The biggest issue facing the warehousing and logistics industry in Jacksonville today is the imbalance between supply and demand for warehouse space.
Post-COVID, the demand for warehouse space led to increased industrial development in the Jacksonville market.
While the city experienced record leasing of industrial space in 2022 and 2023, leasing activity was relatively weak in 2024 due to high interest rates and inflation. As a result, occupiers became cautious and largely paused new leasing in 2024, but new warehouses continued to be constructed.
This supply and demand imbalance resulted in a 5.5% vacancy rate in Q1 2025, an increase of 170 basis points year over year, with an additional 5.1 million square feet of industrial buildings still to be delivered this year.
Other macroeconomic indicators affecting industrial occupiers and investors include tariffs and the resulting inflationary pressures along with weakened consumer sentiment.
The announcement of tariffs and the increased cost of imports negatively impacted consumer attitudes in April.
When consumer confidence is low, shoppers tend to cut spending on nonessential items, which prompts retailers to reduce their inventory.
This decreased inventory leads to occupiers paying for warehouse space that they cannot fill, causing the demand for additional space to decline.
While there may have been an initial influx of imports in anticipation of the tariffs, container volume at some U.S. ports is currently down as much as 30%. If this trend continues, the reduced volume of goods will further diminish the need for warehouse space.
Despite these factors, there is a reason for optimism.
With a temporary pause on tariffs and the announcement that the U.S. and China are nearing a trade deal, we are likely to see a normalization of container volume from China.
This would stabilize the price and availability of goods, which should positively impact consumer and industry confidence.
The improvement in the overall health of the economy, combined with Jacksonville’s superior logistics and infrastructure attributes, is expected to lead to increased warehouse leasing and a healthier balance between supply and demand of industrial space within the next year.
Seda Preston is part of the Preston Industrial Team at Colliers.