Located along the St. Johns River in northeast Florida, Jacksonville hosts the headquarters of more Fortune 500 companies than any other city in Florida, making it a premiere location for office space.
Jacksonville’s unemployment finished at 2.5% in Q4 of 2022, gaining nearly 36,000 job positions year-over-year.
Not only is Jacksonville the largest city in Florida by population, but it also has the most people moving to it annually.
With solid economic performance, a rising population, and a diverse talent pool in the city, businesses that demand Jacksonville office space are positioned for ongoing expansion.
General Area Overview & Demographics
Jacksonville is Florida’s most populous city, with 880,619 residents. Of that population, 39.2% are White alone, 32.9% are Black, or African American alone, 22.4% Hispanic or Latino, and 5.5% are people of two or more races.
Regarding gender demographics, the population of Jacksonville is split nearly evenly, with 49.3% of residents being female and 50.7% being male.
The median age is 35.1 years old, slightly lower than the US national average of 37.2 years old. The median household income in Jacksonville is $48,117, which is lower than the US average of $61,937. However, Jacksonville’s cost of living is much lower than most cities, with a composite index of 94.0 compared to the US average of 100.
While only 89% of American adults graduated high school, 91% of Jacksonville residents have a high school diploma or equivalent. Regarding college degrees, 27% of residents have earned a bachelor’s degree compared to the national average of 28%.
The largest university in the city is the University of North Florida (UNF), which has an enrollment of nearly 16,000 students. Other colleges and universities include Jac and University, Edward Waters College, Florida State College at Jacksonville, and many other public and private institutions.
Summary of Jacksonville Office Space Performance in Q4 2022
Jacksonville’s office space availability increased by 25.8% throughout 2022, reaching nearly 6 million square feet as companies downsize and embrace more remote work.
Absorption for the Urban submarkets posted a net positive of 202,740 square feet, while the submarkets across Suburban areas went negative by 66,303 square feet, bringing total absorption across all submarkets to 136,433.
The overwhelming majority of positive absorption occurred in Northbank, accounting for 200,047 square feet.
The vacancy was also highest in Class A properties, totaling 20.5%, while Class B closed at 16.1% in 2022.
What are office space rents like in Jacksonville, FL?
Asking rents increased by $0.30 quarter-over-quarter, going from $22.35 per square foot in Q3 2022 to $22.55 in Q4 2022.
Rents have had a nearly steady and consecutive rise since the first half of 2017.
Jacksonville’s Suburban submarkets’ Class A properties posted the highest rents in Q4, with some areas, such as Beaches, going as high as $31.90 per square foot.
Purchase & Leasing Activity
Both sales volume and price were down in the fourth quarter year-over-year.
In 2021, sales volume posted around $360 million, whereas in 2022 finished slightly over $300 million. Regarding sales price, the decline went from approximately $159.00 per square foot to $149.00.
Leasing activity was much higher.
Jacksonville finished 2022 with 330,000 square feet of activity in Q4, bringing the total for the year to 1.5 million square feet, which marks an immediate 40% improvement year-over-year.
The national flight trend drove this increase to quality. Workers are shifting away from affordable value properties and toward higher class space to encourage working in the office.
Notable Office Space Deals in Jacksonville in Q4 2022
There were several leasing and sales deals for Jacksonville’s office space in Q4.
- ASI Government’s leasing of about 28,400 square feet.
- Novocardia’s leasing of about 15,200 square feet.
- Real Capital Solutions’ purchase of 153,000 square feet for $95 million.
- First-Citizens Bank & Trust Company’s purchase of 162,000 square feet for $29 million.
These are a few among other deals that took place.
New Office Space Development Activity in Jacksonville in Q4 2022
With the flight-to-quality movement, high availability, and leasing activity where it is, there has been no new development for office space in Jacksonville for the fourth quarter.
Year-to-date completions were below 540,000 square feet, exclusively for Class A space. That number stayed the same by the end of 2022.
About 1.4 million square feet were under construction during Q4, but all of that activity came from prior periods.
Market Forecast for Jacksonville’s Office Space Market
Jacksonville maintains the lead fundamentals for a healthy office space market, and that’s a growing population and job sector.
Rents are excepted to slow their rate of increase as vacancy, and available space continues to rise.
As the flight-to-quality trend continues and employees shift from exclusively remote work to a hybrid in-office model, leasing activity will continue to do well.
Given the availability of space, new construction won’t likely pick up soon.
Takeaways for Office Space Investors
To succeed in Jacksonville’s office space market, indicators from Q4 show that acquiring a Class A property to lease to tenants is the route.
Sales volume and transactions are low, and no new construction has been generated this quarter.
Lower-tier space will continue to decline as quality becomes the new standard nationwide.