Jacksonville, Florida, is seeing an influx of multifamily inventory coming online. Just over 7,700 units were delivered in 2023, while current construction comprises nearly 15,000 units. Between the recent deliveries and what’s under construction, that’s a roughly 16% expansion to the market’s total multifamily inventory.
“2024 is going to be a challenging year for apartment owners in a lot of Sun Belt markets, Jacksonville included. The market is no different from Orlando and Tampa, Florida; Austin, Texas; and Nashville, Tennessee,” says Casey Babb, executive vice president at Colliers. “There’s a historic wave of supply coming online this year that needs to be absorbed. And, to be clear, those units will ultimately be absorbed, but it will make for a challenging next 12 to 24 months.”
Babb notes that even though the new deliveries could cause short-term problems, Jacksonville, and Florida in general, is “a juggernaut for population growth, and there’s a certainty of demand that will fill these units.”
From 2017 to 2022, population in Jacksonville grew at a pace more than four times the national average, according to Babb. It has a diversified economy, being one of the more active and large container ports in the state as well as having a major medical and military presence. Babb says the market has also seen an influx of finance and tech jobs as well. It was ranked the No. 1 city for U.S. job seekers by MoneyGeek in 2023 as well as the No. 3 hottest job market in America by The Wall Street Journal last year.
“Population growth and job growth are really the drivers of multifamily, and those trends are going to create healthy markets in all of the Florida cities long term,” he says. “Jacksonville, on the whole, continues to be a more affordable type of market. The rents there and the cost of living is less expensive than Tampa or Orlando and far less expensive than what you see in South Florida. When you have that affordability and job growth, that’s attractive.”
The influx of supply is having an impact on occupancy and rents, but Babb says it’s all relative. Year-over-year rent growth is down 5%, according to Colliers. However, rents are still up 45% on average in aggregate from 2020 until now. He adds that rents in Jacksonville are expected to start growing next year by 3%.
The market also is around 92% for occupancy. While the market peaked at the mid-96% range in late 2021, it is expected to bottom out this year and then return to the longer-term average of the mid-94% range in 2025.
Investment activity declined drastically in Jacksonville last year with only 11 trades of market-rate properties with over 100 units versus 47 in 2022.
“Florida, in general, was hit with rising interest rates and a pretty catastrophic insurance situation, and it’s really made it hard for deals to pencil unless the seller was distressed in some shape or form. Owners have largely been in a holding pattern,” Babb notes. “I think as interest rates stay higher for longer, it becomes embedded in the psychology that this is the new normal. We’re expecting to see more and more deal flow as loan maturities occur and sellers start to be forced into some difficult decisions.”
