There is some clear evidence of a market bottom in 2025.
Some local submarkets that saw too much new development in too short of a timeframe, like Baymeadows, Mandarin and lower Southside, have quietly cleared most of the new supply overhang. Property owners and managers can begin to lease space from a position of strength.
You won’t see rents increase tomorrow, but rental concessions and lease losses can go away quickly. For reference, when recovering from the Great Recession of 2007-09, rent concessions virtually disappeared from the market over Labor Day weekend in 2010.
At the same time, in general, the market is sufficiently liquid. The overall cost of debt capital has stabilized. Equity investors have begun to get “off their wallets” as commercial real estate is a compelling investment versus the S&P 500, looking forward on a risk-adjusted basis.
As an asset class, commercial real estate is maturing. While not yet in that phase of the life cycle, it’s clear that early growth is in the rear view and late-stage growth is somewhere up ahead.
Maturity is a mixed bag of benefits and consequences, with liquidity and the decline in the cost of capital over the last 25 years being the major benefits. The sector is powered by an educated and experienced employment base, productive trade organizations and state-of-the-art data collection.
Innovation is still occurring. Two years ago, the owner of Riverplace Tower on the Downtown Southbank felt a soft market coming.
Instead of discounting rent, they decided to innovate by completely transforming an entire upper floor into a sky lounge exclusively for the office tenants. It opened in 2025 along with a revitalized fitness center and a golf simulator curated by a former PGA professional.
On the flip side, institutional ownership and consolidation have emerged as powerful forces.
The Government Accountability Office estimates that institutional investors own more than 20% of Jacksonville’s single-family rental housing regulations, compliance, property taxes, intangible taxes, title insurance and the cost to insure the industry’s assets have exploded in the past decade.
Gone are the days of dabbling in commercial real estate, shooting from the hip and speculation.
The cap rate compression that propelled the market forward in the past cannot be relied upon to such degree in the future.
But disciplined owners and experienced managers of any size that innovate and who are hyperlocal in districts such as eTown, Downtown Jacksonville, Seven Pines and World Golf Village, or experts in active-adult housing, or in public-private-partnerships, will continue to unlock opportunity in 2026 and beyond.
Heninger is vice president of asset management with RISE, a real estate company, and adjunct professor in accounting and finance with the UNF Coggin College of Business.
Will Messer: Expansion driving demand by small commercial tenants. Story here
Matthew Clark: Next up Downtown: ‘Contemporary clothing and furniture brands’. Story here
Eric Heninger: Discipline and ‘hyperlocal’ unlock opportunity. Story here
Christian Harden: Stabilization, value and momentum define the office market. Story here
Kelly Pulignano: Speed, flexibility and credit strength an advantage for tenants. Story here
Peter Anderson: Equilibrium creates stability by removing uncertainty. Story here
2026 a balancing act for Northeast Florida commercial real estate market. Story here
Top commercial sales of 2025. List here
Top commercial sales of Q4 2025. List here