2Q2011 Office Research & Forecast Report - Northeast Florida
 

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Real Estate Office Statistics & Forecast for 2nd Quarter 2011 - Northeast Florida Market

Real Estate Office Statistics & Forecast for 2nd Quarter 2011 - Northeast Florida Market

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2Q2011 Office Research & Forecast Report - Northeast Florida Document Transcript

  • 1. Q2 2011 | OFFICE NORTHEAST FLORIDA RESEARCH & FORECAST REPORT Office Market Summary OVERVIEW . The Jacksonville Office market continues to experience improvement in occupancy during the second quarter of 2011 with positive absorption from 314,359 to 280,001 square feet. Absorption for the past three quarters continues to exceed the net absorption of the previous three years. The vacancy rate was down over the previous quarter at 13.9% from 14.5%. There were a number of large deals executed during 2010, including CSX for 172,000 square feet in the 550 Water Street Building, Comcast of Greater Florida/Georgia for 106,253 square feet in the Deerwood North Building, the Adecco Group for 78,292 square feet in Flagler’s MARKET INDICATORS Deerwood Park South Building 200, PNC Financial for 57,865 square feet at 5011 Gate Parkway, Availity for 49,948 square feet in the WaterView Building II, and Rayonier for 35,619 square feet Q1-2011 Q2-2011 in the Riverplace Tower on the Southbank of Downtown Jacksonville. These deals are being VACANCY followed up in 2011 by Wells Fargo for 112,966 square feet in Wells Fargo Plaza (formerly the Modis Building) and the City is working with and has approved incentives for EverBank toVACANCT SUBLEASE relocate to the Central Business District for 225,000 square feet. Other large lease signings in 2011 include the 41,421 square feet at 12735 Gran Bay Parkway West in Baymeadows, 15,995 NET ABSORPTION square feet at 10151 Deerwood Park in Baymeadows, and ICS Logistics recently leased 18,280 RENTAL RATE square feet in the BBVA Compass Bank building on 10060 Skinner Lake Drive, where Colliers International and Jones Lang LaSalle brokered the lease. CONSTRUCTION During the second quarter, the market experienced an increase in investors seeking income- producing properties. With the high level of inventory consisting of distressed and bank-owned properties, investors are taking advantage of lower prices and attractive cap rates. Business owners are also becoming more active in the market. Many are finding it more advantageous to buy at this time and are receiving financing through the low interest rates on SBA loans. VACANCY RATE TRENDS16.00% 15.5% 15.2% 15.0%15.00% 14.5%14.00% 13.9%12.00%10.00% 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 www.colliers.com/jacksonville
  • 2. RESEARCH & FORECAST REPORT | Q2 2011 | OFFICE | NORTHEAST FLORIDA Office Statistics 2nd Quarter 2011 Office Building Inventory 60,082,205 SF Vacancy 13.9% YTD Net Absorption 280,001 SF Under Construction 14,560 SF Asking Full Service Class A - $19.82/SF Class B - $16.90/SF Class C - $15.46/SF Estimated Operating Expenses All Classes $5.50 - $8.50 / SF Estimated Tenant Improvement Cost $30 - $40/sf (1st generation) $10 - $25/sf (2nd generation) Office Cap Rates Class A - 8% – 9% Class B & C - 9% - 10% 2011 LARGEST OFFICE BUILDING SALES PROPERTY ADDRESS BUILDING CLASS SALE PRICE SIZE SF SUBMARKET 7510 Baymeadows Way Class B $5,800,000 116,974 Baymeadows 7185 Bonneval Road Class B $3,675,000 27,273 Southpoint 750 Cassat Avenue Class C $1,260,000 32,450 Westside 2011 LARGEST OFFICE BUILDING LEASES PROPERTY ADDRESS BUILDING CLASS TENANT SF LEASED SUBMARKET One Independent Drive Class A Wells Fargo 112,966 Downtown 12735 Gran Bay Pky W. Class B Outreach Financial Svs 41,421 Baymeadows 10060 Skinner Lake Dr. Class A ICS Logistics 18,280 SouthsideP. 2 | COLLIERS INTERNATIONAL
