Retail commercial real estate outlook: The appetite for new store development is extremely high

"Our market remains highly competitive with retailers."

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  • | 12:00 a.m. January 17, 2023
Kaelyn Sreenan
Kaelyn Sreenan
  • Real Estate
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By Kaelyn Sreenan | Senior Associate, Franklin Street

Jacksonville’s retail market more than recovered from the pandemic in 2022, as record population growth and restored consumer demand led to a strong performance across the board. 

Kicking off 2023, retail in North Florida is still very much on fire. 

Our market remains highly competitive with retailers ranging from franchise-driven concepts to national brands to local mom-and-pop shops all vying for space. 

The fourth quarter of 2022 closed out the year with an average vacancy rate of 3.9%, slightly up from the previous quarter yet still lower than the national average of 4.2%.  

Despite increased construction costs and continued supply chain delays, the appetite for new store development in our market is extremely high. This is especially true in fast-growing submarkets like St. Johns County, where new retail construction simply cannot be built fast enough to meet the demand created by new single-family and multifamily construction. 

In Q4 of 2022, the Jacksonville market saw nearly 600,000 square feet of new retail product delivered and there is currently another million square feet of new construction planned or underway.

While this new construction should help mitigate current supply challenges, we can expect the new space to be quickly leased up due to pent-up demand. 

Although the retail landscape looks different than it did during the height of the pandemic, the “convenience factor” remains king. 

Quick-service restaurants and drive-thru coffee shops are among the fastest-growing retail categories in our market. Jacksonville’s coffee offerings, in particular, have greatly expanded with new-to-market concepts including Scooter’s, Ellianos and 7 Brew. 

Further, discount stores have continued to expand across our market. Dollar Tree-Family Dollar Combo Store, a new prototype for the company, as just one example, recently signed a lease for 23,000 square feet at 5751 N. Main St. 

Junior anchor spaces between 10,000 and 15,000 square feet are in high demand, with users such as Five Below, Ulta and Pet Supplies Plus, and although many retailers are “rightsizing” their footprints, we are beginning to see an uptick in interest in big-box spaces, which had been a challenge to lease in recent years.

Our team at Franklin Street is extremely positive on the year ahead. Some of the areas we’ll be watching include Downtown, where projects like the VyStar Credit Union parking garage will add to the district’s increasing vibrancy, as well as St. Johns County, where numerous mixed-use developments, like Beachwalk, are sure to entice national names to our region.

Kaelyn Sreenan is a member of the NAIOP Commercial Real estate Development Association Northeast Florida Chapter.