JLL Florida reached out to Kaycee Gardner to answer three key questions on what’s ahead for Jacksonville’s office market.
JLL: What are the factors driving office leasing activity in Jacksonville’s key submarkets?
Gardner: With economic conditions improving across the country and business confidence significantly increasing, the Jacksonville office market is gaining momentum and continues to see growth for the fifth consecutive quarter. Office vacancy rates across the board are at an all-time low and are expected to continue declining this year with a lack of new construction on the horizon.
Unlike other large cities in Florida, Jacksonville’s strongest rent growth is happening in its suburban markets, such as the Butler Boulevard corridor and Baymeadows corridor. For instance, at Butler Boulevard, rents have increased over 10 percent in the last year and the current total direct vacancy rate for Class A buildings remains below 7 percent. The strong leasing activity is largely due to the number of financial services firms that are interested in growing their footprints in the Jacksonville area.
JLL: What types of tenants are you seeing entering or expanding within Jacksonville’s office market?
Gardner: Over the past few years, Jacksonville has evolved into a regional hub for the headquarters of many domestic and international financial services firms. Jacksonville’s tax friendly environment, competitive business relocation incentives and strong labor pool continue to attract talent and global companies.
Jacksonville is becoming a hotspot for global financial firms like German global banking and financial services company Deutsche Bank and Australia’s Macquarie Group. Deutsche Bank has been building its presence in Jacksonville since 2008, currently employing about 1,700 people, and continues to import jobs from the Northeast to Jacksonville as it grows its business operations. The global financial services firm has now become one of the largest bank tenants in Jacksonville’s office market leasing two separate office spaces.
In addition, there’s also been a wave of existing companies, like Fidelity Investments, that are in expansion mode as a result of a strengthening economy and brighter business outlook.
JLL: What’s ahead for Jacksonville’s office market in 2016?
Gardner: We anticipate that over the next year the dynamics of Jacksonville’s office market will begin to shift as the availability of office space in the suburban markets continues to shrink. We can expect to see a rise in office space demand in the Central Business District if two large pending suburban office deals close soon.
The outlook is bright for the Jacksonville office market as a result of record low vacancies, rising demand from large users and stronger economic conditions. While Jacksonville historically has lagged behind other office markets, it is beginning to emerge as an important office hub as more professional services firms continue to relocate and expand here. We expect that momentum to continue, making the year ahead promising for Jacksonville.
For more information, please contact: Kaycee Gardner at firstname.lastname@example.org or +1 904 356 0050