  • 3. RESEARCH & FORECAST REPORT | Q2 2011 | OFFICE | NORTHEAST FLORIDA EXISTING VACANCY CONSTRUCTION RENTS EXISTING PROPERTIES VACANCY CONSTRUCTION RENTS Total Inventory Total Vacant "Sublease YTD "Total Under Class Bldgs Direct SF Construction Quoted Rates SF SF Vacant Net Absorption Vacant SFDOWNTOWN CBDA 18 6,684,943 1,033,859 15.6% 8,204 0.2% 1,042,063 0 $19.42B 131 7,279,786 783,272 10.9% 9,084 0.0% 792,356 0 $16.96C 384 2,326,002 376,809 16.2% - 0.0% 376,809 0 $17.34Total 503 15,972,785 2,068,000 14.2% 17,288 0.1% 2,085,288 0 $18.40RIVERSIDEB 122 1,012,953 89,877 8.9% 0 0.0% 89,877 0 $16.24C 394 1,678,049 135,102 8.4% 0 0.0% 135,102 0 $16.02Total 516 2,691,002 224,979 8.6% 0 0.0% 224,979 0 $16.13SAN MARCOA 1 113,682 11,463 10.1% 0 0.0% 11,463 0 $19.50B 48 922,094 152,185 16.5% 0 0.0% 152,185 0 $15.08C 177 997,778 216,819 21.7% 0 0.0% 216,819 0 $15.67Total 226 2,033,554 380,467 18.7% 0 0.0% 380,467 0 $15.64ARLINGTON / REGENCYB 22 689,190 73,054 10.6% 0 0.0% 73,054 0 $14.78C 113 739,312 80,775 10.9% 0 0.0% 80,775 0 $15.01Total 135 1,428,502 153,829 10.8% 0 0.0% 153,829 0 $14.89BUTLER / BAYMEADOWSA 39 4,825,875 407,756 9.2% 36,925 0.5% 444,681 0 $19.53B 177 8,070,455 1,468,067 18.6% 29,099 0.5% 1,497,166 4560 $16.37C 61 907,939 249,000 27.4% 0 0.0% 249,000 0 $15.52Total 277 13,804,269 2,124,823 15.9% 66,024 0.5% 2,190,879 4560 $17.02SOUTHSIDEA 23 3,556,806 128,057 4.0% 13,031 0.2% 141,088 0 $18.74B 220 4,669,398 863,350 18.6% 5,450 0.1% 868,750 0 $14.81C 373 3,702,349 655,149 17.7% 0 0.0% 655,149 0 $14.37Total 616 11,928,553 1,930,340 14.0% 14,088 0.2% 1,713,723 0 $15.01NORTHWEST (NorthwestA 0 0 0 0.0% 0 0 - 0 0 0B 19 274,506 38,327 14.0% 0 0.0% 38,327 0 $14.19C 151 540,732 34,239 6.3% 0 0.0% 34,239 0 $13.11Total 170 815,238 72,566 8.9% 0 0.0% 72,566 0 $13.68NORTHSIDE (NortheastB 25 266,241 57,702 21.7% 0 0.0% 57,702 0 $16.94C 37 270,291 41,130 15.2% 0 0.0% 41,130 0 $13.83Total 62 536,532 98,832 18.4% 0 0.0% 98,832 0 $15.48ORANGE PARKA 1 85,000 0 0.0% 0 0.0% 0 0 0B 161 1,601,443 314,508 20.2% 9,400 2.0% 324,008 0 $20.56C 151 934,408 77,811 8.3% 0 0.0% 77,811 0 $17.76Total 313 2,620,851 392,319 15.3% 9,400 0.7% 401,819 0 $20.05MANDARINB 139 1,414,842 258,213 18.3% 1,080 0.3% 259,293 0 $17.92C 96 622,654 100,488 16.1% 0 0.0% 100,488 0 $14.92Total 235 2,037,496 358,701 17.7% 1,080 0.1% 359,781 0 $16.92BEACHESA 7 431,553 121,376 28.1% 0 0.0% 121,376 0 $27.05B 161 1,760,789 191 11.9% 2,640 0.2% 189,268 0 $22.83C 196 902,256 78,127 8.8% 1,050 0.1% 79,177 0 $16.84Total 355 2,930,676 384,487 16.1% 3,690 0.1% 388,177 0 $22.66MARKET TOTALA 92 15,925,535 1,721,132 11.2% 58,160 0.1% 1,779,292 0 $19.82B 1,548 30,368,324 4,574,646 15.3% 59,111 0.3% 4,633,757 0 $16.90C 2,211 13,788,346 1,946,945 14.1% 0 0.0% 1,946,945 0 $15.46Total 3,851 60,082,205 8,242,723 13.9% 117,271 0.2% 8,359,994 0 $17.30NOTE: Does not include Baker or St. Johns County. Research findings contained in this report are based on the following criteria: 1.) Building space less than 10,000 square feet is not included. 2.) Absorption calculations include onlybuildings with a certificate of occupancy. 3.) Guidelines adhere to the National Association of Industrial and Office Properties (NAIOP) and Jacksonville Chamber of Commerce/Cornerstone database standards. Due to continual updates andrefinements 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 informationherein is presented without any warranty or representations as to its accuracy. Source: CoStar Property & Colliers International. COLLIERS INTERNATIONAL | P. 3
  • 4. RESEARCH & FORECAST REPORT | Q2 2011 | OFFICE | NORTHEAST FLORIDAVACANCY - Upon completion of the Courthouse, we will 512 Offices inJacksonville’s office vacancy rate decreased to see more law firms moving downtown. 61 Countries on13.9% at the end of the second quarter 2011,compared to the 14.5% vacancy rate in the first SUBURBAN TRENDS 6 Continentsquarter 2011.. The epicenter of the suburban Class A office market is in the Butler/Baymeadows and United States: 125RENTS Southside submarkets. Much like the downtown Canada: 38In the last six months, net effective office rents in area, there has been very little new office product Latin America: 18 Asia Pacific: 214Jacksonville have been significantly lower than developed in the suburbs. EMEA: 117asking rents. This trend in the market has beenmost evident with Class A office space, both Due to Jacksonville’s solid medical presence, we • $1.9 Billion in annual revenueDowntown and in the