Retail Rents Nearing Peak in Strong Jacksonville Market
We’re seeing owners look more closely at a concepts business model and giving more weight to those concepts that are creating a sense of community for their shoppers.
The retail market in Jacksonville and Northeast Florida continues to be strong, with new development projects breaking ground and others in the pipeline.
Colliers International recently stated that the Northeast Florida retail market remains robust and is attracting significant investment. The brokerage firm reported earlier this month that investors deployed approximately $341 million in retail asset acquisitions in 2018, besting 2017’s totals by approximately 10%.
What is fueling activity in and around Jacksonville? Carrie Smith, managing director of Franklin Street of Jacksonville, provided some insight into that and other questions posed by Globest.com.
Smith specializes in retail tenant and landlord representation, and oversees a portfolio of more than 4.9 million square feet in retail space throughout North Florida. She has represented a variety of national and regional clients including Jimmy Johns, Dollar Tree, Great Clips, Save a Lot, First Watch, Newk’s, Kimco Realty, Kite Realty Group, and Equity One.
Joining Franklin Street in 2010, Smith previously served as the regional managing partner handling the growth of the Jacksonville office and playing a key role in the recruitment of agents and personnel. She previously worked at Murphy Land & Retail Services, Inc., where she specialized in both landlord and tenant representation throughout Northeast Florida and began her career at Marcus & Millichap in Jacksonville, where she focused on multifamily and retail assets.
Globest.com: What major local or macro-economic trends are affecting the retail market in Jacksonville?
Smith: With a robust economy, Jacksonville is seeing continued growth both residentially and commercially, ranking as the 16th fastest growing city in America. Specifically, the 32204 ZIP code, home to Riverside, Five Points, and Brooklyn, ranked No. 6, in the country, as a millennial favorite to live, and has the highest percentage of millennial growth over the last five years than any other zip code in the state of Florida. And it’s easy to see why, with restaurants flocking to these neighborhoods, and the weekly Riverside Arts Market, we don’t see this trend changing anytime soon. For retailers and restaurants, the area can be a challenge due to the high barrier to entry, as well as parking constraints, that national concepts have a hard time overcoming. However, I believe, we’ll see redevelopment along untapped corridors, such as Park Street in the Brooklyn neighborhood, that will open the door for local, regional and national concepts looking to enter this thriving community.
Globest.com: Are there any major retail projects under construction or recently completed in metro Jacksonville that are worthy of note?
Smith: Development in and around the St. Johns Town Center continues to dominate the Jacksonville retail landscape. Gateway Village at Town Center and Tinseltown Plaza are two projects that are both under construction and bringing some exciting new-to-market concepts. Gateway Village will be home to the first Cycle Bar, MyDry Blowout Bar, and M Hospitality Group’s much anticipated BBQ Concept. Tinseltown Plaza has the first Insomnia Cookie, and Soupa Saiyan is coming to Jacksonville. In addition to these new projects, the Town Center will have the first Sprouts in Jacksonville, which is backfilling the former Best Buy box at Markets at Town Center. Real estate developer Hines also has a large-scale project that is underway that will feature multifamily, retail, and office space when complete.
Globest.com: What submarket is a hot spot for retail development, and what are the driving factors?
Smith: As mentioned previously, the area around the St. Johns Town Center continues to dominate retail development with several new projects under construction or planned. Situated in the thriving Southside trade area, the market boasts better than average household incomes, solid daytime drivers with several hospitals and major business parks, along with a multitude of residential development. Also noteworthy is the Brooklyn trade area with Vista Brooklyn under construction today, that will have more than 300 apartment units in addition to 12,500 square feet of ground-floor retail space. Brooklyn is a heavily sought-after neighborhood for millennials and home to several independent coffee shops, restaurants, and breweries.
Globest.com: What is the trend line with rents in the Jacksonville retail market?
Smith: I believe we’re nearing the peak of the cycle in terms of rents for Jacksonville. High demand areas, such as Riverside and Southside, owners are attaining $40-per-square-foot in base rent for small shop space along major corridors. New construction costs are a major driver behind these numbers, but retailers looking for A+ locations will pay the freight, when the opportunity arises.
Globest.com: How are retail property owners adapting to the emerging experiential retail sector and are any reinventing their properties in response?
Smith: Shopping center owners have recognized that retailers and restaurants that can create an immersive experience for their customers, will drive repeat foot traffic, and ultimately boost sales for all the businesses at the development. We’re seeing owners look more closely at a concepts business model and giving more weight to those concepts that are creating a sense of community for their shoppers.
We’re seeing all sorts of retailers expand their current offerings by hosting weekly workshops, date nights, wine or beer tastings, and community festivals…and so the overall development must provide amenities for these businesses, such as expanded green space or a patio/rooftop component, but also be careful of use clauses impacting the tenant mix.