3q’18 - nai hallmark...jacksonville market report 3q’18 entering the final quarter of 2018 with...

Jacksonville Market Report3Q’18

Entering the final quarter of 2018 with little signs

of a slowdown in the local economy, third quarter

performance continued its positive upward

trend. The September jobs report illustrates

the strength of the Jacksonville economy, with

the creation of over 30,000 new jobs over the

last 12 months, a 4.4% year over year increase.

The unemployment rate fell to 2.8% which is the

second lowest in the state of Florida.

Major economic development projects continue

to make progress with deals being negotiated

for companies to open new headquarters and

distribution centers in Jacksonville. In addition,

momentum continues downtown with new

apartment projects opening and several more in

the pipeline.

There is some macro-economic uncertainty on

the horizon, including the Federal Reserve’s

interest rate policy, mid-term elections and

tariffs. We anticipate the next quarter will

provide some clarity on these issues and allow

for continued optimism in Northeast Florida.

• Source: NAI Hallmark, CoStar Property®, & ESRI®

• The information contained herein has been given to us by sources we deem reliable. We have no reason to doubt its accuracy, however, we do not make any guarantees. All information should be verified before relying thereon.

TABLE OF Contents

03 Office Market Report

05 Retail Market Report

07 Industrial Market Report

08 Economic Indicators

09 Sales Transactions

10 NAI Global

11 Terminology

12 Our Team

Keith Goldfaden Managing Partner+1 904 404 [email protected]

Christian Harden Managing Partner+1 904 404 [email protected]

Vacancy • The office vacancy rate in the Jacksonville market area

increased to 8.0% at the end of the 3Q 2018.• Class B projects reported a 9.2% Vacancy Rate citywide.• Class C projects reported a 5.1% Vacancy Rate citywide.

Rental Rates• The average quoted asking rental rate for available office

space, all classes, was $19.68/SF at the end of the 3Q 2018 representing a 1.4% increase from the end of the 2Q 2018.

• Class-A sector was $22.86 at the end of the 3Q 2018, while

Class-B rates stood at $19.39, and Class-C rates at $15.62.

New Construction • During 3Q 2018, seven new building totaling 159,991 SF

completed.

• By comparison, 2Q 2018 had zero buildings completed.

Sales Activity• One of the largest transactions that has occurred in the 3Q

2018 is the sale of SunTrust Tower. This 361,481 square foot office building sold for $59,000,000, or $159.68 per square foot.

NET ABSORPTION RENTAL RATES CONSTRUCTIONVACANCY RATE

3Q18 vs. 2Q18

Office Submarket StatisticsMarket

Existing Inventory Vacancy YTD NetAbsorption

YTDDeliveries

UnderConst SF

QuotedRates# Bldgs Total RBA Direct SF Total SF Vac %

Arlington 210 1,548,090 146,589 148,820 9.6% 27,438 15,500 0 $17.17 Baker County 32 123,795 8,660 8,660 7.0% 13,337 0 0 $15.00 Beaches 368 3,106,184 83,911 87,721 2.8% 91,696 45,000 12,554 $27.05 Butler/Baymeadows 268 10,338,174 668,944 832,203 8.0% (132,052) 95,010 4,560 $19.63 Downtown Northbank 361 12,385,014 867,780 867,780 7.0% 37,163 0 156,744 $20.82 Downtown Southbank 136 3,058,029 194,018 199,722 6.5% 31,886 0 0 $22.48 Mandarin 308 2,645,859 159,285 159,285 6.0% (2,725) 5,444 0 $18.87 Nassau County 237 1,235,055 26,752 26,752 2.2% (4,343) 0 29,600 $33.31 Northeast Jacksonville 76 866,155 54,125 54,125 6.2% (15,200) 0 0 $14.88 Northwest Jacksonville 187 1,174,356 27,377 129,377 11.0% 17,956 0 0 $14.09 Orange Park/Clay County 407 3,360,789 248,308 274,255 8.2% 81,574 0 0 $20.05 Riverside 624 3,006,700 141,253 141,253 4.7% 22,826 20,000 0 $17.68 San Marco 258 1,829,146 187,581 187,581 10.3% 14,682 0 0 $17.50 Southside 748 16,230,148 1,745,732 1,817,380 11.2% (498,517) 9,000 0 $18.79 St Johns County 443 3,098,725 188,360 188,360 6.1% (17,147) 24,637 7,780 $19.93 Totals 4,663 64,006,219 4,748,675 5,123,274 8.0% (331,426) 214,591 211,238 $19.68

Net Absorption & Vacancy Rates

Rental Rates

New Construction

MARKET REPORT Office

“With several redevelopment projects on the horizon and overall occupancy rates remaining over 90%, the Downtown submarket looks to continue positive momentum through the end of the year and into 2019.”

