Q2 2011 | INDUSTRIAL
NORTHEAST FLORIDA
RESEARCH & FORECAST REPORT
Industrial Market Summary
.
OVERVIEW Nationally, the Industrial Market outpaced the performance of all other commercial real estate product types. Lack of construction of new Industrial buildings, along with solid demand in most markets, continued the modest decrease in the vacancy rate, but without a corresponding increase in the rental rates. Jacksonville follows this national trend. The Industrial vacancy rate in Jacksonville is down from 11% in the first quarter to 10.5% in the second quarter, while rental rates ended the second quarter at $4.03 per square foot, a decrease from the first quarter. Net absorption this quarter was 544,077 square feet.
MARKET INDICATORS Q2-2011
Q3-2011
New construction, both nationally and locally, will remain at very low levels and be confined to build to suit transactions for credit worthy users. Locally, this is especially true for tenants needing Class A cross dock facilities of 400,000 SF or more, where there now exist only 3 choices.
VACANCY VACANCT SUBLEASE
NET ABSORPTION RENTAL RATE
—
CONSTRUCTION
—
Any incremental increase in occupancies will immediately translate into lower vacancy rates. For the majority of landlords and investors, the best that can be expected going forward, is a modest decrease in vacancies. The Port of Jacksonville has been and will continue to be a major driver for Industrial product. JAXPORT has some major strategic initiatives for 2011. As JAXPORT plans for new facilities and grows existing business, Jacksonville’s seaport is realizing it’s potential by offering enhanced port services with diversified cargo handling and worldwide trade lanes. These initiatives include:
* Q3-11 Projections
VACANCY RATE TRENDS
12.00% 11.50% 11.00% 10.7% 10.50% 10.00%
Deepen the St. Johns River: While all of JAXPORT’s terminals enjoy direct access to the 40-foot deep, 21-mile long federal shipping channel, the U.S. Army Corps of Engineers is studying two projects to improve navigation and prepare the harbor for the larger cargo ships projected to call Jacksonville in the future.
11.6%
11.1%
11.0% 10.5%
2Q 10 3Q 10 4Q 10 1Q 11 2Q 11
Develop new port facilities: JAXPORT is planning for the development of the Hanjin Container Terminal, a new 90-acre facility to be constructed at Dames Point. Both the Hanjin terminal and the TraPac Container Terminal will offer shippers unprecented containership access between Jacksonville and parts throughout Asia, particularly as the Panama Canal’s new locks open to Post-Panamax vessels later this decade. Invest in the Port’s future: To ensure the Port’s long term viability, JAXPORT is embarking on a major capital improvement program to renovate and improve infrastructure and equipment. From new rail tracks to new cranes, JAXPORT is improving terminal facilities for port customers.
www.colliers.com/jacksonville
RESEARCH & FORECAST REPORT | Q2 2011 | INDUSTRIAL | NORTHEAST FLORIDA
Industrial Statistics 2nd Quarter 2011 Industrial Building Inventory 122,417,071 SF Vacancy Flex: 12.4% Warehouse: 10.5% Total: 10.5% Net Absorption 544,077 SF Under Construction 235,000 SF Base Triple Net Rental Averages Warehouse: $2.50-$3.90/SF Bulk Distribution:$3.00-$4.50/SF Flex:-$7.50-$12.00/SF Industrial Acreage Asking Prices $50,000/acre (raw) $100,000/acre (entitled) Shell Building Cost $48/sf (no land) Industrial Cap Rates 7% – 9% CAM Averages Warehouse: $0.90-$1.20/SF Bulk Distribution: $.80-$1.20/SF Flex: $2.25-$3.50/SF
P. 2
| COLLIERS INTERNATIONAL
