Jacksonville multifamily market looks strong for 2017

Colliers International of Northeast Florida expects Jacksonville's multifamily market to continue on its current path as the area experiences strong job growth and modest construction starts.

"The Jacksonville multifamily sector continues to perform at a high-level from a core fundamentals perspective as rent growth endures at a healthy rate increasing by 3.3 percent verses the prior year," according to the organization's research and forecast report.

Bradley Coe, a director of multifamily investment services for Northeast Florida, said the demand for apartment units will continue to outpace supply through 2017, but absorption of new units will begin to slow in 2018 as supply begins to outpace demand.

"Over the course of 2017, occupancy levels will remain strong hovering around 95 percent for the MSA," he said. "The vacancy rates by product class within the MSA during 2017 should be as follows: class A properties at 6.5 percent, class B properties at 5 percent and class C properties at 4.8 percent."

The research note put together by Colliers reports that Jacksonville's overall vacancy rate is at 5.1 percent even though 2,400 units have been built in the past 18 months. The research also points out that 2,125 units started construction in the past six months and there's 1,200 units proposed for future delivery.

"At the present time, within the MSA 14 multifamily projects remain under construction spread across seven submarkets," according to the research. "Heavier construction activity is concentrated in the South, Baymeadows, and North submarkets."

Other Florida metros have seen much more construction of multifamily developments. Tampa, Orlando, Miami — and elsewhere in the Southeast — have seen somewhat of a boom in multifamily development, with tens of thousands of apartment units constructed in the past few years.

Missing out on the latest wave of apartment construction may not be a bad thing for Jacksonville since less units will allow for rent growth at apartment properties to be pushed.

Also, Jacksonville has seen steady increases in employment with 22,000 jobs created in 2016, according to Colliers research. The unemployment rate in Jacksonville is below the national average of 4.8 percent. According to the U.S. Bureau of Labor Statistics most recent data, Northeast Florida's unemployment rate is 4.4 percent.