The Jacksonville market in the third quarter continued with strong performances across asset classes, experiencing a reduction in vacancy rates and increase in rental rates across the board. Rental rates for Class A suburban office and Class A industrial product have reached a tipping point in select submarkets, leading to new construction in the office and industrial sectors for the first time since the great recession. This new supply is not expected to have a significant impact on the market for existing product.
Total sales transaction volume amongst all property types increased significantly in the third quarter, with the second highest quarterly volume in the past 10 years, trailing only the second quarter of 2014. We continue to see increased interest from all types of investors who are focusing on Jacksonville and view northeast Florida as a very attractive market to find higher yields. However, even with this increased demand we anticipate transaction volume to decline in the fourth quarter given the impact of Hurricane Irma and increasing uncertainty of tax reform and its potential impact on commercial real estate.
With an unemployment rate of 3.4% at the end of the quarter and continued projected strong population and job growth, we continue to be bullish on Jacksonville’s commercial real estate market.