Northern Florida is having a bit of a moment. The two strongest jobs markets in the nation, among markets with at least 1 million people, are Orlando and Jacksonville.
Both metropolitan areas have come into their own this cycle with job growth topping 3.5 percent this year and unemployment rates below 4 percent. The national top 10 in job growth is dominated by Sunbelt cities, with Seattle being the only city in the northern half of the country.
Jacksonville has been firing on all cylinders recently, with record-low vacancy across building types. Expansions at the Port of Jacksonville have helped bring more international shipping volume to the East Coast.
This has been particularly fruitful in light of slowdowns at West Coast ports and the widening of the Panama Canal, which has seen shipping capacity balloon. The market’s industrial vacancy is a scant 2.5 percent, and developers have been slow to open up the speculative pipeline, with just 0.5 percent of the existing inventory under construction.
Office construction has been fairly muted this cycle, leading to a significant compression in vacancies, now less than half of that during the dark days of 2009. Large employers have found the market as a relatively low-cost place to do business, as well as home to a deep technical talent pool that has not historically been associated with Jacksonville.
The high-end professional services firm Genpact recently announced a major expansion of existing operations, more than quadrupling its presence in the Southside area. Genpact was spun off from General Electric in 2007 and offers services in data analytics and artificial intelligence.
The company plans to add 800 employees, with its chief executive, '"Tiger" Tyagarajan, saying in the announcement that the firm chose the market “because it’s a budding financial services hub and boasts both an extremely favorable business climate and an impressive digital talent pool."
As the local economy has improved, Jacksonville’s multifamily rent growth has been stellar as well. With vacancies in a holding pattern since 2015, rents have jumped nearly 18 percent, while this quarter will see rent growth top 6 percent, on an annualized basis. This level of growth could have room to run if cross-state competitor Orlando is any comparison. Orlando has asking rents nearly 25 percent higher, despite median incomes nearly 10 percent lower. Further, Jacksonville is adding better, higher-paying jobs with household income growth 100 basis points higher, at 5.5 percent year-over-year.
With a cost of living index 8 percent lower than the national average, Jacksonville may continue to be a viable candidate for large corporate relocations, as businesses rethink high-cost states in the Northeast, where high-priced housing plays an outsized roll in quality of life surveys. With that kind of draw, the River City might continue its surge.
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