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Retail Vacancy Rates Near an All Time Low in Northeast Florida

May 30th, 2019 · Leave a Comment

The Jacksonville retail market remains on solid footing according to a new report from Colliers International Northeast Florida. The current vacancy rate of 4.2 percent is at or near an all-time low, while the average market rent of $17.45 is within $0.30 of the high seen in mid-2008.

Construction remains far below pre-recession levels. In the two years leading up to mid-2008, 5.7 million square feet of retail was completed in Jacksonville. Despite having almost 250,000 more people today in the Jacksonville market, only 2.5 million square feet of retail was completed in the last two years. And while there is roughly 1.7 million square feet of product under construction today, 65 percent of that is in St. Johns County — a market that has been starved for retail for the last decade.

There is a strong demand for new-construction properties in the St. Johns County submarket. WalMart and Home Depot are now open at Gatlin’s Durbin Park at I-95 and 9B.

Outside of St. Johns County, Fuqua Development made a splash last quarter with its announcement that it has been awarded a 67-acre site at I-295 and Butler Boulevard. Fuqua plans to use the land to construct a $300 million mixed use project called The Exchange, which will accommodate 350,000 square feet of retail, roughly 700 multifamily units, two hotels, and a 60,000-squarefoot office building. The development’s traditional retail anchors have not been announced, but Fuqua took the unconventional step of introducing Bold City Food Hall as the anchor for the dining and entertainment portion of the project.

Nassau County also continues to attract interest from retailers as Rayonier pushes forward with its plans to develop Wildlight, a 24,000-acre master planned community that will include 24,000 residential units and 11 million square feet of commercial space at full buildout. Phase I will include 900 homes, of which approximately 100 have been sold or are under contract. Skinner Bros. Realty is developing 35,000 square feet of retail, which will become the front door to the 450,000-square-foot Wildlight Village.

In the age of Amazon, most of the activity Colliers is seeing on the retailer side comes from service uses. Fitness concepts like Blink Fitness, Planet Fitness, 24 Hour Fitness, and Club 4 are very active, as are restaurants and healthcare users like Baptist and St. Vincent’s. Banks are actively looking to dispose of excess land and branches across the market, as they pivot to an online facing model. Interestingly, medical marijuana dispensaries have emerged as a viable option for backfilling these spaces. As it turns out, vaults are useful for all-cash businesses.

On the capital markets front, there were four significant deals that traded since Colliers’  last report. First, Kite Realty Group sold Lakewood Promenade to Sleiman Enterprises for $24.5 million. The nearly 200,000-square-foot center is anchored by Winn-Dixie and Stein Mart, and comprises several buildings spanning all four corners of a major intersection. Second, RREEF sold Windsor Commons to Publix for $21.5 million, or $278 per square foot. Third, Stiles sold its single tenant Floor & Décor development near the St. Johns Town Center for $17 million. Lastly, Shops at Amelia Market traded to Coro Realty from The Simpson Organization for $14.8 million. Colliers believe this represents a sub-5 percent cap rate for what some might call a “trophy” asset. Shops at Amelia Market is located on the south end of Amelia Island (next to the Ritz-Carlton) and is home to the only Harris Teeter in Florida.

Colliers expects retail in Jacksonville to finish strong in 2019, maintaining below-average vacancy and above-average rental rate growth.

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