As is the case with HVAC, electrical systems and soundproofing, insulation is the key to protecting internal components. The Southeast, and Jacksonville's retail market in particular, has maintained this type of insulation while most of our nation has battled the grim reaper of recession.

While the nation has endured unemployment rates approaching 6 percent, Jacksonville remained seemingly unscathed, posting unemployment rates of around 4.2 percent. This low unemployment rate, combined with a steady increase in population and new jobs, has had a marked effect in insulating Jacksonville's retail markets. The city's geographic location, which is proving quite attractive to corporations and individuals, has also served to preserve and protect some of the internal economic components of the Jacksonville metropolitan statistical area (MSA).

Statisticians across the nation, including the Department of Labor, have repeatedly ranked Jacksonville as one of the top 10 cities in the nation for new job growth. For the second time in 4 years, Expansion Management magazine has ranked Jacksonville as the Number 1 city for corporate relocation and expansion. "Jacksonville has consistently ranked favorably in the annual survey," said Kirk Wendland, executive director of the Jacksonville Economic Development Commission. "This kind of attention underscores the success of the collective efforts that have made Jacksonville a great city in which to do business."

National and regional interest in Jacksonville has increased. The "super retailers" have assaulted many of Jacksonville's submarkets in an attempt to draw greater market share in one of the nation's greatest growth markets. The Home Depot, Wal-Mart, SuperTarget and the like have mushroomed throughout each of the MSA's submarkets.

All points of the compass have experienced strong retail demand and growth. Newer markets, like Fleming Island, have been the beneficiaries of everything from powerhouses like The Home Depot and Wal-Mart Supercenters to pristine Publix-anchored centers and other neighborhood strip centers with restaurant-oriented outparcels. Anchors Food Lion and Publix have been very active in absorbing space. Publix continues to be the "grocer du jour" -- the retailer recently opened a store in Fleming Island and is preparing to complete an infill project in Riverside at Margaret Street, just west of the central business district. Simultaneously, Food Lion has also opened stores in Fleming Island, the Northside and east Arlington near the new Home Depot. In the Southside/ Baymeadows corridor, Publix and Winn-Dixie have plans to anchor centers at both Baymeadows/9A and Touchton/Baymeadows, respectively. These follow the most recent Publix-anchored center already located at Baymeadows/9A.

Ben Carter Properties and Simon Property Group are expected to break ground later this year on a 1.2 million-square-foot regional mall on the northeast quadrant of St. John's Bluff and 9A in the Southside submarket. The excitement surrounding this project, and all of Jacksonville's retail markets, was clearly evident during a dissertation given by Paisley Boney, president of Ben Carter Properties, at the 2002 Florida's First Coast Outlook Conference. Boney reiterated his belief in the strength and diversification of Jacksonville's capital markets and how they positively relate, ultimately, to expendable income in the retail markets.

High occupancy, rising lease rates, continued absorption and overall construction activity mark the continued expansion of the Jacksonville MSA retail markets. It has been stated that no substantial speculative construction has taken place during the recent economic downturn. However, with the Jacksonville retail vacancy rate diving below 7.5 percent overall, and individual submarkets such as Baymeadows/Avenues and Southside boasting total occupancy rates of 98.25 and 94.75 percent respectively, it seems pleasantly ironic that most speculative development has waned. It seems that space is absorbed before it is complete. Development continues and second generation space is quickly absorbed. These retailers desire to penetrate the Jacksonville market or increase their market presence.

At a glance, vacancy rates are down, and lease rates and construction are up. The average weighted retail lease rate within the MSA has increased by roughly 10 percent to $11.50 per square foot, triple-net, between third and fourth quarter 2001 alone. With approximately 25 million square feet of space divided over 170 major retail centers and plans for more than 2 million additional square feet of retail space over the next 3 years, Jacksonville's retail market seems well poised to capitalize on the continued influx of people and employment. Few cities have been fortunate enough to witness retail vacancy rates decrease more than 50 percent within a 5-year period. Fewer still have done so while injecting almost 2 million square feet of new product during the same period.

Craig Thomas is with Coldwell Banker Commercial, Nicholson Williams Realty in Jacksonville, Florida.


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