The economy of Jacksonville, Florida, is strong, stable and poised for growth. The city, with a metropolitan statistical area (MSA) covering 2,674 miles, boasts an MSA population of more than 1.1 million, representing an increase of 21.4 percent since 1990. Jacksonville is the 14th largest city in the nation when ranked by population.

Since 1995, the number of Jacksonville developments has also increased, with a small decline in 2000. In 1995, 54 office and industrial projects totaling $460 million were developed in Jacksonville. This year, the projected 117 office and industrial developments total $1.84 billion. If included in the 2001 figure, Jacksonville Electric Authority has plans for two projects that raise the value to $2.77 billion.

Also contributing to the city's growth and development are the NFL Jaguars and their foundation. The organization, located in Jacksonville, has donated more than $3.7 million to non-profit agencies and will continue to positively influence the area.

CBD and Major Projects

Jacksonville's downtown redevelopment project, the Better Jacksonville Plan (BJP), is a $2.2 billion series of projects that encompasses the $860 million redevelopment of the former Shipyard's riverfront location into residential, office and retail space. The redevelopment project focuses on multiple road improvements, restructured land use and other resources to maximize Jacksonville's economy. It will revitalize the downtown community and aims to bring 10,000 people to live in the heart of the city. The BJP and other projects pave the way for massive capital improvements and, over time, will bring billions of dollars into the city's local economy. The projects will reshape the face of the central business district (CBD), which will eventually include 100,000 square feet of commercial space, 662 residential units, 3,900 units of parking, a 350-room hotel, 150 boat slips and a 16-acre riverfront park. Also, Jacksonville's new U.S. Federal Courthouse, another addition to the downtown scheme, is currently under construction.

Jacksonville might also be looking at a new port of call by 2005, when the city will host the Super Bowl. Investors, like Hill Street LLC, are expected to buy the 23-acre waterfront car factory for the Sea Port Terminal that is likely to include marina slips, loft apartments and commercial space. In addition to the 16-acre waterfront park and the projects involved in the BJP, 23 acres of riverfront property will be redeveloped. Land values in the downtown area are increasing and will continue to rise as the 2005 Super Bowl nears.

Jacksonville is a major telecommunications hub for the Southeast, and this will increase with the addition of an $80 million project by Fort Worth, Texas-based TeraSpace Networks at Jacksonville International Airport. By developing a Network Access Point (NAP), a massive switching center, Jacksonville increases its ability to provide top-line service to technology companies.

Jacksonville also has the largest exchange center for automobiles as a result of deep-water ports, multiple interstates and extensive railways, which strongly support the manufacturing and industrial communities. The ports are scheduled to be deepened in the near future to further port growth.

The city's top planned-community development is Nocatee, a 25-year project containing over $1 million in road improvements and direct extensions to existing infrastructure. Nocatee will feature 15,000 residential housing units for an estimated population of over 35,000, 1 million square feet of retail space, 4.2 million square feet of offices, 270 acres of parks and 8,000 acres of preservation land. The Nocatee project will, in essence, join Jacksonville and St. Augustine, the oldest city in America.

Retail

Jacksonville's retail market has remained highly productive. With recent economic concerns, Jacksonville is continuing to be a more-than-viable market for real estate investment opportunities as well as general retail business aimed at serving prime growth areas.

Surveying shopping centers of 40,000 square feet and larger, Jacksonville boasts more than 23 million square feet of retail space. The range of lease rates for this space is $6 to $20 per square foot per year (psf/yr), with an average common-area maintenance expense of $2.50 psf/yr. Since 1997, vacancy rates have decreased from 15.7 percent to the current level of 11.2 percent, showing that Jacksonville's retail market has been stable in the past years regardless of any seasonal or national trends. Approximately 500,000 square feet of retail space is currently under construction and over 3 million square feet is planned.

Ben Carter Properties is developing a $60 million, 1.2 million-square-foot retail project with at least four large, upscale anchor tenants. Located in the northwest corner of J. Turner Butler Boulevard and St. Johns Bluff Road (State Route 9A), the development also contains Class A office space and a 250-room hotel. Simon Property Group, owner of The Avenues Mall and Orange Park Mall in Jacksonville, is teaming up with Ben Carter in the development of this new mall, scheduled for completion by 2004.