NEWS AND TRENDS • CSX Corporation and the Jacksonville Port Authority plan to tap a federal transportaion funding program to get about $58 million needed to build an on-dock or near rail facility that would handle containers from the existing Asian terminal and the terminal planned nearby. The move appears to be the first public move made by the Jacksonville based railway to pursue the facility that is key to making the Port of Jacksonville competitive with major East Coast ports. The majority of Jacksonville’s competitors, including Savannah, Ga., and Charleston, SC, have one - if not two - facilities that provide on-dock or near-dock rail service to their container terminals. Source: Jacksonville Business Journal Announcements and News Around Northeast Florida: • Life Sciences: Medtronic Corporation has selected Jacksonville to build a new $14 million research and development and manufacturing facility, which will add 175 new highwage jobs. Source: Jax USA Partnership • Aviation and Aerospace: Kaman Aerospace is adding 250 jobs and has leased 100,000 square feet in Imeson Industrial Park. This will expand its helicopter parts manufacturing operations. Source: Jax USA Partnership • Logistics and Distribution: PLS Logistics is bringing a new operation to Jacksonville that is heavily IT oriented in the logistics industry and is adding 100 new jobs. Source: Jax USA Partnership • Port: Keystone and Vulcan Materials Company opened a new private port terminal that is bringing 200 new jobs and $150 million in capital investment. Source: Jax USA Partnership
RESEARCH & FORECAST REPORT | Q2 2011 | INDUSTRIAL | NORTHEAST FLORIDA | SubMarket
EXISTING PROPERTIES
| VACANCY |
| CONSTRUCTION
RATES
# Bldgs
Total Inventory SF
Direct SF
Total Vacant SF
Vacancy %
YTD Net Absorption
YTD Deliveries
Under Construction SF
Quoted Rates
8
63,580
1,100
1,100
1.70%
-1,100
0
0
$7.79
FLEX Arlington
|
Beaches
13
105,236
18,792
18,792
17.90%
0
0
0
$10.96
Butler
10
4,380,436
471,837
485,972
11.10%
61,885
0
0
$8.77
Downtown
7
76,253
4,578
4,578
6.00%
0
0
0
$7.00
Mandarin
12
115,886
16,500
16,500
14.20%
23,048
0
0
$8.53
Nassau County
9
62,831
14,691
14,691
23.40%
-7,671
0
0
$3.43
Northside/Oceanway
10
272,757
25,520
25,520
9.40%
-1,040
0
0
$12.00
Orange Park (Clay)
17
381,132
67,173
67,173
18.70%
-2,896
0
0
$11.20
Riverside
45
704,379
103,291
103,291
17.60%
-9,900
0
0
$9.03
San Marco
24
368,374
58,192
58,192
15.80%
-6,600
0
0
$8.09
Southside
17
246,939
64,051
64,051
25.90%
-3,500
0
0
$8.93
St. Johns
35
488,060
67,509
67,509
13.80%
9,900
0
0
$7.63
Westside
15
292,257
10,587
10,587
3.60%
0
0
0
$5.00
TOTAL
317
7,560,520
923,821
937,956
12.40%
63,506
0
0
$8.86
WAREHOUSE Arlington
59
907,022
139,581
139,581
15.40%
2,100
0
0
$5.12
Beaches
134
1,016,744
80,298
80,298
7.90%
3,712
0
0
$8.83
Butler
402
15,302,465
2,234,128
2,234,128
14.60%
227,479
0
0
$4.27
Downtown
463
11,636,282
839,962
839,962
7.20%
-14,186
3,000
0
$2.60
Mandarin
49
1,013,898
118,560
118,560
11.70%
11,300
0
0
$5.25
Nassau County
107
3,583,357
33,996
33,996
0.09%
5,600
0
0
$3.63
Northside/Oceanway
235
19,191,112
3,089,022
3,199,902
18.8%
-167,314
280,000
0
$3.26
Orange Park (Clay)
1,119
0
0
$4.50
164
5,157,824
665,330
665,330
12.90%
Riverside
671
17,144,281
1,020,232
1,020,232
6.00%
191,982
0
235,000
$3.51
San Marco
228
4,156,222
365,237
365,237
8.80%
-22,178
0
0
$4.14
Southside
90
1,033,384
365,237
365,237
8.50%
-9,377
0
0
$7.45
St. Johns
274
4,686,906
550,565
551,559
11.80%
58,572
0
0
$4.81
Westside
516
29,787,080
2,928,262
3,024,262
10.20%
181,281
261,659
0
$3.23
3,396
114,856,551
12,254,983
12,462,857
10.90%
470,050
544,659
0
$4.68
122,417,071
13,178,804
13,400,813
10.9%
533,596
544,659
235,000
$4.03
TOTAL MARKET TOTAL
3,713
SECOND QUARTER MARKET HIGHLIGHTS SIGNIFICANT LEASE TRANSACTIONS
Building Submarket Tenant Square Feet • 12751 W. Gran Bay Pky Butler Saddlecreek 213,041 • 780 Whittaker Road Northside N/A 100,800 • 9444-9446 Florida Mining Blvd. E. Butler Synders-Lance 40,000
SIGNIFICANT SALE TRANSACTIONS
Address Submarket • 6870 Phillips Highway Southside • 10601 San Jose Boulevard Mandarin , SIGNIFICANT PROJECTS UNDER CONSTRUCTION Address Project Submarket • Waterworks Road Saft Battery Westside
Buyer Beard Equipment Hanover Holdings Lttd.
