Q2|2018 NORTHWEST FLORIDA MARKET REPORT RETAIL|OFFICE|INDUSTRIAL
2ND quarter recap
This market report focuses on retail, industrial and office space in Northwest Florida. Our experts dive deep into Pensacola and Tallahassee in this issue to give an in-depth update on the submarkets with specific statistics and knowledge. Get confirmed inventory, vacancy, asking rents, top deals and future outlooks of these areas. Submarkets include: Downtown, Cordova and University in Pensacola Downtown, Northeast and Southwood in Tallahassee Our team collects this information from providers like CoStar & Gulf Coast CMLS, along with data obtained through our database on active market leases and sales. We also give opinions on leasing based on the current activity in the market. This report reflects recent trends in these markets that our team members are actively engaged in.
CONTRIBUTORS JUSTIN BECK, ccim, cpm CEO, PRESIDENT OF REAL ESTATE
CHRIS COBB
SHAWN MAXEY SALES ASSOCIATE
MAGGIE WHITTEMORE ASSOCIATE
MARKETING MANAGER
debbie anglin, sior Vice PRESIDENT
rick locchead SALES ASSOCIATE
PENSACOLA OVERVIEW RETAIL Inventory
30,842,000 SF
Vacancy
1,012,000 SF
Vacancy %
3.3%
Asking Rent
$13.60 NNN
OFFICE Inventory
14,800,000 SF
Vacancy
646,990 SF
Vacancy %
4.4%
Asking Rent
$13.00 NNN
INDUSTRIAL Inventory
18,100,000 SF
Vacancy
819,000 SF
Vacancy %
4.5%
Asking Rent
$5.10 NNN
DOWNTOWN | PENSACOLA Inventory
1,029,000 SF (OUT OF TOTAL RETAIL SF IN PENSACOLA)
Inventory %
3%
Vacancy
19,018 SF
Vacancy %
1.8%
Asking Rent
$16.40 NNN
BECK RANGE $18 - $20
The $/SF range we are seeing compared to other real estate platforms.
FUTURE OUTLOOK Southtowne retail spaces are on the horizon. We are excited to welcome Angelena’s, Sabai Thai, and Disko Lemonade.
RETAIL
CORDOVA | PENSACOLA Inventory
3,973,000 SF (OUT OF TOTAL RETAIL SF IN PENSACOLA)
Inventory %
13%
Vacancy
274,000 SF
Vacancy %
6.9%
Asking Rent
$11.12 NNN
BECK RANGE $16 - $19
The $/SF range we are seeing compared to other real estate platforms.
FUTURE OUTLOOK Chicken Salad Chick will be taking space at the old Burger King location on Bayou Blvd. Its’ neighbor at the prior Hooter’s site (ABC Wines and Spirits) is moving along with its’ construction.
TOP DEALS
Fairfield Shopping Center 32,000 SF | $1.5 Million 2 Property Portfolio Krystal’s 5660 9th Ave $1.0 Million
UNIVERSITY | PENSACOLA Inventory
RETAIL
10,642,000 SF (OUT OF TOTAL RETAIL SF IN PENSACOLA)
Inventory %
35%
Vacancy
368,731 SF
Vacancy %
3.5%
Asking Rent
$15.00 NNN
TOP DEALS BECK RANGE $12 - $15
The $/SF range we are seeing compared to other real estate platforms.
FUTURE OUTLOOK A new Burger King will be taking the place of Fazoli’s on Davis Highway, across the street from University Town Plaza.
Avis/Budget Rental Car 5 year deal at university town plaza 2,500 SF
DOWNTOWN | PENSACOLA Inventory
3,557,000 SF (OUT OF TOTAL OFFICE SF IN PENSACOLA)
Inventory %
24%
Vacancy
146,775 SF
Vacancy %
4.1%
Asking Rent
$15.90 NNN
TOP DEALS BECK RANGE $13 - $16
The $/SF range we are seeing compared to other real estate platforms.
FUTURE OUTLOOK Office space is available at a wide range of class, size, and price. A portion of the 19-acre prior ECUA property on Main St has been donated by Quint Studer with the vision of being home to a 100,000 SF athletic facility. Development has been happening around this site. It will be interesting to see how this announcement will affect it further.
9,880 SF leased to Wells Fargo 125 E Intendencia 6,900 SF leased to Chicago Title 700 S Palafox St 4,809 SF Office Bldg Sold at 119 W Intendencia St 3,500 SF Office Bldg Sold at 850 S Palafox St
OFFICE
CORDOVA | PENSACOLA Inventory
3,582,000 SF (OUT OF TOTAL OFFICE SF IN PENSACOLA)
Inventory %
24%
Vacancy
218,864 SF
Vacancy %
6.1%
Asking Rent
$11.50 NNN
TOP DEALS BECK RANGE $12 - $15
The $/SF range we are seeing compared to other real estate platforms.
FUTURE OUTLOOK Vacancies continue to be similar to Q1 in the Corporate Woods, Jefferson Park, and Madison par areas without any real changes to rates.
