Jax office market stabilizing

The Jacksonville office market is starting to see more single-tenant buildings being converted to multitenant buildings, expanding options for tenants, according to CB Richard Ellis.

JACKSONVILLE - The Jacksonville office market continues to gain strength as the market starts to show signs of stabilization in 2Q10, with the total vacancy rate holding steady at 23% in the second quarter and the quarter closing with positive absorption.

The office market is starting to see more single-tenant buildings being converted to multitenant buildings, expanding options for tenants.

According to CBRE Econometric Advisors, over the last five years the Jacksonville's total employment has declined at an average annual rate of 0.5%, which mirrors the U.S. employment decline for the same timeframe. In the last four quarters, Jacksonville's employment has declined at an average rate of 2.9%. Currently, office employment stands at 133,900 workers, while the total employment for Jacksonville stands at 614,673 workers as of May 2010, according to the Bureau of Labor Statistics.

Sales

There were four notable sales transactions totaling 313,727sf that took place during the first half of the year, all of which are 100% occupied. The University of North Florida purchased the 50,984sf ADT Building at 4926 S. Kernan Blvd. from Spillane & Co. for $17,293,000 ($308 psf). The Landstar Systems Holding Inc purchased the 178,128sf Landstar Building at 13410 S. Sutton Park Drive from DRA Advisors, for $21,135,140 ($120 psf). The Healthcare Trust of America Inc purchased the 53,169sf Gary and Nancy Chartrand Heart & Vascular Center at 1824 S. King St. from Hokanson Companies, for $10,800,000 ($203 psf). The Health America Realty Group purchased the 31,446sf, 4549 Emerson St. Building from Emerson MOB II LLC, for an undisclosed amount.

Rates

The stated asking lease rate for Class A office space ranges from $16 psf to $27 psf, with an average of $20.28 psf. Class B and C stated rates respectively are $16.72 psf and $14.53 psf.

Absorption

The second quarter closed with positive absorption of 31,274sf. The I-95/9A Corridor contributed 75,912sf of positive absorption, followed by the Westside submarket with a positive absorption of 20,758sf. The Downtown submarket closed with 39,143sf of negative absorption, the remaining submarkets followed with a total of 26,243sf negative absorption. This brings the absorption to a positive 40,000sf for the year to date.