Laura Gonzales, Regional Managing Director of Franklin Street’s Jacksonville office as well as Director of Capital Advisory, sat on the esteemed Bisnow panel of commercial real estate experts in Northeast Florida who provided a state of the market for the North Florida Region on Thursday, March 10, 2022. The panelists all agreed the greater Jacksonville area is no longer considered a tertiary market and has been discovered by companies large and small, business owners who wish to relocate to the area as well as investors and large lenders in the U.S. and beyond.
“Even the office market is hot if you can believe that,” Gonzales told the Bisnow audience. “I closed two office deals in 2021 and I get calls every single day from business owners and CEOs who want to move their companies to North Florida from northern cities.”
The panel’s central message was Jacksonville has become a very attractive market because of pandemic factors but also because the former primary markets in the state are saturated, overpriced or are experiencing lower cap rates. Jacksonville has benefitted from migration during the pandemic as 1,000 people move to Florida a day and most of them move to North Florida. “I went to a conference in California and there was a line of people from L.A. who wanted to talk to me about Jacksonville. Jacksonville has been discovered. Jacksonville has become a primary market for lenders and developers as there’s still available land, especially across the regional counties, and the market offers high yield in comparison to larger markets in Jacksonville,” Gonzales said.
Other factors fueling Jacksonville’s growth climate include the consolidated government which presents less municipalities and bureaucracy, leadership focused on pro-development policies and opportunities as well as Florida’s rank as a top four most favorable taxation climates in the nation.
Obstacles in the market continue to follow the national trends – labor shortages, limited supplies due to the global supply chain and escalating construction costs. “Tear downs and in-fill developments are more attractive in this current climate and there is so much opportunity in repurposing existing surplus buildings,” said Gonzales. “We are seeing lenders comfortable with more debt because of rising prices because rent growth has kept up with prices.”
“If you look at what has happened in the Brooklyn part of Jacksonville in less than a decade – it has gone from repossessed properties, dilapidated structures and illegal encampments to now some of the area’s best rental communities and most recently, the highest per-unit multifamily sales price ever in Jacksonville. Companies with vision can make opportunities.”
The panel discussed the valuable asset classes in the market. Multifamily and industrial continue to be the most active and valuable. “I personally want to see more surplus properties being transformed into affordable housing, especially workforce housing, which is desperately needed,” Gonzales added.