Kevin Vaughn VP, Office Specialist+1 904 404 [email protected]

n Arlington - 1n Baker County - 2n Beaches - 3n Butler/Baymeadows - 4n Downtown Northbank - 5n Downtown Southbank - 6n Mandarin - 7n Nassau County - 8n Northeast Jacksonville - 9n Northwest Jacksonville - 10n Orange Park/Clay County - 11n Riverside -12n San Marco - 13n Southside - 14n St. Johns County - 15

OFFICE & RETAIL Submarkets


3Q18 vs. 2Q18

Retail Submarket StatisticsMarket


YTDDeliveries

UnderConst SF


Arlington 439 7,999,112 332,725 339,798 4.2% (24,046) 15,840 0 $9.79 Baker County 146 1,168,300 5,940 5,940 0.5% 39,628 9,100 9,100 $8.48 Beaches 524 5,188,829 128,994 128,994 2.5% 84,854 22,500 12,540 $19.92 Butler/Baymeadows 195 5,178,601 99,041 109,795 2.1% 23,473 14,815 39,550 $16.71 Downtown Northbank 552 3,857,733 261,014 261,014 6.8% (21,268) 7,700 1,500 $13.18 Downtown Southbank 120 637,823 29,035 29,035 4.6% 14,510 0 0 $26.14 Mandarin 275 4,945,072 165,837 165,837 3.4% 26,237 3,300 0 $16.27 Nassau County 645 5,949,288 179,883 179,883 3.0% 43,014 12,400 9,101 $13.29 Northeast Jacksonville 277 3,630,487 105,301 148,779 4.1% 52,855 0 26,000 $11.51 Northwest Jacksonville 669 4,361,658 176,116 176,116 4.0% (36,502) 0 4,400 $10.38 Orange Park/Clay County 812 10,656,623 494,701 496,335 4.7% (23,919) 7,385 67,496 $13.25 Riverside 1,269 13,427,055 616,890 623,390 4.6% 212,966 192,458 14,040 $17.73 San Marco 315 2,864,283 178,535 178,535 6.2% (18,635) 8,800 2,640 $10.99 Southside 972 15,414,196 633,906 645,480 4.2% 296,384 38,976 44,619 $16.91 St Johns County 1,074 9,997,688 299,265 316,170 3.2% 24,789 69,809 370,750 $18.20 Totals 8,284 95,276,748 3,707,183 3,805,101 4.0% 694,340 403,083 601,736 $14.80

MARKET REPORT Retail


Rental Rates

New Construction

Vacancy • Jacksonville’s retail vacancy rate did not change in the

3Q 2018, ending the quarter at 4.0%.• Retail net absorption was slightly positive in

Jacksonville 3Q 2018, with positive 125,053 square feet absorbed.

Rental Rates• Average quoted asking rental rates in the Jacksonville

retail market are up over previous quarter levels.• Quoted rents ended 3Q 2018 at $14.80 per SF

compared to $13.79 per SF in 2Q 2018

New Construction • During the 3Q 2018, 12 buildings totaling 122,932 SF

were completed in the Jacksonville retail market.• Over the past four quarters, a total of 1,283,704 square

feet of retail space has been built in Jacksonville.• Ending 3Q 2018, there were 601,736 SF of new retail

buildings under construction.

Cap Rates• Cap rates have been higher in 2018, averaging 7.72%

compared to the same period in 2017 when they averaged 6.82%.

Bryan J. Mickler Retail Specialist+1 904 404 [email protected]

“The future is now in Jacksonville as retailers are using mobile apps, in-store sensors, computer vision technology, and machine learning to give customers frictionless checkout

n Arlington Ind - 1n Baker County Ind - 2n Beaches Ind - 3n Butler Corridor Ind - 4n Downtown Ind - 5n Mandarin Ind - 6n Nassau County Ind - 7n North Side Inc - 8n Northeast Ind - 9n Ocean Way Ind - 10n Orange Park/Clay Cnty Ind - 11n Riverside Ind -12n San Marco Ind - 13n Southside Ind - 14n St. Johns Ind - 15n West Side Ind - 16

