Jacksonville FL Commercial Real Estate Market Trends Analysis

Industrial real estate means commercial properties that are often occupied by Business to Business (B2B) companies. B2B companies either make or distribute goods to other manufacturers or retailers.

But, today, there is a growing group of industrial buildings whose occupants are internet purchase fulfillment centers that disburse items straight to the purchaser.

The holders of industrial assets are also long-term investor-landlords. Their profitably projections involve lease income and asset value growth. Their lease agreements could either collect pass-throughs like insurance and taxes in one payment (gross) or separately (net).

Annual and 10 Year Population Growth

Industrial property investors require population statistics for purposes that are different from residential investors. Sluggish or decreasing populations mean a shrinking tax base. Adequate tax receipts are needed to keep up highways and infrastructure that industrial properties require.

An area that is dropping its residents will experience weak commercial property appreciation as well as residential. Industrial tenants are operating businesses that need employees. Big industrial renters will shun areas that are losing residents.

Property Tax Rates

Real estate tax rates are the identical economic indicator for industrial property investors as they are for multifamily investors. Consistent tax rates are an indicator of a certain environment for your investments.

Our resources about commercial property taxation along with how to reduce commercial property tax in the U.S. will help you understand taxation rules.

Accessibility

The users of industrial properties produce or transfer high numbers of goods that are bulky. Tractor-trailer trucks are usually employed to accomplish this. Industrial properties have to be adjacent to major roads so that significant vehicles can get to and from them without difficulty.

Many industrial tenants have to get to train or airport freight terminals. This means that being close to an interstate, which usually goes close to air and railway hubs, a significant bonus for industrial assets.

Utilities

Production properties often need large amounts of electricity and water. If an industrial building doesn’t contain necessary utilities, it will limit the kinds of tenants that will rent there.

Companies that are situated in retail spaces sell directly to the citizens in the trade area. This includes single-tenant and multi-tenant buildings. Desirable companies for single-tenant locations are drug stores, automobile parts stores, banks, and dining establishments.

Multi-tenant buildings can be two or 3 space facilities, modest “strip” centers, big “big box” or grocery shopping centers with nationally known anchor tenants. Centers that contain condos or apartments, office space, and retail shops are known as “lifestyle” centers.

Retail owners utilize “net” contracts that obligate the tenants to additionally take care of the property’s taxes, property insurance, and upkeep of the common areas such as the parking lot. Retail renters also have to take care of the property.

Retail property investors search for the demographic data that their renters will stipulate in their location criteria.

Population Growth

The overall numbers and ratios for the complete market are just the start for retail property investors. Their tenants are looking at the specific submarket, or trade area surrounding the marketed property. Shoppers need to be able to locate and easily reach your retail tenants.

Population improvement is important, but retailers demand a minimal amount of customers now. Retail tenants, and accordingly retail landlords will go over all population information to include size, growth, and daytime population.

Median Income

Nationally recognized brands or “credit tenants” have very particular site criteria that include income amounts. Higher incomes show a suitable location for higher end retailers, whereas middle wages are acceptable for middle income stores such as car equipment stores.

Median Age

The age of the area’s residents could be critical to retailers who lease your retail property. If your retail asset is situated near the age groups that possible renters require, it is less difficult to recruit them.

Property Tax Rates

The previous illustration of how property tax rate data is utilized by industrial and multifamily purchasers relates to retail investors as well. Larger taxes equate to larger rents which increase vacancy rates, and places with growing tax rates frequently have shrinking property prices.

You spend even more money if the county tax office’s evaluation of your property value was incorrect. Protesting property value assessment can be outsourced to the best commercial real estate attorneys in Jacksonville FL.

Companies lease space for their workers in office buildings. Office real estate can be a single story flex space or a multiple level building. Significant companies typically prefer to use their cash for business improvement rather than possessing real estate.

Office rental contracts are typically gross or “full service” contracts. These kinds of contracts add the landlord’s expenses, such as property tax and property insurance into the payment. The details can be updated according to the renter and landlord’s requirements.

Office real estate investors keep these assets for a long term which generates revenues from both repeating rental income and the growing value of the property.

Population

The population demographic data that office space investors hunt for needs to indicate a sufficient number of employees for office tenants. This normally includes the number of residents residing there, their education, and median age. So that they can rent to dependable renters, investors ought to reflect the lessees’ specifications in their location criteria.

Property Tax Rates

Vibrant cities that possess a good pool of potential office employees will have expected, consistent tax rates. Good lessees for your office property will look at this factor and so should you.

Incomes/Cost of Living

Higher incomes can signal an educated population that a lot of office renters need. It additionally gives them an indication of the salary levels needed to compete for the best workers.

Education

The amount of education completed by the potential location’s population is specifically important to big office renters. Some lessees don’t have to see college degrees but other businesses do.

Buy, rehab, rent, refinance, and repeat (BRRRR) is a growth strategy that develops a collection of leased properties. It’s a Buy and Hold investment because the investor keeps the property for a long period of time. This method has the advantage of providing short-term (lease) income and profit from the long-term increase in value.

The investor picks up a rental, repairs or improves it, and rents it out. Next, the property is refinanced subject to its enhanced value, and the increase in its worth is provided to the investor. The funds are used for the down payment for another asset, and the process is duplicated.

It’s hardly possible to qualify for a traditional multifamily financing for a building in need of a serious renovation. Conventional financing firms don’t serve such projects deeming them too risky.

