Jacksonville Industrial Market Report 2nd Quarter 2021

Jacksonville’s Industrial market has continued to tighten over the past year. With many companies fleeing to the business-friendly environment of Jacksonville, vacancies are compressed lower. More than 3.6 million SF of new construction is underway. However, this does not net substantial new availability because three-quarters of the new construction has been pre-leased.

The industrial vacancy rate in Jacksonville is currently 4.3%. However, when accounting for available spaces with leases out for signature, this number is likely closer to 3.5%. In high-demand markets such as Jacksonville’s South Side, we are seeing few industrial spaces coming to market. Available industrial space in Jacksonville has reached a 2-year low. Many potential vacancies are trading off-market or absorbed by expanding co-tenants.

Low vacancy rates in the market have stimulated strong annual rent growth. Jacksonville’s annual rent growth has held steadily over 6.0%. This is well above the national average of 5.1%. Given Jacksonville’s tight industrial market conditions we will likely see above-average rent growth rates for the foreseeable future.

After a frenetic year of sale transactions, Jacksonville saw investment activity slow slightly. However, this does not mean that there was a decrease in investment interest. The significant lack of inventory certainly contributes to this trend. Hundreds of millions of dollars are ready to be deployed by institutional investors in the Jacksonville market. Large industrial portfolios leased by national credit tenants are rumored to trade below a 4% cap rate. We expect a continued steady cap rate compression into the near future.