This area is hot with growth in multifamily and single-family communities, as well as office space, to support the retail growth. Outback Steakhouse has entered the area with a new location at the intersection of SR 9A and Baymeadows Road, with an adjoining 76,000-square-foot, grocery-anchored retail project by Amprop Development Corporation. Land Rover is also working on the concurrency of a 2.4-acre project on the southwest corner of this intersection.

Hallmark Partners and Stiles Corporation are planning to develop Deerwood Lake Commons, a 67,530-square-foot shopping center on 8.7 acres at Southside and Touchton roads. This center will be anchored by a 44,280-square-foot grocery store.

Wal-Mart Supercenter is in the concurrency review phase for a 36-acre, 315,000-square-foot project at the crossroads of Atlantic Boulevard and Kernan Road in the Southside area; 204,167 square feet will house Wal-Mart and the remaining space will be for additional retail users.

The Southside/Arlington area's Home Depot has begun construction on its new store, located on 28 acres at Atlantic Boulevard and Girvin Road. Home Depot is also reviewing plans with the city for a 24-acre, 145,320-square-foot project in the upper Westside area at the intersection of Lem Turner and Armsdale Roads near Interstate 295.

Lowe's Home Improvement Warehouse has proposed a 135,198-square-foot store and a 44,224-square-foot garden center with additional outparcel space at the Westside location of Lenox Avenue and Ramona Boulevard.

The majority of the planned retail development and new construction will be in the Baymeadows/Avenues and Southside areas. The Orange Park and Westside areas, with the Westside redevelopment project occurring at Cecil Field, are also seeing their share of growth. The retail space is being absorbed, as are the older box stores, and the Northside is beginning to respond with its own retail projects.

Sawgrass Investment Partnership is adding an 18,550-square-foot retail project at Kernan Road and Beach Boulevard; Thor Heinrichs Architect is serving as project architect.

St. Augustine's retail additions include Home Depot, which opened on U.S. 1 just north of SR 312, and a Target planned for the same area. The World Golf Village added an entertainment shopping center anchored by Publix. A 45-acre, 300,000-square-foot project called Cobblestone Village Shopping Center is also planned for SR 312, located between U.S. 1 and SR 207, with Burdines as the anchor tenant.

New stores to enter the southwest Jacksonville market include the recently opened Wal-Mart Supercenter, located at the corner of SR 17 and SR 220, and Home Depot, with a store planned for an adjacent corner. Food Lion is moving forward with its plans for a location at Doctor's Inlet.

Industrial

The Jacksonville industrial market has grown approximately 25 percent since 1995. Jacksonville, with its 79 million square feet of currently existing industrial properties, has lower vacancy rates than many Florida markets.

Vacancy rates in the market have moved up from approximately 6 percent in 1999 to 6.9 percent at the end of 2000. An overall adjusted vacancy of 8 percent is projected for this year. At year-end 2000, average asking rates and effective industrial rents were $3.90, up 3.9 percent from 1 year earlier. Rental rates are expected to continue increasing at an average rate of 2 percent per year for the next few years.

Flex space rates stabilized at $8.88 per square foot during the second quarter of 2001. Of the nearly 3 million square feet of existing flex space, the majority of this space is located in the Southside area.

The softening in the overall market is temporary and Jacksonville will continue to be a healthy market. Though construction has slowed, investors will look at Jacksonville over other markets, as construction cost analysis is lower than the national average. Utility costs in Jacksonville are also lower, which impacts manufacturing buildings and other 24-hour facilities. Speculative development has slowed, but will continue to be the trend in the Westside and Southside areas.

New Westside projects include Pattillo Construction Corporation's 154,000-square-foot facility in Westside Industrial Park. Other speculative construction is pending, including 440,000 square feet in the same location. Pattillo is also seeking city approval for a multi-structure 1.08 million-square-foot warehouse development called Beaver Street Industrial Park to be located between Chaffee and Jones roads near Interstate 10. The Southeast Toyota Distributors project is a 311,000-square-foot processing facility located at Westlake Industrial Park; Dana B. Kenyon is the contractor. W.W. Granger will soon begin construction on a 230,000-square-foot distribution center, also in Westside Industrial Park.

The 1.2 million-square-foot Perimeter West Industrial Park is planned on 163 acres. Pizzuti Construction Inc. has completed a 135,360-square-foot building located at I-295 and Pritchard. Park North, another pending project, located near I-295 and U.S. 1, will include a 330,000-square-foot industrial facility and a 55,000-square-foot commercial center.

