By Karen Brune Mathis, [email protected]
A pair of real estate reports found positive news for Jacksonville’s office and industrial markets.
Cushman & Wakefield of Florida Inc. and CBRE Inc. both forecast stability and improvements in the area markets.
In the fourth-quarter reports, Cushman & Wakefield found that Jacksonville’s office market ended the year with an overall vacancy rate of 18.6 percent, while CBRE calculated 19 percent.
“Jacksonville’s office market remained stable over the course of 2014,” said Cushman & Wakefield.
As it has been for some time, Downtown’s rate was the highest — with Cushman & Wakefield finding a 22.2 percent vacancy rate and CBRE, 22.1 percent.
Looking closer, the Downtown Northbank’s office space was 26.4 percent vacant, with the Southbank at 11.2 percent, according to Cushman & Wakefield’s MarketBeat report.
CBRE spoke optimistically about the market.
“The largest amount of positive activity occurred in the Downtown submarket,” said CBRE’s MarketView report.
Among larger new deals Downtown in 2014, the Jacksonville Transportation Authority leased 33,000 square feet of space at 121 Atlantic Place on the Northbank and Adecco leased 30,000 square feet in the Riverplace Tower on the Southbank.
The 2014 report didn’t include the 232,000-square-foot Citizens Property Insurance Corp. lease at EverBank Center, which was approved this year by the insurance company’s board. The lease is expected to start Sept. 1.
Moreover, sales of Jacksonville office buildings were much stronger last year, including several large deals in the suburbs and especially the six Downtown towers that changed hands between December 2013 and year-end 2014.
“The overall sales volume considerably exceeds the figures from the previous three years, exhibiting increased confidence in the future of the market,” said CBRE.
Each report said Downtown improved, although it remains at a higher vacancy rate than offices in the suburbs.
The suburban vacancy rates were 17-17.7 percent among the two reports.
While the reports don’t align their submarket definitions, each counts the Butler/Baymeadows area as the largest office submarket — at 10.2 million square feet by Cushman & Wakefield and at almost 10.7 million, called the Interstate 95/Florida 9A Corridor, by CBRE.
Cushman & Wakefield found vacancy in Butler/Baymeadows at 13.8 percent and CBRE found vacancy at I-95/9A at 15.8 percent.
Overall, “several significant lease deals are still pending and indicate a strong level of activity for the beginning of 2015,” Cushman & Wakefield reported.
CBRE concurred. “After closing 2014 with positive fundamentals, the Jacksonville office market has a strong foundation for growth in 2015.”
In the industrial market, the overall area vacancy rates ended the year below 10 percent.
Cushman & Wakefield reported a rate of 9.8 percent and CBRE’s rate was 8.9 percent. Both said the rates dropped.
The submarkets don’t necessarily align, but each says West Jacksonville is the largest — from almost 40 million (CBRE) to almost 46 million (Cushman) square feet of space.
Each also found vacancy rates in Westside the lowest – 4.4 percent (CBRE) and 5.9 percent (Cushman).
Cushman & Wakefield said rental rates and leasing activity rose to their highest levels in years.
Among the largest leases was GE Oil & Gas, which agreed to rent 510,000 square feet in AllianceFlorida at Cecil Commerce Center in West Jacksonville.
Each company found the large North Jacksonville market at notably higher vacancy rates — 19.7 percent by Cushman and 15.9 percent by CBRE.
This year should find more buildings coming online, including some large warehouses designed as speculative structures in Westside Industrial Park and in North Jacksonville at Imeson International Industrial Park.
CBRE noted the Mile Point project, designed to correct a navigational hurdle at the St. Johns River and Intracoastal Waterway, likely could lead to more industrial business because more ships could call on JaxPort.
Cushman & Wakefield also anticipates positive growth in the market through the first half of 2015.
“Jacksonville continued to be on the radar for many firms’ site location strategies due to the lower business costs and close proximity to many major markets,” it said.