Writer: Joshua Andino
3 min read December 2021— Florida’s real estate market has surged in the wake of the COVID-19 pandemic, leading real estate developers to look to untapped markets such as Jacksonville, where opportunity abounds.
As Florida seems to have emerged as a pandemic winner, with headlines arriving every other day of a major relocation or new office expansion and as the state’s population continues to swell in response to the flight from high tax and cold weather states, markets such as South Florida or Tampa Bay have seen increasingly high rents and development costs. With the go-to markets more crowded than ever, real estate developers have looked to quieter but no less robust markets for the next wave of opportunity and development. Jacksonville fits the bill.
While there are macroeconomic concerns, such as the impact of inflation, the Federal Reserve’s policy decision on interest rates due later Wednesday, or the Gordian knot that is the supply chain, many remain bullish on Florida and are particularly excited about the potential the Jacksonville market offers. With lower density, a rising population, a coast to rival anywhere else in the state and a unified government administration between the city and Duval County, the market offers unique opportunities that are difficult to find anywhere else in the state.
“Jacksonville has benefited from the economic boom and rapid immigration. We have a strong business community that is open for business, more and more companies are relocating here, and we are experiencing strong population growth. In addition, we have affordable commercial real estate compared to similarly sized markets, no state taxes and available land,” explained Laura Gonzales, Regional Managing Director of commercial real estate firm Franklin Street’s Jacksonville office.
Affordable rents will remain top of mind for many across Florida, as markets such as South Florida or Tampa Bay have risen by double digits. The South Florida rental market saw an increase of 35.8%, with Tampa Bay close behind at 34.5%. In Jacksonville, however, rents have risen a more reasonable 15.2%, and potential residents and investors alike are taking note.
Alex Sifakis, president of JWB Real Estate Capital, told Invest:, “The secret is finally out that in-migration is causing rising demand and rising rents, which makes deals more attractive, and makes deals economically feasible that previously didn’t work.”
PEBB Enterprises’ Chris Stewart, senior vice president of leasing, had a similar view in an interview with Invest:. “In commercial real estate, markets that are ‘secrets’ or under the radar do not stay that way for long. Many of our investor and developer peers in South Florida are now planting their flags in the Jacksonville area — or seeking opportunities to do so. Competition is never a bad thing but, obviously, it can drive up real estate prices and impact supply.”
To its credit, Jacksonville has recognized the moment and is looking to capitalize on these developments with a massive effort to redevelop a portion of the city’s Downtown along the St. Johns River to the tune of $1.1 billion. Part of the development includes Miami-based Related Group’s 327-unit multifamily project at the site of the former River City Brewing Company.
The Downtown redevelopment master plan includes proposals for commercial office space; mixed-use multifamily and for-sale condominium residential; retail; an entertainment-oriented hotel; a food hall; and a convention/events center. The combination of highly amenitized housing, with grocery stores, recreational facilities, such as gyms, all near potential job opportunities, will continue to grow in popularity for a variety of reasons, chief among them their strong rebound and continued success due to the sheer pent-up demand.
“In the markets PEBB is active in, the pent-up demand for in-person dining is sustaining existing restaurants and driving relocation interest from out-of-market food-and-beverage operators. Outdoor dining accommodations are a must with new retail developments or redevelopments,” remarked Stewart when asked about retail’s resurgence. “Neighborhood shopping centers, especially those with inline service-oriented and restaurant tenants, will continue to overtake big box retail centers in 2022. Grocery-anchored centers with restaurant, fitness and service-oriented components, along with standalone restaurant buildings, are coming out of the pandemic the strongest.”
Gonzales sees no sign of a slowdown in demand for multifamily and mixed-used development. “Demand for commercial real estate will continue to increase in 2022, both from an occupier and investor perspective. We can expect Jacksonville’s population growth to spur new development across all property types, from multifamily to retail, as our market gains new residents and businesses. From an investment standpoint, our Franklin Street team is seeing large interest from both local and out-of-town buyers from all over the state and country.”
The numbers line up, with Duval County and Jacksonville having found itself among the ranks of cities that have seen over 100,000 new residents over the last 10 years. As part of the Greater Jacksonville area, St. Johns County also saw its population grow during that span. The county added more than 83,000 residents, an increase of 43.9%. With Florida expected to grow by an estimated 300,000 people a year up to 2025, it’s safe to say Jacksonville stands to benefit from the growth with new houses, new businesses, a growing economy and an even brighter future.