Pilot Pen Corporation is constructing a 230,000-square-foot distribution center in EastPark in the Southside area. The second phase of construction for EastPark is pending, and when completed will yield 282,000 square feet. Tom Collier is serving as the building contractor.

Office

In Jacksonville buildings of 10,000 square feet or more, there is more than 35 million square feet of useable office space. The overall average rental rate is $16.35 per square foot, and the overall vacancy rate of 13.7 percent is substantially lower than many regional averages. The overall average for Jacksonville Class A building rent is $19.25 per square foot.
Central Business District
Lease rates for Class A offices in the CBD range from $16 to $24 per square foot. Vacancy rates for the CBD are at 9.76 percent, which is outstanding and likely to continue as a result of the city's new focus on downtown redevelopment. Investors and developers are taking notice and are intrigued by Jacksonville's investment opportunities.
Butler/Baymeadows and Southside
Some of the larger multi-building projects in the Butler/Baymeadows and Southside submarkets might be postponed until vacancy rates begin to drop in this high growth area. The Butler/Baymeadows area average lease rates are decreasing slightly from $19 to $18.50 per square foot due to the large amount of sublease space on the market. The average rental range is between $17.50 and $19.50 per square foot. For the adjoining Southside area, rents are the same with vacancy at 13.9 percent.

Flagler Development Company has completed two of four buildings planned at Gran Park at Deerwood Park North, a development located off of Touchton Road just east of Southside Boulevard.

In Deerwood Park North, Itera International Energy Corporation is developing a 60,000-square-foot building with Elkins Construction as the contractor, and Florida Telco is constructing its 28,644-square-foot headquarters. Just north of this site, TNT Logistics will occupy 60,000 square feet of a 102,250-square-foot building. This property is being developed by The St. Joe Company and constructed by Dana B. Kenyon Construction Corporation.

At the Meridian at Deerwood, a five-building, 200,000-square-foot project, Schultz Angelo Group has constructed 85,000 square feet. America Online is building a 125,000-square-foot call center, with Elkins as the contractor, located just off of Kernan Road and J. Turner Butler Boulevard.

Liberty Property Trust's Butler Plaza III at Southpoint is planning to build its third 82,400-square-foot building on Belfort Road with Elkins as the contractor. Butler Plaza II was completed in March of this year, and Rink Reynolds Diamond Fisher served as project architect. Liberty also has plans for completion of 122,400 square feet of a four-building, 244,800-square-foot project at Salisbury Business Park.

Concourse III was recently completed, bringing that project to a total of 300,000 square feet. Gresham, Smith & Partners served as the architect, and the developers were Hallmark Partners and Stiles Corporation.

Multifamily

Multifamily developments in Jacksonville are plentiful with the growth of the renter-by-choice population. It was expected that 2001 could bring 2,500 apartment units to the area. The majority of these apartments are in the Southside Baymeadows area, where the most substantial growth is occurring. The CBD may also be seeing its fair share of multifamily developments, as will the Westside and Arlington areas.

Vestcor Equities LLC is looking at downtown redevelopments that utilize old mid-rise buildings for multifamily housing and loft apartments. Along with the local architecture firm of PQH, the company has tentative plans to build 226 units. The Harbor Companies of Atlanta is developing Berkman Plaza, a 20-story townhouse development located next to the county courthouse, which is already changing the face of the CBD's riverfront. Property owner Bank of America, with architect Rink Reynolds Diamond Fisher, is constructing a 51-unit complex called Parks at the Cathedral, also in the CBD.

New projects in Jacksonville include Tivoli Apartments, located on Gate Parkway, which features 400 units in 30 buildings. Vestcor Construction is the contractor and VCP-Tivoli Ltd. is the owner; PQH served as project architect. Deerwood Lake LLC plans to build a 315-unit apartment complex on approximately 75 acres of the southwest quadrant of the Southside Boulevard and Touchton Road intersection. This land is part of a 277-acre planned-unit development project. Pulte Corporation is adding the seventh building, The Overview at StoneBridge on Baymeadows Road, which will increase the complex by 30 units.

Douglas Blair is director of research for Colliers Dickinson in Jacksonville, Florida.


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