JACKSONVILLE, FL–The Jacksonville area has “overwhelming evidence” for needed new warehouse space. But there is not enough new development of industrial to keep up with demand, according to a new quarterly report from Colliers International Northeast Florida. The report found a relatively small amount of construction underway despite evidence of underbuilding. Colliers calculated that 760,000 square feet was underway in the past quarter. The majority of it was being developed by Jackson-Shaw, Becknell Industrial and Patillo Industrial Real Estate.
“Most of the construction pipeline is speculative in nature but given the relative tightness of the market, we expect most of this space to lease prior to completion or very shortly thereafter,” the report said.
Construction costs for new development continue to constrain land prices. Colliers’ research showed that costs have increased by more than 4% for each of the last five years “and 2018 will be no exception,” the report concluded.
The vacancy rate dropped below 3 percent in the second quarter, and average lease rates increased to $4.95. By comparison, only two quarters ago, vacancy was at 4.6 percent and average lease rates were at $4.44, according to Colliers data. “We are finding that most users that are looking to expand in North Florida have an immediate need and are not willing to wait 9-12 months for a new building,” the report said.
But the report added that there is renewed interest from out-of-town developers drawn to the area by the increased demand and the ease of purchasing land.
One recent spec project by Industrial Park Investments Inc. was a140,790 square-foot distribution center at Busch Drive and Whittaker Road in Imeson International Industrial Park in north Jacksonville.
Recent Spec Building in North Jacksonville
The Imeson structure will join a tight Northeast Florida industrial market where more than 1.5 million square feet of industrial space is proposed in north and west Jacksonville, two of the primary areas for distribution centers.
Another report earlier this year showed the overall industrial vacancy rate reached a record low of 3.4% in the first quarter. Within the market, warehouse-distribution space vacancy fell to 4%, also historically low.
Jacksonville’s location on the St. Johns River and the Atlantic Ocean — and its sizeable deepwater port — have been instrumental in its growth. With consolidation in 1968, the city became the largest city by area in the contiguous US. Once a thriving dairy farm area, its consolidation helped attract a diverse economy for finance, technology, manufacturing and particularly distribution.