2,789 SF Medical Bldg Sold at 5120 Bayou Blvd 2,600 SF Office Bldg leased at 4400 Bayou Blvd
UNIVERSITY| PENSACOLA Inventory
4,084,000 SF (OUT OF TOTAL OFFICE SF IN PENSACOLA)
Inventory %
28%
Vacancy
137,776 SF
Vacancy %
3.4%
Asking Rent
$12.00 NNN
TOP DEALS BECK RANGE $10 - $13
The $/SF range we are seeing compared to other real estate platforms.
FUTURE OUTLOOK Available space spread widely on type, class, and rate throughout the University market with most offerings near the interstate.
Whataburger Training Center leased 4,701 SF at Interstate Office Plaza 7,069 SF Office Sold at 6700 N Davis Hwy
INDUSTRIAL
DOWNTOWN | PENSACOLA Inventory
498,000 SF (OUT OF TOTAL INDUSTRIAL SF IN PENSACOLA)
Inventory %
3%
Vacancy
165,000SF
Vacancy %
33.1%
Asking Rent
$4.92 NNN
BECK RANGE $6 - $9
The $/SF range we are seeing compared to other real estate platforms.
FUTURE OUTLOOK The downtown industrial submarket is primed for action as the Port of Pensacola continues to market hard. We should see increased activity in the 2nd half of 2018 as the 33.1% vacancy is historically high! It is hard to compete with other options throughout the market.
CORDOVA | PENSACOLA Inventory
5,400,000 SF (OUT OF TOTAL INDUSTRIAL SF IN PENSACOLA)
Inventory %
36%
Vacancy
263,000 SF
Vacancy %
4.9%
Asking Rent
$4.54 NNN
TOP DEALS BECK RANGE $5 - $8
The $/SF range we are seeing compared to other real estate platforms.
FUTURE OUTLOOK This submarket is seeing a historically low vacancy rate and this will likely continue to drop with no new square footage currently in planning. Industrial properties continue to be in high demand even as they are converted to higher and better uses.
3736 N Palafox St 23,452 SF Lease 4 year term 3590 N Palafox 2,040 SF Lease 2 year term
INDUSTRIAL
UNIVERSITY | PENSACOLA Inventory
5,900,000 SF (OUT OF TOTAL INDUSTRIAL SF IN PENSACOLA)
Inventory %
40%
Vacancy
185,200 SF
Vacancy %
3.1%
Asking Rent
$5.66 NNN
TOP DEALS BECK RANGE $4 - $7
The $/SF range we are seeing compared to other real estate platforms.
FUTURE OUTLOOK Planning for this submarket (and the overall market in general) for current and future industrial properties are being kept mostly to the north and some to the west. We will see continued demand which is likely to be filled through rehab or replacement. Any future large developments will likely be north or west of the markets, we are illustrating here.
208 Stumpfield Rd 12,900 SF, 10.79ac Sale for $1.15M 5316 Davis Hwy 106k SF, 5 parcels, 3.96 ac Sale for $3.75M Ellison Industiral Park 3338 McLemore Dr 12,500 SF Lease, $5.80/sf N
TALLAHASSEE OVERVIEW RETAIL Inventory
24,681,846 SF
Vacancy
1,097,745 SF
Vacancy %
4.4%
Asking Rent
$16.04 NNN
OFFICE Inventory
22,887,565 SF
Vacancy
1,012,210 SF
Vacancy %
4.4%
Asking Rent
$16.95
INDUSTRIAL Inventory
16,103,000 SF
Vacancy
420,461 SF
Vacancy %
2.6%
Asking Rent
$6.16
DOWNTOWN | TALLAHASSEE Inventory
1,319,627 SF (OUT OF TOTAL RETAIL SF IN TALLAHASSEE)
Inventory %
5%
Vacancy
34,404 SF
Vacancy %
2.6%
Asking Rent
$16.04 NNN
BECK RANGE $16 - $19
RETAIL TOP DEALS
The $/SF range we are seeing compared to other real estate platforms.
FUTURE OUTLOOK A lot is happening in the 3rd quarter of 2018 for the downtown area. Publix will be opening their new Greenwise location in the downtown area while Proof continues to build out their new location.
Proof Brewing Company completes transaction for the former Coca-Cola bottling plant at 1320 S Monroe St FOR 22,000 sF
NORTHEAST | TALLAHASSEE Inventory
1,372,973 SF (OUT OF TOTAL RETAIL SF IN TALLAHASSEE)
Inventory %
6%
Vacancy
83,448 SF
Vacancy %
6.1%
Asking Rent
$19.15 NNN
BECK RANGE $16 - $19
The $/SF range we are seeing compared to other real estate platforms.
FUTURE OUTLOOK This submarket is on the rise. The 3rd quarter will bring asking rents to the highest they have been in the market. With lots of retail movement and the ever improving housing market, asking rents will be pushed to the next level next quarter. This should bring more national retailers to the area.
