What Makes Jacksonville, FL a Top Market for Real Estate Investing?

What Makes Jacksonville, FL a Top Market for Real Estate Investing
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When a commercial real estate investor thinks of opportunities in Florida, their mind probably jumps to the beaches of Tampa or flashy nightlife of Miami. While those locations have their upsides, steady Jacksonville shouldn’t be overlooked.

Jacksonville is home to the National Football League’s Jaguars franchise, and tourists flock to its warm weather beaches and spend time on the green at many local golf courses. It’s also home to a major civilian and military deep water port and a steady local economy fueled by companies in the banking, healthcare, and insurance industries.

So as the most populous city in Florida, and the twelfth most in the entire United States, it’s surprising how much untapped value remains.

But it won’t stay this way for long. Experts are taking notice.

For example, Jacksonville ranked as the 23rd best real estate market in the recent Price Waterhouse Cooper (PwC) and the Urban Lands Institute (ULI) Emerging Trends in Real Estate 2020 report. Yardi Matrix’s Booming Jacksonville Multifamily Report Summer 2019 also projects a promising future for the Jacksonville market.

And we’re on the bandwagon too. In this article we’ll share five factors that are driving commercial real estate investment opportunities in Jacksonville.

Factor 1: Population Growth

Though already the city with the highest population in Florida, Jacksonville is still on the rise.

According to Yardi’s report, an “ongoing influx of both young people and retirees moving to Jacksonville are maintaining strong demand for apartments across asset classes.”

This is largely driven by employment gains and the relatively low cost of living in Jacksonville, which is drawing an influx of residents from other areas of Florida, such as Orlando and Miami.

Yardi cites that Jacksonville gained 28,477 residents in 2017, amounting to a 1.9% increase in population which is far greater than the overall United States growth rate of 0.7%. And the U.S. Census Bureau’s American Community Survey data ranked the metro fifth in the United States for senior net migration from 2012 to 2017.

This impressive and steady growth of a lifestyle city is good news for commercial real estate investors, as demand for rentals rises.

Factor 2: Tourism Boom

Not only can the economy count on local residents for a boost, a robust tourism industry helps splash the cash.

According to an article by the Jacksonville Business Journal, Visit Jacksonville reports $3.2 billion in annual revenue from tourism, citing the warm weather and local attractions drawing in both thrill-seeking spring breakers and corporate guests for business conventions.

Whether it’s business, golf, or fun in the sun, Jacksonville is showing it has it all.

Factor 3: Job Growth

Yardi’s report indicates that Jacksonville gained 15,900 jobs over the 12 months ending in June. This represents a 1.4% year-over-year increase. Though that figure falls slightly behind the 1.7% national average, Jacksonville’s unemployment rate was down to 3.0% as of May. That’s far below the 3.6% U.S. average and among Jacksonville’s lowest levels in recent years.

So rather than just relying on tourists or outsiders to spend money in the community, Jacksonville is also attracting workers looking to stay put. This will help generate rental demand and keep prices competitive.

Factor 4: Housing Development

As you would expect, the influx of new residents, strong economy, and tourists are pushing Jacksonville to develop more housing, especially in its downtown area.

Yardi highlights, “Developers are especially targeting areas in and around the metro’s thriving downtown, which has crossed the 5,000-resident mark, according to Downtown Vision’s latest report.”

One such high profile project is a $450 million public-private partnership between the City, Jaguars owner Shad Khan, and the Cordish Cos. to develop Lot J at TIAA Bank Field into a mixed-use destination that includes a hotel.

While already drawing new residents and tourists, new developments will continue to bring in more as well as help the current population stay.

Factor 5: Favorable Tax Rate

Like a cherry on top of it all, Florida’s corporate tax rate is only 5.5%, which bodes well both for the businesses within Jacksonville to stay as well as continuing to draw more companies to put down roots in the area. Neighboring states will have a tough task luring Jacksonville jobs away to more favorable pastures, which would weaken the local economy and drag down the demand for rentals.

The Investment Window is Open — but Closing Soon

With its population growth and strong economic factors, Jacksonville is a bright prospect for commercial real estate investment, and these trusted real estate sources agree.

Yardi’s report is bullish on rent growth, highlighting, “As the metro’s positive demographic and employment trends are slated to continue, we expect a 4.1% rent growth by the end of 2019.”

But it’s PwC with perhaps the most compelling statement of why to look toward Jacksonville. They note, “Jacksonville leaped from 48th place in overall prospects a year ago to 23rd in this year’s survey. Yet its investment flows rank only 43rd since January 2016.”

With these experts spreading the word, this underinvestment won’t last. Your opportunity to buy into commercial real estate in Jacksonville is now.

At Birchstone Investments, we’ve got our eye on emerging investment opportunities in the Jacksonville multifamily real estate market. If you’re interested in learning more about commercial real estate investment opportunities in Florida or another area of the Southeastern United States, join our investor community today.

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Jerry Hollifield

Jerry Hollifield

Jerry is the Managing Principal & Chief Investment Officer at Birchstone Investments, LLC. With a business career that spans more than 30 years, he has been involved in the acquisition, development, financing and management of over $400 million in real estate. In addition, he has been involved in more than 40 Merger and Acquisition transactions with total value exceeding $600 million.

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