What does the landscape for Colliers look like at this juncture?
Colliers has two offices in North Florida: one in Jacksonville and the other in Gainesville. We have 34 brokers and 14 support staff covering the retail, office, industrial, land and multifamily spaces. Our growth has been steady over the past few years, culminating with 2021, which was a record year by more than 70% on the revenue front. 2022 will be close to that level but likely lower as things are slowing down amid the increase in interest rates.
What is the role of the commercial real estate market in facilitating Jacksonville’s growth?
As brokers, our job is to act as advisors and facilitators to help support all the growth that the market demands. Jacksonville has seen steady population growth of 30,000 to 35,000 people per year for some time, which was largely under the radar until the pandemic happened and you started to see population decreases in major markets. Jacksonville maintained a solid growth rate in a time where many people wouldn’t leave their homes. Throughout all the growth Jacksonville has seen in the last decade, we have actively been working with developers to source sites for single family housing, multi-family housing, retail and industrial development. We also work closely with occupiers of commercial space to help locate and lease space to accommodate their expansion within or into our market.
How will the heightened land demand impact the commercial market in the next couple of years?
As Jacksonville continues to grow and land becomes more scarce, competition will increase and developers will need to get more creative. One consequence of our growth is we do have less entitled land than we once did. But there is still no shortage of land that can be used or reused for development subject to rezoning efforts. Even in developed areas, there are products that are functionally obsolete or have low demand in their current state. So there is tremendous room for redevelopment in certain areas of Jacksonville, particularly in the Downtown area. We are already starting to see enterprising developers make big moves in the urban core, citing the incredible long-term value there.
What are some ways in which the commercial real estate sector is using technology?
It is important for our people to be up to date on current technology trends so they can help our clients make sound, informed decisions. One of the ways Colliers is doing this is consulting with owners about the implications and potential uses for augmented reality. For example, do you own the image of your building in the metaverse? How might landlords monetize the use of their buildings to display ads in the metaverse? We have also developed a tool called Colliers 360 that helps occupier tenants access a full 360 view of their portfolio to understand their occupancy costs, lease expiration and other factors across a portfolio that might span hundreds or thousands of locations. Colliers also invests in startup property technology companies through the Techstars Proptech Accelerator program, which is an angel investment platform. This allows us to get an early look at the technologies that will drive the future of our industry.
Are there any specific groups that are seeing more attention than others?
The growth on the industrial side has been exponential, with 10 million square feet absorbed in the last two years and 30 million since the GFC. We are a market of 150 million square feet, so you have basically added 20% of the stock since 2010. Multifamily is right behind that, following population growth with a consistent amount of 4,000 units absorbed per year. Retail has also seen growth, with a shift away from soft goods to services, which has been going on for years. The retail market is now seeing record-low vacancy and record rent growth. Also, retail development is limited, which is good for landlords as they retain pricing power and get to control more of the conversation.
The most challenging space has been the office sector due to the uncertainty surrounding the work from home trend. Currently, we have 9 to 10% headline vacancy, which is good historically, but if you look at who’s actually in the office, it’s closer to 50 to 70% vacancy depending on the building. Landlords and occupiers alike are trying to figure out what happens to the corporate office long term. Construction cost and capital cost increases are having a compounding negative effect.
Is there any legislation that you have an eye on?
Historically, rent is taxed in the state of Florida, which has been a challenge for the industry. We were able to knock off a few basis points from that and will continue to challenge it in hopes of getting it eliminated. Also, there is a movement to help improve the liquor license process in Jacksonville. Currently, it is extremely challenging to get a liquor license because they are limited, come up in a lottery and cost around $1 million. So, there is a movement to undo these constraints. Lastly, there is a push to make portions of the Riverwalk a social district with open alcohol containers, which should help drive traffic, especially during major events.
What are Collier’s priorities as a brokerage within the next year or two?
As one of the largest and most active brokerage companies in Jacksonville, we are already in a great position to take advantage of Jacksonville’s coming growth. There is no doubt that Jacksonville will continue to grow, and we’ll grow with it. But we don’t want to grow just for the sake of growth. We want to do it by adding top tier advisors to our team. Those are the people most valued by our clients and ultimately, we want to make sure our clients are served at a high level.
Source: Capital Analytics Associates