INDUSTRIAL Submarkets


Rental Rates

New Construction

Industrial Submarket StatisticsMarket


YTDDeliveries

UnderConst SF


Arlington Ind 86 1,019,462 2,000 2,000 0.2% 19,300 8,000 7,600 $8.94 Baker County Ind 19 1,312,966 0 0 0.0% 0 0 0 $3.25 Beaches Ind 161 1,118,851 21,956 21,956 2.0% 7,623 0 0 $9.82 Butler Corridor Ind 638 21,002,607 880,968 891,068 4.2% 330,803 74,400 0 $6.82 Downtown Ind 464 11,605,224 172,838 172,838 1.5% 117,645 0 0 $3.21 Mandarin Ind 107 1,475,959 16,174 16,174 1.1% 24,136 0 0 $7.44 Nassau County Ind 111 3,301,434 6,315 6,315 0.2% 0 0 0 $3.71 North Side Ind 123 7,497,793 349,060 387,460 5.2% (28,550) 0 0 $3.96 Northeast Ind 38 4,226,298 0 0 0.0% 306,611 0 0 $4.47 Ocean Way Ind 126 13,279,329 512,569 514,319 3.9% 232,034 10,500 391,925 $4.33 Orange Park/Clay Cnty Ind 220 5,725,034 173,417 175,917 3.1% 30,304 57,200 0 $4.90 Riverside Ind 740 20,481,842 478,679 478,679 2.3% 408,886 0 0 $4.20 San Marco Ind 258 4,666,736 250,781 250,781 5.4% (43,033) 0 0 $6.71 South Side Ind 123 1,500,478 38,498 38,498 2.6% (13,590) 0 0 $8.74 St Johns Ind 346 5,632,324 130,553 130,553 2.3% 46,390 47,237 0 $8.42 West Side Ind 556 31,143,722 631,519 641,739 2.1% 28,851 0 962,166 $4.08 Totals 4,116 134,990,059 3,665,327 3,728,297 2.8% 1,467,410 197,337 1,361,691 $4.99


3Q18 vs. 2Q18MARKET REPORT Industrial

Net Absorption• Net absorption for the overall Jacksonville Industrial market

was negative 86,437 SF in the 3Q 2018. That compares to positive 969,448 SF in the 2Q 2018

Vacancy • The industrial vacancy rate in the Jacksonville market area

increased to 2.8% at the end of the 3Q 2018.• Flex projects reported a 4.7% vacancy rate citywide.• Warehouse projects reported a 2.6% vacancy rate citywide.

Rental Rates• The average quoted asking rental rate for available

industrial space, was $4.99/SF at the end of the 3Q 2018 representing a 1.2% increase from the end of the 2Q 2018.

• Flex rates were $9.73/SF at the end of the 3Q 2018, while

warehouse rates stood at $4.65/SF.

New Construction • During the 3Q 2018, three buildings totaling 71,600 square

feet were completed.• Ending 3Q 2018, there were 1,361,691 SF of new

industrial buildings under construction.

Jason J. PurdyIndustrial Specialist+1 904 404 [email protected]

“While 3rd quarter numbers indicate a pause in the industrial sector with negative absorption and slight vacancy increase, limited supply and steady demand demonstrate continued strength.”

Economic IndicatorsJacksonville Market MARKET REPORT Jacksonville, FL

2.8%2018 2018

Market Overview ReportSales Transactions

Significant Office Sales Transactions:Property Date Sale Price Square Feet Price/SF

SunTrust Tower 07/31/2018 $59,000,000 369,481 $160

Concourse Buildings 07/31/2018 $36,086,342 288,150 $125

Summit at Southpoint 09/06/2018 $29,550,000 260,665 $113

BB&T Tower 07/26/2018 $24,465,000 285,487 $86

Significant Retail Sales Transactions:Property Sale Date Sale Price Square Feet Price/SF

Beaver Chevrolet 08/14/2018 $10,700,000 53,398 $200

Ridgecrest Plaza 08/06/2018 $8,000,000 111,148 $72

CVS Pharmacy 08/07/2018 $6,369,000 12,900 $494

Davis Chrysler Dodge Jeep Ram 8/1/2018 $5,200,000 15,347 $338.83

Significant Industrial Sales Transactions:Property Sale Date Sale Price Square Feet Price/SF

2345 Friendly Rd 7/20/2018 $2,075,000 54,400 $38.14

402 Ellis Rd S 8/20/2018 $1,475,000 16,000 $92.19

614 Pecan Park Rd 7/24/2018 $1,312,000 75,044 $17.48

140 Industrial Loop 7/23/2018 $1,000,000 24,746 $40.41

Significant Multifamily Sales Transactions:Property Sale Date Sale Price # Units Price Per Unit

Point at Tamaya 7/6/2018 $70,000,000 380 $184,211

Portiva 8/9/2018 $50,700,000 291 $195,000

Hawthorne Apartments 7/16/2018 $42,000,000 239 $175,732

Westridge Apartments 8/13/2018 $36,000,000 312 $115,385

Significant Land Sales Transactions:Property Sale Date Sale Price Acres Price/AC

801 Broadcast Pl 7/13/2018 $18,500,000 30 $616,667

Cold Storage Rd 9/25/2018 $18,440,000 156 $118,205

MARKET REPORT Jacksonville, FL

The Premier Managed Commercial Real Estate Network.

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425+MillionSquare Feet Managed

7,000+Professionals

Top 4 Brand NAI Global is the single largest, most powerful global network of owner-operated commercial real estate brokerage firms. NAI Global member firms are leaders in their local markets and span the world with 400+ offices and more than 6,700 professionals supported by the central resources of the NAI Global organization. Market your products and services to this global audience either year round via our special packages designed to put your name in lights and keep it there or via an event sponsorship or exhibit.

