CRE commentary: Downtown is yet to be fully stabilized in office market

Jacksonville is experiencing positive gains as well as challenging conditions when assessing the forecast of the region’s office market.

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  • | 12:00 a.m. February 12, 2024
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Michael Loftin
Michael Loftin
  • Real Estate
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The recent momentum of the Downtown Jacksonville office submarket can be characterized “as one step forward, one step back.”  

Encouraging announcements have been mitigated by corporate departures and downsizes from Downtown over recent years contributing to a fairly stagnant overall market condition. 

However, while there are a handful of properties that do currently have a significant amount of vacant space, there are just as many office buildings that are benefiting from healthy occupancies leading to a disparate status throughout the Downtown market.

This disequilibrium is expected to continue through the balance of 2024.

Jacksonville is experiencing positive gains as well as challenging conditions when assessing the forecast of the region’s office market.  

JLL’s Q4 Office Insight report shows that the total vacancy rate in the Jacksonville office market stands at about 20%. 

We have several commercial projects that are in the advancing stages of breaking ground in Downtown Jacksonville in the Northbank Riverfront Plaza at the former Jacksonville Landing site, the RiversEdge mixed-use development on the Southbank, and the Four Seasons development in the Sports Complex area. 

All of these will contribute to the overall vibrancy of Downtown, making it a business destination that is more appealing for companies to establish their office operations here.

Offsetting this is the continuing burden on office demand that has resulted from post-COVID era hybrid and work-from-home strategies employed by companies.

Businesses are still employing different return-to-office (RTO) strategies, with some more aggressive than others in pulling employees back to the office.

However, one common thread is that senior leadership is becoming more concerned with a hybrid workforce limiting employee productivity and degrading the important corporate culture.  

We have been encouraged with recent RTO movement. Seeing parking lots become fuller and streets returning to their morning/lunch/afternoon bustle are strong indicators that more people are working from the office. 

That said, there is still more progress to be made until we see the overall office demand returns to pre-pandemic levels. 

 It is apparent that Jacksonville as a whole sees the overall benefit of a thriving Downtown and there are city employees and residents alike making contributions toward that ultimate goal. 

However, the Downtown Jacksonville office market still has some improving to do before we can say it is a fully stabilized market that is healthy and balanced for both tenants seeking space as well as office building owners pursuing strong occupancy levels.

Michael Loftin is a member of the NAIOP Commercial Real Estate Development Association Northeast Florida Chapter.



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