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May. 17, 2012

MARKET SNAPSHOT: Jacksonville Sees First Job Growth in Years; Vacancy to Level Out at 8.5 Percent

By Philip Shea, Associate Editor

After lagging considerably behind the rest of the country in economic recovery, the city of Jacksonville posted an employment gain of 1.0 percent in 2011—translating to the addition of 5,900 new jobs. While this was not enough to bring the local unemployment rate below 10 percent, it marked a significant improvement from the 11.2-percent unemployment rate in 2010.

Additionally, demand for apartments is expected to slow over the next couple of years due to increased demand for single-family homes. Sales in this sector increased 1.9 percent in 2011, and the inventory of available homes for sale decreased by 17 percent as compared to 2010.

Hendricks & Partners projects the vacancy rate for apartments to fall slightly from 8.8 percent in 2012 to 8.5 percent in 2013, this as construction is expected to lag even further behind the subdued demand. There were no new units added during 2011, and only 288 units are expected to be added this year.

The Port of Jacksonville is expected to receive $12.7 million state funds for an expansion that will allow the second-largest deep water port on the East Coast to be more competitive with ports like Miami and Charleston. Hendricks & Partners notes that the port city already has an advantage over others due to its business friendly climate and low tax rate.

MCSM Services, a major Dutch export company, is just one firm pondering relocating to Jacksonville due to its advantages over other locales, including the state and local economic benefits. Other European manufacturers are in discussion with the local government and considering similar moves.

Bloomberg recently ranked Jacksonville fourth on its list titled “cities with the biggest growth in tech jobs,” pointing to a 58 percent increase in that sector of the economy. Other industries such as leisure, hospitality, professional, business services, education and health services are also expected to aid in economic expansion in the coming years.

Driving the recent boost in single-family is a remarkably high homeownership affordability rate of 84 percent. This takes place alongside increasing multifamily rents, with the average local rent rising 1.3 percent—from $800 to $810—between 2010 and 2011.

The beach areas remained the submarket with the highest rents, at $995 per month, while the Arlington area had the lowest average rent, at $643. Overall rents are expected to increase 1 percent—or to an average of $830 per month—through 2013.

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