Search through our commercial real estate service provider directory to contact the best commercial rehab lenders in Jacksonville Florida and the best Jacksonville commercial hard money lenders.

Also, don’t miss out on the expert knowledge of the best commercial real estate brokers in Jacksonville FL. Let’s look at a set of indicators a broker will advise you about.

Median Gross Rents

Investors need to see acceptable existing rent standards and evidence of acceptable rent bumps. Rent levels are a key component in an investor’s decisions.

Property Value Growth

Buy and hold investments obviously require assets that are supposed to grow in worth.

Population

The dynamics of the population’s increase is a critical indicator to BRRRR investors. Absent an expanding populace, real estate will stay unoccupied and lose value.

Income

Apartment complex investors have to know the income level of their potential tenants. If you are comfortable owning mid-priced real estate, you do not need to find high wages.

Property Tax Rates

Higher tax rates will stifle both short-term and long-term profitability. On the other hand, stable real estate tax rates can signal a growing region.

This is even more crucial if your property is overassessed by the county tax assessors. To execute a tax protest process, talk to the top commercial property tax appeal firms in Jacksonville FL as well as best Jacksonville commercial real estate appraisal companies.

Professionals in the real estate business think of development as creating whole housing neighborhood ventures or any sort of commercial facilities. A developer finds and buys suitable property and develops either parcels for purchase or buildings that are leased to tenants.

An investor has to make sure the land is correctly zoned, employs civil engineers to design the site work, engages architects and engineers to create building plans, and controls the local approval process. Once permits are received, the land is developed, and the final product is advertised to the desired users.

The time it takes to finish a real estate development could be several years. During that period, economic and legislative shifts could affect the project’s profitability. This is why the most financially dangerous way of real estate investing is development.

Risks can cause you to interrupt the project for an unknown period of time. Even if the site is protected against thieves, you won’t prevent natural disasters from causing damage to the unfinished building. You should seek services by the best commercial landlord insurance companies in Jacksonville FL.

Insurance is something you may need to show lenders if applying for a loan. Ask the best commercial construction real estate lending companies in Jacksonville Florida which local insurance companies they recommend.

Population

To confirm that their residential and commercial development projects are located in suitable places, developers assess the same population size, populace growth, household incomes, and education level of the population that their end users want to find.

Income

Retail facility developers utilize income levels to locate their development where it will draw the buyers that their desired renters need. Lower wages could still indicate a profitable location for blue collar retail centers.

Office and industrial tenants will need to see the salary rates that their potential employees will want. Developers understand this, and use income data to project a location’s attraction for their preferred renters.

Education

Industrial and office property renters want different achievements of education in the area’s citizens. White collar firms need to find more college degrees. Industrial companies look for a higher concentration of high school degrees.

Age

Developers search for a median age that shows residents who are active workers and taxpayers. Industrial and office developers require an employable age citizenry. Citizens who are actively employed typically go shopping and eat out repeatedly at retail businesses.

Growing families become homebuyers that are the foundation of a growing residential market.

Mortgage note investors purchase existent loans for less than the amount owed and become the new lender. Lenders often sell loans to boost capital, but they typically unload them due to them not being paid as agreed.

A portion of mortgage note investors will re-amortize the loan to enable the borrower to keep paying their loan payments — for a long-term investment. They know that if the borrower discontinues making payments, they can take back the asset and sell it, which is a portion of the plan.

Population

Population size and its growth are important to these investors for the same reasons as other investors. This is a fast “sniff test” of the financial vitality of the area.

Property Values

A mortgage note investor needs to discover that property values in the area are growing. The expanding value of the property mitigates the risk of the investment.

Property Tax Rates

If real estate taxes rise, the larger housing cost will be difficult for struggling borrowers to keep up with. This would be not good for interest income, but is actually preferred by note buyers who expect to make a profit faster by taking back the property.

An easy way to invest in the acquisition and management of real estate is to buy shares in a REIT (Real Estate Investment Trust). They produce income from rent and build long-term asset appreciation.

These trusts have to distribute 90% of profits to shareholders as dividends. The ability to place and withdraw your money as your needs require make REITs an appropriate strategy for an average individual to invest in real estate.

REIT investors are passive investors who have nothing to do with the choice or supervision of the assets.

REITs are often acquired by real estate owners wanting to change strategy from active to passive investing. They dispose of their own real property to reinvest the capital into REIT shares.

A like-kind exchange is meant to save money for investors who plan to do so. Learn details about it by reading our guides: What Is a 721 Tax Deferred Exchange? along with Pros and Cons of a 1031 Exchange into DST.

A 1031 Exchange Qualified Intermediary is required by the IRS to have a role of a middleman in the procedure. Find one in our list of the best 1031 exchange Qualified Intermediaries in Jacksonville FL.

An additional investment option that collects money from individuals to invest in real estate is a real estate investment fund. These entities maintain interest in entities that invest in real property, notably REITs.

Unlike REITS, funds aren’t required to pay dividends. The investment return to the shareholder is the expected growth in share value.

A real estate fund might be a mutual fund, a private equity fund for wealthy investors, or exchange-traded funds (ETFs). Similarly to REITS, real estate investment funds provide investors liquidity by allowing them to liquidate their shares on the market anytime.

Because they are passive investors, fund shareholders aren’t part of any decisions such as property purchases.