Office space in Jacksonville was in high demand in 2018 – and that demand isn’t expected to decrease in 2019. That’s why office rental rates in the city are set to increase even as vacancy climbs to 8%.
Colliers International recently released their Q3 market report for Northeast Florida, highlighting some of the biggest local transactions of the past quarter and offering some insight into what we’ll see in 2019.
The most significant transaction in the Jax market was VyStar Credit Union’s $59 million purchase of the Class A office tower at 76 N. Laura St. in the Downtown Northbank submarket.
“VyStar is bringing 700+ people into the Tower,” says Chuck Diebel, an executive vice president at Colliers International with over 40 years of real estate experience. “More people working in the CBD (Central Business District) makes for a more healthy downtown and brings another corporate HQ location to the CBD.”
Other significant transactions include the sale of properties at 5200, 5210, and 5220 Belfort Rd. in the Southside submarket for $36 million as well as the sale of the Class A tower at 200 W. Forsyth St. (Downtown Northbank) to Ash Properties for $24.4 million.
The areas with the highest momentum are, unsurprisingly, downtown Jax and the ever-growing Butler corridor. Downtown growth is being driven by several active renovation and restoration projects that will add to the growing amount of office space and bring more overall traffic to the city’s central business district. In the Butler corridor, Town Center One and Two are the largest among several other new commercial office projects in the area.
“Expect the trend to continue,” says Diebel, who points out that the submarket containing the Butler corridor has “close to 50% of the [Jacksonville market’s] suburban office space.”
And while vacancy rates throughout the Jacksonville market have been on the rise for two straight quarters, the report indicates that 2019 will still be a good year for landlords. The average rate of asking rents is up to $19.68 as of Q3 2018, and Diebel believes those rates are set to increase further in 2019.
“Continued economic growth will keep the demand for space high,” says Diebel, “which favors the Landlord.”
Jacksonville’s overall 8% vacancy rate is still well below the national rate of 11.8%.
The report from Colliers International, along with Diebel’s insight, suggests that commercial office space in Jax will continue to thrive in 2019 and beyond as the city’s economy keeps growing.
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