CBRE Reports Few New Retail Tenants Signing Deals in Jacksonville, FL

JACKSONVILLE, FL-CB Richard Ellis' Jacksonville, FL office reports that while a slight second quarter economic uptick occurred, forecasters’ predictions for a rocky third quarter proved to be
accurate.

Lea Court (top right photo), CBRE Director of Retail Leasing, Jacksonville, notes the third quarter ended with consumer confidence at record low levels as a “complete meltdown” of the financial markets was avoided only by unprecedented governmental intervention.

The state of the economy has affected consumer spending in a tangible way.

At the root of the problem is the mortgage crisis as borrowers took on loans they
could not afford, made by lenders acting irresponsibly.

This, coupled with rising fuel
costs, high unemployment and election uncertainties impacted third quarter results.

These conditions are not expected to improve in the near future, and total retail sales for the holiday forth quarter ’08 will be the weakest in 6 years, according to a forecast by CNN Money. Worst hit will be retailers selling non-essential items and those with product lines dependent on a strong housing market. This trend will be felt both nationally and locally.

As an example, Starbucks is closing 600 stores nationwide, six of which are located in the
Jacksonville MSA.

Conversely, on a local level, the retail vacancy rate stood at 6.7 percentage,
roughly unchanged from the second quarter but significantly better than the national average of 8.2 percentage.

Year to date absorption is positive 909,664 sq. ft., however third quarter absorption is negative 13,197 sq. ft.

The overall high absorption is a function of big box/mid box space that was largely pre-leased at three centers that have been completed so far this year:

OakLeaf Town Center (860,000 sq. ft.) (bottom right photo), OakLeaf Commons (73,717 sq. ft.) and Kendall Town Center (275,066 sq. ft.) totaling 1,208,783 sq. ft.

From the landlords’ perspective, with few new tenants signing deals, the main focus for the short term is tenant retention. During these challenging times, many national, regional and local tenants are scaling back as landlords are offering concessions as tenants’ renewals occur.

Other third-quarter highlights:
• Jacksonville retail vacancy rate is 1.5 percentage lower than the national average with 6.7 percentage.

• Unemployment rates are up across the board. While Jacksonville is lower in the overall Florida market, and Jacksonville surpasses the National unemployment rate.

• University of Central Florida Institute for Economic Competitiveness is reporting that the Jacksonville MSA is expected to show moderate growth in the economic indicators.

• The Florida Agency for Health Care Administration has approved for St. Vincent’s HealthCare to build a 98-bed hospital in Clay County.