Colliers International: Vacancy Rates Up in Jacksonville Retail Sector
Landlords and tenants are navigating an unprecedented time, as the COVID19 pandemic has shuttered nearly all nonessential businesses.
So here's a question many of us have once the dust settles: What does the future look like for the retail landscape on the First Coast?
Jason Ryals with Colliers International's Jacksonville office has been studying the North Florida retail sector. He said Monday that vacancy in the local retail market currently stands at 4.5%; a 60 basis point uptick since the end of the fourth quarter in 2019.
"Grocery stores are obviously a necessity and doing well," Ryals said during an interview on First Coast Connect with Melissa Ross.
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"I think the hair salons and nail salons and even restaurants and hardware stores, they'll all come back relatively normally. I think movie theaters, gyms, places where large gatherings were happening are going to see a little bit of a longer recovery."
The restaurant sector, now confined to delivery and takeout items only, has been hit particularly hard, and may change permanently once establishments open back up, he said.
"We've heard comments like, there may not be menus in the future. The ketchup bottle and the salt shaker and the pepper that sit in the middle of the table likely won't be there. Do servers come out and take your order? Or do you sit down and basically order online from your table and the server brings the food to you? That may be an immediate kind of knee-jerk reaction when things open, and maybe over, you know, five or six years we get back to some more normalcy."
As both commercial and residential tenants stop paying rent, Ryals said that will also impact an overall recovery:
"It all flows upstream. So the tenants don't pay rent to the landlords, and the landlords can't pay their mortgage payment to their lenders, and the lenders then ultimately will likely have to go to the government for a bailout,” said Ryals.
Earlier this month one of Jacksonville’s largest commercial landlords, Sleiman Enterprises, announced it would waive rent payments for April and May, but with the caveat that two additional months would be added to the end of those leases.
“I talked to a landlord last week that has a pretty good portfolio of retail centers around the state of Florida, and they said they're getting two to three tenants a day either terminating their lease now, or just saying they're not going to renew when their lease comes up for renewal later this year. That landlord was at 3% vacancy in February, and they said by the end of the year, they're thinking their portfolio will be closer to 15%. So yeah, there'll be a ripple effect."
Jacksonville First Quarter 2020 Retail Market Snapshot
Melissa Ross can be reached at firstname.lastname@example.org, 904-358-6382 or on Twitter at @MelissainJax.