Jacksonville, Florida has garnered attention from industrial property investors in recent months, with 10 million square feet of industrial properties sold last year, far exceeding most markets its size. This tally surpassed industrial property sales in all other major Florida markets in 2023 for only the second year on record.
But more impressively, among the 50 largest U.S. markets, Jacksonville ranked number one last year for total square footage of industrial space sold as a percentage of market size, with 6.2% of the local market changing ownership, almost double the rate of 3.2% recorded for the U.S. as a whole.
The bulk of recent industrial investment into Jacksonville has come from buyers based outside the market, that are acquiring newly built distribution centers or their closest competitors. Almost 70% of the $795 million in acquisitions of local industrial properties last year was of properties built since 2000, even though 21st century-built properties represent about 30% of the local industrial stock.
In one such deal, Connecticut-based JB Capital Management acquired a newly completed, 167,000-square-foot distribution center within Perimeter West Industrial Park from the property’s developer, Rooker, early last year for $20.7 million, or $124 per square foot. The property was fully leased to Williams Sonoma at sale and traded at a 5.7% pro forma capitalization rate, with United of Omaha Life Insurance Company providing financing for 50% of the purchase price.
Jacksonville’s largest industrial deal over the past 12 months was Invesco’s sale of two giant 2008 and 2009 vintage cross dock distribution centers to Dallas-based Hillwood Investment Properties for $115.6 million, or $84 per square foot. The properties were fully leased to Unilever and Dr. Pepper and part of Invesco’s Strategic Opportunities III fund, which closed in 2019 and has been gradually selling properties since mid-2021.
More than half of the year’s industrial sales volume took place in the Ocean Way and West Side areas, locations which offer logistics tenants distinct advantages. Ocean Way immediately surrounds the Port of Jacksonville, where industrial demand has risen following the completion of its more than $500 million harbor deepening project, which will allow larger international ships to call at the city’s Blount Island Marine Terminal. The West Side is home to the CSX Intermodal Terminals, offering connections to more than 230 short line and regional railroads.
Investors’ interest in Jacksonville aligns with its limited amount of modern logistics space available for lease. While industrial tenant demand has slowed dramatically at the national level in recent months, it has held up relatively well in Jacksonville where the total occupied industrial square feet grew by 3.5 million square feet or 2.4% last year, more than double the 1% growth for the U.S. as whole during the same period.
Sam’s Club, Primark, Toyota and at least 12 other tenants have signed industrial leases larger than 200,000 square feet in the market over the past 12 months. These companies are seeking access to the Port of Jacksonville, which ranked 18th in the U.S. for the combined weight of imports and exports handled in 2022, according to the Census Bureau. However, proximity to Northern and Central Florida’s rapidly growing population is also key.
Thanks to its resilience in tenant demand, Jacksonville’s logistics properties built since 2000 with ceiling heights of 30 feet or higher have an availability rate of 5.8%. That figure jumps to 13% when including properties currently under construction but remains almost half the national rate of 21.5% and below availability rates in major port markets such as Los Angeles, Miami and Northern California’s East Bay.