Jacksonville ends 2009 with positive industrial absorption

JACKSONVILLE - The Jacksonville industrial market vacancy rate increased to 9.3% in the fourth quarter of 2009 versus the prior quarter’s 8.5%. Despite increasing vacancy, the average asking lease rate showed a slight increased to $4.64 NNN psf versus $4.59 NNN psf for the third quarter.

Annualized absorption ended on a positive note with 1,669,488sf. The fourth quarter was a negative 205,682sf. 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.

Several notable buildings completed construction in the industrial market during 2009, with the bulk of the new construction focusing between the Northside and Westside submarkets, with North Port Logistics (872,627sf), Imeson International Parks Whitaker Building (279,874sf) and several other facilities totaling 338,436sf. Investment sales were down in 2009 as the market experienced limited funding and rising CAP rates.

Lenders are feeling the impact of the economic conditions and are reluctant to lend, making it harder for potential investors to get financing/refinanced. The Jacksonville market has yet to see a high number of distressed assets.

According to Jeff Nelson, senior associate for CBRE, “Sales are down because financing has still not loosened up, but tenants are finding savings by extending their term in exchange for lower rents.”

The Florida unemployment rate in November was 11.5 %, the highest it has been since May 1975 when it was 11.9 %. As the unemployment rate continues to climb, the Jacksonville MSA has managed to stay below the Florida average at 11.2%. The Palm Coast MSA soared above it with 16.8%, the highest unemployment rate in the state. Gainesville MSA had the lowest unemployment rate in the state at 8%.