Jacksonville's office market should improve in 2007 despite a "perfect storm" of rising costs that will limit new large-scale office development in the region, according to a new analysis.
"The dynamics of the Jacksonville office market will certainly improve in 2007," says Bill Mason, who heads NAI Realvest in Jacksonville. "But for all the wrong reasons."
Mason said rising construction and land costs plague office building developers.
"Demand for Class-A office space will be flat at best and may even decline slightly because of the declining number of big blocks of office space," Mason explained.
"Over the past couple years, Jacksonville's office market has benefited from big tenants leasing large blocks of space. With fewer of those large blocks available for lease, our office absorption will come from small tenants filling smaller, more scattered blocks of space," he said.
Vacancy will continue to improve, Mason predicted, but rising construction costs, high land prices and increasing operations costs create a "perfect storm" that will limit new office development here, Mason added.
