Jacksonville Commercial Real Estate Suffers from COVID
The pandemic has easily sickened the Jacksonville commercial real estate market, according to a report released today from Colliers International, a professional services and investment management company.
Colliers analysts report: “Of course the office market has been challenging for most of 2020, and we see the macro-level challenges continue for at least another year. Almost every tenant in the market is re-evaluating their space requirements and some are painting their offices entirely. “
Office space has increased significantly (300 basis points) since Q1 2020, and the available stock of subleases is three to four times the typical stock of at least 2.5 million square feet.
Colliers assumes that the vacancy rate will continue to rise and market rents will fall.
On the upside, there could be an unusually large number of new leases in the next 24 months as renters leave their previous rooms to look for options that better reflect their new needs for social distancing and cleanliness. Those who need to spend capital on “reconfiguring and equipping” space will have an advantage in what is likely to be a “highly competitive market”.
Development in Jacksonville’s final quarter of 2020 slowed significantly, and analysts anticipate that development will remain extremely limited for the foreseeable future.
Capital market activities also remained a challenge as investors and owners struggled to determine fair market value and rent when it is not yet known how permanent labor trends will develop in or with the pandemic.
However, Colliers points out that there have been several large transactions including the Hertz Investment Group’s sale of the Bank of America Tower for $ 75.5 million, or $ 108 per square foot, and the sale of the 6675 Corporate Center Pkwy for 9.4 MILLION, or $ 150 per square foot, and the sale of 1 News Place for $ 7.5 million, or $ 112 per square foot.
2021 doesn’t look much better: “We expect the fundamentals to deteriorate further, with vacancies rising and market rents falling. Transaction speed should be significantly faster than it was in 2021 as tenants begin to comment on their long-term occupancy plans. We assume that the development will remain minimal and that the capital markets will remain subdued until the second half of the year when we have additional clarity about the intentions of the tenants. “