Construction strong in Jax industrial market

JACKSONVILLE - Although leasing activity remains slow, the trend of positive net absorption continued at 921,399sf in the first quarter of this year. Included in net absorption this quarter is the occupancy of the Dr. Pepper Snapple Group of 601,170sf.

“The market has definitely slowed from last year when we had record absorption. There are some tenants out looking to possibly upgrade their facilities without having to pay much more in rent. Buyers are looking for deals, but until the credit market gets moving again, finding financing will continue to be a challenge,” said Jeff Nelson, Sr., senior associate for CB Richard Ellis.

The average NNN asking rate for all types of available industrial space remained under $5 psf in the first quarter of the year.

The Jacksonville industrial market vacancy rate increased to approximately 7.3% this quarter with the addition of new speculative space at Alta Lakes Commerce Center in the port area.

The Westside submarket posted 2,214,485sf of vacant space, of which 86% is warehouse/distribution space. The Southside submarket has 1,401,475sf of vacant space with 58% recorded as R&D/flex space.

More than 1,265,000sf of additional industrial space was completed this quarter. Currently, there is another 1.5 msf of industrial space under construction in Jacksonville. Much of the new industrial space is warehouse/distribution space primarily located within the Northside and Westside submarkets, areas that are significant to the storage and moving of increased cargo that will stem from the port’s expansion.

Additional industrial projects remain in the planning stage due to the continued interest of developers with long-range plans to capitalize on the port’s increasing cargo over the next several years.

Absorption

For the past five years, the Jacksonville industrial market overall has experienced positive net absorption. The year-to-date total for 2008 was a record-setting 3.7 msf. This figure is more than the two previous years of net absorption combined.

Jacksonville is experiencing an increase in the size of new build-to-suit and speculative warehouse/distribution facilities. Many new projects range from 500,000sf to 1 msf. Tenant occupancy of these new large facilities is contributing significantly to the recent growth in positive net absorption.

Net absorption this quarter includes occupancy of the San Mar distribution facility and The Dr. Pepper Snapple Group - totaling just more than 935,000sf.

Construction

There is currently 1,464,192sf under construction in the Jacksonville industrial market. Two of the larger projects are NorthPort Logistics at 872,627sf on the Northside and a new development on the Westside called Crossroads Distribution Center that currently has 126,056sf under construction. Crossroads Distribution Center, a Class A facility, will consist of four buildings for a total of 674,000sf.