SOUTHEAST SNAPSHOT, MAY 2005

Jacksonville Retail Market

John Crossman, CCIM Principal The East Coast Retail Investment Team of Trammell Crow Company

According to Reis.com, market trends remain relatively consistent across the board, aside from the north side of Jacksonville, which, although boasting the lowest rental rates in the area ($7.60 per square foot), holds an occupancy rate of 78 percent in its anchor-driven retail centers. Conversely, even in the north side’s non-anchored centers, occupancy is at 95 percent. Across the board otherwise, occupancy rates are above 94 percent in anchor- and non-anchor-driven developments, and rental rates range from $7.83 to $16.56 per square foot. Overall, rental rates are $3 to $5 higher at non-anchor centers, and with the north side being the only outlier, occupancy is slightly higher in the anchored centers by roughly 1 to 4 percent.

Throughout the area, the most development is taking place as lifestyle centers and big box development, which at the current stage is by far outpacing neighborhood supermarket development. Supermarkets such as Winn-Dixie, Food Lion and Albertsons are being squeezed out of the market by Publix on the top end and by Wal-Mart on the bottom end, effectively slowing and significantly reducing new neighborhood shopping center construction. However, Kohl’s recently entered the Florida market, and it has provided some competition for Wal-Mart, significantly impacting the retail sector as it will be a prime target for a big box anchor.

The Sembler Company, Regency Centers, Simon Property Group and Ramco-Gershenson are all developers that are active in Jacksonville’s retail market, and several of these companies are responsible for significant developments currently being constructed. Simon, along with Ben Carter Properties, has completed a 1.1 million-square-foot project called St. Johns Town Center, which includes more than 100 retailers including Dillard’s, which occupies a 240,000-square-foot space, Dick’s Sporting Goods, DSW Shoe Warehouse, Target, The Cheesecake Factory, P.F. Chang’s China Bistro and Maggiano’s Little Italy. In addition, Ramco-Gershenson has broken ground on a mixed-use retail/residential center called River City Marketplace. Located at Interstate 95 and Duval Road, the development will feature Wal-Mart Supercenter as an anchor in addition to a Wallace Theatre and various national restaurants and retailers. In the Palm Valley sector of Ponte Vedra in St. Johns County, Sembler is underway developing a Village Publix center that encompasses 80,000 square feet.

While Kohl’s just recently entered the market, its activity is already strong in the Jacksonville retail sector, as three separate locations are under construction or in developmental stages. In Fleming Island at U.S. Highway 17 and Route 220, O’Connor Development is working on an 80-acre project that Kohl’s will anchor, and it will be the first of three Kohl’s stores to open in October. At I-95 and St. Augustine Road in N. St. Johns County, Crescent Resources is developing the Shoppes at Bartram Park, which already features an approximately 45,000-square-foot Publix. Crescent is set to break ground on Phase II of this project, which Kohl’s will anchor. Finally, permitting is underway for a third Kohl’s location at Kernan and Atlantic boulevards.

Other retail developments in the area include Amelia Concourse, a 390,000-square-foot power center located in Yulee. Kimco expects to break ground on this project in June, and it will feature a 125,000-square-foot Target and a 135,000-square-foot Home Depot. Another Home Depot will occupy space at South Beach Regional shopping center in Jacksonville Beach, where it plans to obtain permits for a 135,000-square-foot store at a former Kmart location. Finally, Gate Development currently is underway on Kendall Town Center, a mixed-use project located north of Regency Mall. The project will be anchored by a Wal-Mart Supercenter, and it will include a Main Street component, two Marriott hotels and residential townhomes. (Please see sidebar for more details.)

As Jacksonville continues to see extensive development in its retail sector, the north side — containing 147,300 acres between the Trout and St. Johns rivers, Interstate 295 and the Nassau County line — will see marked activity in the future. As different areas of Jacksonville have reached much of their growth potential, housing retail stores and workplaces, a majority of development is gravitating toward the north side, where there is the only abundance of land in the city. For more than 20 years, north Jacksonville has been in a holding period, being well known as a city frontier where land is reserved for agriculture and industry and not for residential or commercial development. Recently, however, city officials have decided that now is a proper time to focus on the sort of growth occurring in nearly all other areas of Jacksonville. The area retains more than 21,200 acres of developable land, and more than 6,200 acres already has been committed to development. The city has created a vision for this area that will feature new roads and subdivisions including 34,411 single-family homes and 12,874 multifamily units. Such a residential build-out obviously will incite other market development, as the city estimates the construction of 12 million square feet of commercial space, 10 million square feet of office space and 23 million square feet of industrial space. If trends continue as they have and as they are planned, Jacksonville’s retail market will remain strong.

— John Crossman, CCIM, principal, The East Coast Retail Investment Team  of Trammell Crow Company

IVY PLACE AT KENDALL TOWN COMES TO JACKSONVILLE Arlington Properties is building Ivy Place at Kendall Town in Jacksonville. Arlington Properties of Birmingham, Alabama, a construction and management firm founded in 1968, is bringing a new retail and multifamily development to Jacksonville, Florida. Site work is underway on Ivy Place at Kendall Town, a $40 million development that will include 400 apartment units and 10,500 square feet of retail. Ivy Place fronts on Lantern Street, near the intersection of Highway 9-A and Monument Road. Under the development plan, Lantern Street will include park space within a roundabout lined with gas lanterns. Ivy Place, expected to be completed in January 2007, is situated on 21 acres at Kendall Town, a 120-acre master-planned community, which is being developed by Gate Development. According to Jim Dixon, a vice president at Arlington Properties, Gate’s master-planned development also includes 202 townhomes, two hotels, a Wal-Mart Supercenter and 48,000 square feet of additional retail. Plans also include 12 outparcels that will be home to financial institutions, restaurants and additional retail. — Julie Fritz Hunt

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