NORTHEAST FLORIDA -- Available industrial space is up, the amount of space under construction is also up, vacancy rates are down and hopes are high for the growing Jacksonville market.
The industrial market has grown steadily since 2001 and has reached an all-time high during the first quarter 2007, according to information provided by CoStar Group Inc. and CB Richard Ellis Group Inc. Industrial brokers and developers expect that upward trend to continue for the foreseeable future.
"It's a very good market right now," said CBRE Vice President Nathan Rogers. "It's a good supply/demand balance."
Los Angeles-based CBRE is a full-service commercial real estate company with 300 offices worldwide. CoStar, based in Bethesda, Md., provides information services to commercial real estate professionals in 66 U.S. markets, the United Kingdom and France.
By the end of the first quarter 2007 the Jacksonville market had about 89 million square feet of rentable building space with a 4.8 percent vacancy rate and 567,175 square feet of new space under construction, according to research compiled by Brian Cornett and Toni Mace at CBRE. That's up from 88 million square feet of rentable building space during the first quarter 2006. The vacancy rate was down from 5.58 percent in the first quarter 2006.
CBRE and CoStar often report different statistics, Rogers said, because they use a different baseline of properties. CBRE sets a 10,000-square-foot minimum threshold for industrial properties and does not ordinarily include owner/user buildings. CoStar does not have a minimum square footage and does include owner/user buildings.
CoStar reports that, at the end of the first quarter 2007, the Jacksonville industrial market had about 101 million square feet of rentable building space, up 22 new buildings and more than 1 million square feet from the first quarter 2006. The amount of rentable building area under construction skyrocketed from 779,333 square feet to 2.5 million square feet and vacancy rates dropped from 7 percent to 5.1 percent during the same period.
The companies' numbers are different, Rogers said, but they show the same trend. The steady growth can be attributed, at least in part, to the city's direct access to two interstate highways, three railways, an international airport and three marine terminals.
Future growth will likely be based on the Mitsui O.S.K. Lines Ltd. East Coast container terminal that is being built at Dames Point and is expected to be completed by December 2008. The Japanese cargo carrier is expected to handle 350,000 containers at its terminal annually, receive $392.4 million in business revenue and directly employ 1,647 people. In 2005, the Jacksonville Port Authority's terminals handled 777,318 containers.
Already the growing success of Jacksonville's industrial market is spilling over to neighboring counties. Industrial and office developer Jackson-Shaw Co. chose a 1,225-acre site in Baker County adjacent to the Duval County line to build an industrial warehouse, 300,000 square feet of office/commercial space and a hotel.
"I can't really say it was one thing; it was a combination of reasons," Tom Jones, Jackson-Shaw regional development planner, said of the site.
It took the company eight to nine months to decide on the site, which is three to seven years away from development. Among the reasons it was chosen, Jones said, was the location fronting Interstate 10, the price of the land, the availability of utility lines and government regulations.
"Baker really sort of became the leading opportunity," Jones said, adding that the company is still actively seeking other development opportunities in Duval, Nassau and St. Johns counties as well.
Commercial Jacksonville Inc. President Chuck White called the state of the market an "industrial land rush" in his company's Market Beat Snapshot for the first quarter 2007. The end of the land rush is nowhere in sight, he wrote in the market report, until the land rushes out.
"The only foreseeable threat to this positive momentum is the shortage of developable land and neccessary development rights to accommodate large-scale users."