibited both the residential and commercial markets.
“Construction costs continue to rise and subcontractors have over-committed materials that went to the Gulf Coast after the hurricanes,” said Diebel. “We have 40,000 people moving in, building houses. The residential market is driving everything right now and retail follows that.”
Overall, Joost said the general state of the local industrial market is good. Vacancy rates are coming down, rents are slightly up and construction costs appear to be stabilizing due to the downturn on the residential side.
“On the retail side, Tinseltown, St. John’s Town Center and River City Marketplace were bare land five years ago; today the name of the game is big box anchored retail and lifestyle centers which operate on the principle of something for everyone. Vacancy in the retail market has gone from 11.8 percent in 2001 to 5.2 percent today,” said Joost.
“It’s all but cliche now to say, ‘Jacksonville is being discovered,’ but after discovery comes the masses,” said current NAIOP President David Auchter.