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The white-hot Jacksonville industrial machine took a breather this quarter, posting negative absorption of nearly 90,000 square feet. We aren’t worried. Demand continues to impress, and supply is hard to come by. Despite a slight up-tick in vacancy this quarter (from 2.6% to a whopping 2.8%), rental rates increased 1.2% vs. 2Q18, which underscores the continued strength of the sector.
As discussed in our second quarter report, Jacksonville is in dire need of new product. 2.8% vacancy on our current stock amounts to only 3.7 million square feet of vacancy including both flex and warehouse space. Much of that space is the least desirable and least functional (class C or worse) space in our market. Anecdotally, the availability rate for class-A space is much lower than the overall market. It is critically important for Jacksonville to have a reasonable stock of good, modern industrial building supply available to help accommodate large sophisticated operations when they are ready to move.