Look ahead: Industrial development likely in Jacksonville as vacancy rate starts 2018 below 5 percen
By Derek Gilliam – Reporter, Jacksonville Business Journal
Jacksonville's industrial real estate market has an overall vacancy rate below 5 percent heading into 2018, possibly foreshadowing some development plays from the major players in the region as useable available space becomes hard to find.
Newmark Phoenix Realty Group President John Richardson said he expects at least one national industrial developer to acquire a parcel in Jacksonville next year. Several national industrial developers are already kicking the tires at some of the sites in the area, he said.
"But with prolonged design, planning and permitting time frames, ground breaking on any of these projects most likely would not take place until late 2018 or even early 2019," Richardson said.
Richardson, a veteran of Jacksonville's industrial market, expects building values to continue to increase, with sale price per square foot being higher in 2018 than in 2017, due to a lack of available inventory.
That lack of inventory will likely push vacancy rates lower next year, especially in bulk distribution centers, causing lease rates to increase in the industrial sector.
"I anticipate more build-to-suit activity as the bulk-distribution supply is at an all-time low," Richardson said.
Richardson also anticipates third party logistics companies will continue to have expansion needs in the coming year.
However, this doesn't mean that Jacksonville will be a hotbed of speculative investment as Richardson predicts "downward pressure on CAP rates" partially due to a lack of institutional quality assets.
But it's not just Jacksonville that's seeing shrinking CAP rates in the industrial sector.
"The historically low cap rates in other parts of Florida, also push our market cap rates lower," Richardson said.