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JACKSONVILLE-The retail market will benefit from the city’s diverse economy and population gains, according to Marcus & Millichap’s National Retail Research Report for 2006.

According to the report, the city will add 15,100 jobs in 2006, an increase of 2.5%. Retail sales are projected to increase 5.4% this year, fueled by rising incomes and a 2.4% increase in the number of households.

“Residential growth is surging, especially south of the city toward St. Johns County and to the southwest on the west side of the St. Johns River,” says Steven Ekovich, a first vice president of Marcus & Millichap and regional manager of the firm’s Jacksonville office. “These high-growth areas are generating strong retailer interest and expansion.”

With the increase in population, developers are expected to complete two million sf of retail space in 2006, down slightly from last year’s total of 2.2 million sf. The majority of the new supply, 60%, can be found in fast growing residential areas south and west of the city. As a result of the increased construction, new inventory will exceed absorption and result in an 80 basis point jump in vacancy to 7% by the end of the year, the report states.

However, strong absorption in several submarkets will allow owners to hike rents, despite the overall increase in vacancy. Asking rents are predicted to increase 3.3% by the year’s end to an average of $14.85 per sf.

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