Unprecedented Multifamily Demand Leads to Record High Deliveries in Jacksonville
Despite approximately 8,200 units in the pipeline in the Jacksonville area, including half in the highly sought-after Baymeadows and Southeast markets, the multifamily vacancy rate is expected to remain below 5% through 2019.
JACKSONVILLE, FL—With the likes of Amazon, the Mayo Clinic and Baptist Health investing in the greater Jacksonville area, no wonder the multifamily market here is enjoying strong demand and record deliveries.
The latest research from Colliers International Northeast Florida shows that Jacksonville has seen the strongest multifamily demand in 10 years with a record high occupancy rate of 96.5%. Despite approximately 8,200 units in the pipeline in the Jacksonville area, including half in the highly sought-after Baymeadows and Southeast markets, the multifamily vacancy rate is expected to remain below 5% through 2019.
“After crossing the billion-dollar mark in transaction volume for the third consecutive year in 2018, the Jacksonville multifamily market continues to be one of the highest performing and most sought-after multifamily markets in the US,” the report states. That success and continued job growth has led to significant developer interest and record setting construction starts over the last two years.”
At the close of last year, the Jacksonville MSA had approximately 5,300 units under construction, more than 2,500 units proposed and an additional 1,700 units under renovation. Colliers notes that some analysts had questioned how the market would respond to that record level number of units being delivered. The report notes that according to Real Data, demand for multifamily housing in Jacksonville “is as strong or stronger than ever.”
Rental rates in the second quarter of 2019 Jacksonville rose 2.8% over the previous year pushing the average monthly rent to $1,100 per month. Multifamily sales are again on pace for a very strong year led by the sale of the 300-unit Steele Creek, which captured a price per unit market record of $211,333/unit, which calculated out to $63.4 million.
The multifamily market is being bolstered by a strong economy and significant investment from major employers.
The unemployment rate for the Jacksonville metro has hovered around 3% for the past year and the metro region has gained more than 8,000 jobs over that same period. Construction, financial services, healthcare and the transportation sectors continue to be the leaders in the economic growth of the MSA, Colliers states in the report.
Healthcare in particular is going through substantial growth as The Mayo Clinic announced the expansion of more than 300,000 square feet over the next five years and Baptist Health recently unveiled a new 330,000-square-foot, $184 million M.D. Anderson Cancer Center. Back-office for financial services remains strong with the presence of Bank of America, Merrill Lynch, Citibank, JPMorgan Chase, Wells Fargo, Deutsche Bank, Fidelity National and Ernst & Young, the report notes.
Amazon’s recently completed two fulfillment cents totaling more than 3 million square feet is expected to bring approximately 2,500 jobs to Jacksonville by the end of the year.
Colliers states that Port trade continues to be a catalyst for the Jacksonville economy. JAXPORT posted a record year in 2018, with more than 1 million, 20-foot equivalent units (TEU) passing through the port, up 20% over the prior year’s numbers, keeping Jacksonville as the largest container port in Florida.
In addition, JAXPORT is nearly two years ahead of schedule with its harbor deepening project that will allow the largest container ships to enter the harbor. It is estimated that for every $1 invested in deepening, $24 will be returned to the economy. The initial cost estimate for all three deepening segments was $484 million, according to Colliers.