#2RankTotal SIOR’sTotal CCIM’s

750+Key Decision Makers

MARKET REPORT NAI Global

Building ClassClass A: Buildings that generally qualify as extremely desirable investment-grade properties and command the highest rents or sale prices compared to other buildings in the same market. Class B: Buildings that generally qualify as a more speculative investment. Such buildings offer utilitarian space without special attractions, and have ordinary design. Class C: Buildings that generally qualify as no-frills, older buildings that offer basic space and command lower rents or sale prices compared to other buildings in the same market.

Deliveries:Buildings that complete construction during a specified period of time. In order for space to be considered delivered, a certificate of occupancy must have been issued for the property.

Direct Space:Space that is being offered for lease directly from the landlord or owner of a building, as opposed to space being offered in a building by another tenant (or broker of a tenant) trying to sublet a space that has already been leased.

Existing Inventory:The square footage of buildings that have received a certificate of occupancy and are able to be occupied by tenants. It does not include space in buildings that are either planned, under construction or under renovation.

Full Service Rental Rate:Rental rates that include all operating expenses such as utilities, electricity, janitorial services, taxes and insurance.

Industrial Building:A type of building adapted for such uses as the assemblage, processing, and/or manufacturing of products from raw materials or fabricated parts. Additional uses include warehousing, distribution, and maintenance facilities. The primary purpose of the space is for storing, producing, assembling, or distributing product.

Market:Geographic boundaries that serve to delineate core areas that are competitive with each other and constitute a generally accepted primary competitive set of areas. Markets are building-type specific, and are non-overlapping contiguous geographic designations having a cumulative sum that matches the boundaries of the entire Region (See also: Region). Markets can be further subdivided into Submarkets.

Net Absorption:The net change in occupied space over a given period of time.

Office Building:A type of commercial building used exclusively or primarily for office use (business), as opposed to manufacturing, warehousing, or other uses.

Price/SF:Calculated by dividing the price of a building (either sales price or asking sales price) by the Rentable Building Area.

Quoted Rental Rate:The asking rate per square foot for a particular building or unit of space by a broker or property owner. Quoted rental rates may differ from the actual rates paid by tenants following the negotiation of all terms and conditions in a specific lease.

Region:Core areas containing a large population nucleus, that together with adjacent communities have a high degree of economic and social integration. Regions are further divided into market areas, called Markets. (See also: Markets)

(RBA) Rentable Building Area:The total square footage of a building that can be occupied by, or assigned to a tenant for the purpose of determining a tenant’s rental obligation. Generally RBA includes a percentage of common areas including all hallways, main lobbies, bathrooms, and telephone closets.

Sales Price:The total dollar amount paid for a particular property at a particular point in time.

SF:Abbreviation for Square Feet.

Submarkets:Specific geographic boundaries that serve to delineate a core group of buildings that are competitive with each other and constitute a generally accepted primary competitive set, or peer group. Submarkets are building type specific (office, industrial, retail, etc.), with distinct boundaries dependent on different factors relevant to each building type. Submarkets are non-overlapping, contiguous geographic designations having a cumulative sum that matches the boundaries of the Market they are located within (See also: Market).

Under Construction:Buildings in a state of construction, up until they receive their certificate of occupancy.

Vacancy Rate:A measurement expressed as a percentage of the total amount of physically vacant space divided by the total amount of existing inventory. Under construction space generally is not included in vacancy calculations.

YTD:Abbreviation for Year-to-Date. Describes statistics that are cumulative from the beginning of a calendar year through whatever time period is being studied.

MARKET REPORT Terminology

Jacksonville Market Report3Q’18

6675 Corporate Center Parkway, Suite 100Jacksonville, Florida 32216+1 904 363 9002naihallmark.com

NAI Hallmark has a 25 year history of successfully managing real estate to its highest performance.

It would be our privilege to serve you.

Jason J. Purdy Industrial [email protected]

Jeff Conn [email protected]

Our Brokerage Team

Christian Harden [email protected]

Bryan J. Mickler VP, Retail [email protected]

Daniel Burkhardt VP, Investment [email protected]

Keith Goldfaden [email protected]

Patrick Thornton Principal, [email protected]

Carmen Mantay VP, [email protected]

Joe Scavetto VP, Office [email protected]

W. Alex [email protected]

Patrick Carney Office [email protected]

Luke Feldman Investment [email protected]

Kevin Vaughn VP, Office [email protected]

Jennifer Beerli Marketing [email protected]

Mike Maschmeyer VP, Land [email protected]

3q’18 - nai hallmark...jacksonville market report 3q’18 entering the final quarter of 2018 with...

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