suburbs. Class B and C continue to see development of medical office • 979 Million SF under managementoffice buildings, meanwhile, have been more space near hospitals, as well as in the different • Over 12,000 professionalsresistant to recent market fluctuations and submarkets around Northeast Florida. Continuedtherefore their rent levels have remained more development of hospitals and medical office • $59.6 Billion in Total Transaction Valuestable. buildings can be expected in Jacksonville’s suburbs in the coming years. There are currently Northeast Florida Downtown and suburban Class A office new hospital expansions planned with a Shands 1 Independent Drivelandlords are increasingly under pressure to facility on the Northside, St. Vincent’s in Clay Suite 2401 Jacksonville, FL, 32202negotiate deals more favorable to tenants. In the County, and Memorial on the Westside.Butler/ Baymeadows area, landlords are willing TEL +1 904 358 1206to give rent concessions of up to 6 months of Flagler Development Company has recentlyfree rent for credit tenants with 5-year terms. secured entitlement rights for a multi-building office complex totaling 675,000 square feet in SALESDowntown landlords are also willing to give rent Nocatee, a massive mixed-use developing LEASINGconcessions due to the additional cost of parking. community in south Jacksonville. This will be ASSET MANAGEMENTOn 5-year deals, 6 months of free rent is Flagler’s first fully sustainable development ASSET RESOLUTIONcommon. There is plenty of parking downtown project in Northeast Florida. SITE SELECTIONbut it comes at a cost. Parking rates on average VALUATIONare $85 per month for surface space and $110 Adecco Group left 114,000 SF downtown for ACQUISITIONper month for covered/ garage space. Some 78,292 SF in Deerwood South. CONSULTING SERVICESLandlords are now offering up to two years offree parking on 5-year deals. OUTLOOK MARKET RESEARCH - In anticipation of a more active market,DOWNTOWN TRENDS investors and developers are positioningDowntown features over 16 million square feet themselves to play a key role in the next Prepared By:of office space, more than 1,200 businesses, two expansion phase of the city’s office market. Office Services TeamFortune 500 headquarters and about 55,000 Paul Scullemployees. The central business district is still - Due to proximity to the port, Downtown, Preston Phillipsthe location of choice for companies seeking Arlington and the Northside will increasingly Chuck Diebel, CCIMeasy-accessibility and numerous amenities attract maritime and related business in need of Fran Pepiswithin walking distance. Financial services, office space. Erika Bjorkinsurance companies, law offices and Kimberly Normanengineering firms are some of the largest - Office growth and development will continue to Lisa DennisDowntown employers. One of the latest trends shift, with an expanding population, toward thewe are seeing is that companies are leaving the southern reaches of the county and into St.Suburbs and moving Downtown. Johns and Clay counties.Downtown’s vacancy rate is stabilizing due to - The Downtown and Suburban office markets Information contained herein has been obtainedseveral factors: will continue to remain attractive for local growth from the owners or from other sources deemed industries: the professional and business service reliable. We have no reason to doubt its accuracy but regret we cannot guarantee it. All properties- The conversion of older office buildings to sector, healthcare, port related companies, subject to change or withdrawal without notice.mixed-use and residential usage. government, education, and companies seeking- The development of new residential towers in a signature address.the downtown area is the result of a trendwhereby more people are moving back into the - Larger companies are repositioning to takeurban core section of the city. These new advantage of beneficial tenant economicresidents want to work in offices near where opportunities.they live.- Financial service companies continue to lookfor high profile space downtown. Accelerating success.www.colliers.com/jacksonvillewww.colliers.com/jacksonville