TOP DEALS
Youfit Health Clubs moves into new retail space totaling 19,000 sf on North Monroe St
SOUTHEAST | TALLAHASSEE Inventory
RETAIL
4,383,817 SF (OUT OF TOTAL RETAIL SF IN TALLAHASSEE)
Inventory %
18%
Vacancy
164,885 SF
Vacancy %
15.4%
Asking Rent
$15.22 NNN
TOP DEALS BECK RANGE $12 - $14
The $/SF range we are seeing compared to other real estate platforms.
FUTURE OUTLOOK A lot of activity is happening in the 3rd quarter for the Southwood area and East Tallahassee. With a new proposed retail development coming into Southwood and Premier Homes Builders continuing to develop these areas, we are looking forward to reporting some new tenants coming to the area next quarter.
GBT Realty Corp announced that they’d acquired Governor’s Marketplace 243,100 SF shopping center for $25.5 million Five Below (a new retail concept) opens up their first location in tallahassee at Governor’s Marketplace at the Intersection of Park Ave & Magnolia Drive totaling 10,619 sf
DOWNTOWN | TALLAHASSEE Inventory
4,041,340 SF (OUT OF TOTAL OFFICE SF IN TALLAHASSEE)
Inventory %
18%
Vacancy
153,474 SF
Vacancy %
3.8%
Asking Rent
$21.93 NNN
BECK RANGE $18 - $21
The $/SF range we are seeing compared to other real estate platforms.
FUTURE OUTLOOK The Tallahassee downtown office market has improved dramatically over the past years, with a vacancy rate less than half the national average. Moving through 2018, investment activity has been strong, with both sales volume and price per SF projected to increase for the third and fourth quarters.
TOP DEALS
BAYFRONT CAPITAL PARTNERS, LLC purchase Florida Press Center downtown Tallahassee
NORTHEAST | TALLAHASSEE Inventory
OFFICE
3,568,583 SF (OUT OF TOTAL OFFICE SF IN TALLAHASSEE)
Inventory %
16%
Vacancy
126,466 SF
Vacancy %
3.5%
Asking Rent
$16.13 NNN
TOP DEALS BECK RANGE $14 - $16
The $/SF range we are seeing compared to other real estate platforms.
FUTURE OUTLOOK The northeast Tallahassee office market may see a huge up-tick this next quarter. Plans were announced by the owners of the long vacant Centre of Tallahassee Mall to convert some of the nearly 1 million SF of retail space into office space, aimed at government entities.
Hewitt Real Estate Inc. out of Destin, FL purchases the 100% occupied Investar building The building yielded a cap rate of 8.5% totaling $5,300,000
SOUTHEAST | TALLAHASSEE Inventory
5,110,549 SF (OUT OF TOTAL OFFICE SF IN TALLAHASSEE)
Inventory %
22%
Vacancy
360,701 SF
Vacancy %
11.7%
Asking Rent
$16.18 NNN
BECK RANGE $15 - $17
The $/SF range we are seeing compared to other real estate platforms.
FUTURE OUTLOOK Asking rents will continue to increase in this hot market. Medical office space is on the rise with the 17,000 SF Mahan Commercial Medical Complex and proposed 10,897 SF emergency medical facility in Southwood.
TOP DEALS
State Of Florida Dept of Business completed lease and moves into a new 12,500 sf office space at 1211 Governors Square
INDUSTRIAL
SOUTHWEST| TALLAHASSEE Inventory
2,052,836 SF (OUT OF TOTAL INDUSTRIAL SF IN TALLAHASSEE
Inventory %
8%
Vacancy
55,070 SF
Vacancy %
2.7%
Asking Rent
$6.60 NNN
BECK RANGE $4 - $5
The $/SF range we are seeing compared to other real estate platforms.
NORTHWEST | TALLAHASSEE Inventory
1,923,031 SF (OUT OF TOTAL INDUSTRIAL SF IN TALLAHASSEE
Inventory %
8%
Vacancy
44,812 SF
Vacancy %
2.3%
Asking Rent
$6.38 NNN
BECK RANGE $5 - $7
The $/SF range we are seeing compared to other real estate platforms.
FUTURE OUTLOOK Tallahassee-based Genesis Group, purchases the warehouse and three other properties on the north side of Gaines Street. The plan is to turn the properties into a $52-million, 7-story and 166unit complex that would house up to 511 college students.
TOP DEALS
The Florida Dept of Transportation leases a 12,500 Sf Warehouse in Midway until 2027 Higdon Furniture Company sold their 194,041 square foot industrial building to Hackney Nursery Co in Quincy, FL
WEST | TALLAHASSEE Inventory
INDUSTRIAL 1,434,823 SF (OUT OF TOTAL INDUSTRIAL SF IN TALLAHASSEE
Inventory %
6%
Vacancy
9,800 SF
Vacancy %
0.7%
Asking Rent
$6.11 NNN
BECK RANGE $4 - $5
The $/SF range we are seeing compared to other real estate platforms.
TOP DEALS
20,000 SF Mutli tenant industrial building sells for $1,225,000 on Capital Circle
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