Square Feet 42,000 52,300
Sale Price $6,800,000 $1,295,000
Delivery Date Fourth Quarter 2011
Square Feet Notes 235,000 Sf Owner Occupied
Price/SF $59.52 $24.76
COLLIERS INTERNATIONAL |
P. 3
RESEARCH & FORECAST REPORT | Q2 2011 | INDUSTRIAL | NORTHEAST FLORIDA
TRANSPORTATION NETWORK
SUBMARKETS
Located in northeast Florida on the Atlantic Coast, Jacksonville is a major transportation hub.
Downtown: Primarily a waterfront industrial district, Downtown’s existing inventory includes warehouse/storage and port related uses. Construction is rare as a result of little developable land. Vacancy is consistently low due to lack of new product and demand for industrial space in proximity to the port.
Jaxport: The Port of Jacksonville currently has four operational marine terminals: TraPac (Northside), Talleyrand (Downtown), and Blount Island and Dames Point (Northside). Strategically located, Jaxport is able to handle every type of cargo, and has a growing business with Latin American markets. After New York City, Jacksonville imports the second largest amount of vehicles in the country. Roads: Local access to four interstates (I-95, I-10, I-295 and I-75) provides distribution along the entire U.S. East Coast, the southern tier of the nation to the Pacific Coast, and major sections of the South and Midwest. U.S. Highways 1,17, 90 and 301 also provide a link to the nation’s markets. Rail: CSX, Norfolk Southern and Florida East Coast service the area, offering connections to the eastern United States and Canada. Air: Jacksonville International Airport (JIA) and six other regional airports open up the world to business and leisure travelers with more than 120 nonstop flights to 34 U.S. cities, along with a network of major air freight companies that move millions of pounds of air cargo through JIA each year.
Northside: Most of the Northside’s industrial activity in recent years has been taking place in three large business parks – Northpoint, Imeson International and Jacksonville Tradeport. This trend should continue, supplemented by new industrial projects on the Northside near the new TraPac Terminal. Westside: Jacksonville’s largest industrial submarket is an attractive area for large distributors and manufacturers due to existing building supply and easy road and rail access. Westside Industrial Park and Westlake Industrial Park are currently producing most of this submarket’s new warehouse and distribution space. Southside: This densely populated submarket has seen intense competition for residential/ retail land use in recent years, thereby limiting industrial development. Existing inventory consists mainly of smaller, higher office finish, multi-tenant industrial space. There is an increasing trend on the Southside toward mixeduse developments that include an industrial component. Clay/Orange Park: This submarket features mostly small industrial structures oriented toward servicing the nearby retail industry.
NOTE: Research findings contained in this report are based on the following criteria: 1.) Absorption calculations include only buildings with a certificate of occupancy. 2.) Guidelines adhere to the National Association of Industrial and Office Properties (NAIOP) and Jacksonville Chamber of Commerce/Cornerstone database standards. Due to continual updates and refinements in the historical database, some of the data in this report may not match previously published reports. Information contained in this report has been obtained from sources deemed reliable but not guaranteed. The information herein is presented without any warranty or representations as to its accuracy. Source: CoStar Group & Colliers International Northeast Florida.
512 Offices in 61 Countries on 6 Continents United States: 125 Canada: 38 Latin America: 18 Asia Pacific: 214 EMEA: 117 • $1.9
Billion in annual revenue
• 979
Million SF under management
• Over
12,000 professionals
• $59.6 Billion in Total Transaction Value
UNITED STATES: CEO/President | Northeast Florida Robert W. Selton III 1 Independent Drive Suite 2401 Jacksonville, FL, 32202 TEL +1 904 358 1206 FAX +1 904 353 4949
Researcher’s Information Hobart Joost, Jr. SIOR Guy Preston Bart Hinson Jeff Evans Phillip Parsons Ernie Saltmarsh Kimberly Norman
Information contained herein has been obtained from the owners or from other sources deemed reliable. We have no reason to doubt its accuracy but regret we cannot guarantee it. All properties subject to change or withdrawal without notice.
Accelerating success. www.colliers.com/jacksonville www.colliers.com/jacksonville