Jacksonville Industrial Market Finds Its Footing After Development Wave

Written by:

Steve Marcinuk

Date:

30 Mar 2026

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Jacksonville’s industrial market is working through a period of adjustment after a rapid surge in new warehouse construction. Nearly 15 million square feet of industrial space was delivered between 2023 and early 2026, causing vacancy rates to jump from nearly 2% to approximately 10%. While this spike has prompted some concern, market participants largely see it as a temporary correction resulting from an aggressive development cycle, not a sign of underlying weakness.

We built roughly 15 million square feet of industrial space between Q1 2023 and Q1 2026.  In a typical year over the last 10 years, you could expect around 3 million square feet in new space to be absorbed annually,” said John Cole, industrial real estate advisor with Colliers’ Preston team in Jacksonville. “Most of the developers and other brokers I speak to regularly are optimistic about the next two years.  With time, and strong market fundamentals, we expect a gradual return to healthy vacancy levels.”

A Regional Distribution Hub

Jacksonville’s industrial sector stands apart from other major Florida markets due to its role as a regional distribution center. Unlike Orlando, which serves the entire state of Florida, or Miami and Tampa, which are focused on their local populations, Jacksonville functions as a Southeast regional distribution market. This broader geographic reach has helped sustain demand, even as the local industrial market has seen a rise in vacancy.

“Our ports and railways are distributing goods south throughout the state, north along the coast, and also west to markets with limited port access,” said Cole. The city’s position as a logistics hub with access to major highways, rail, and deepwater port facilities continues to attract national distributors and 3PL providers seeking regional coverage.

How the Development Wave Unfolded

Cole entered the industrial real estate business in early 2021, just as the market was emerging from the pandemic shutdown. At that time, vacancy rates hovered between 2-4%, and functional, vacant warehouse space was nearly nonexistent.

“There was plenty of demand, but no space available,” Cole recalled of his early days knocking on doors to offer tenant representation services. The shortage prompted developers to launch a wave of speculative projects. As Class A industrial projects delivered in waves, vacancy gradually rose, while demand simultaneously waned in the post-pandemic adjustment period.

Despite the higher vacancy rate, market fundamentals remain healthy. Jacksonville posted 2% rent growth in 2025, and lease rates have held firm for first-generation industrial space.

Tenant Caution

Tenant activity slowed sharply through mid-2024 and into 2025, as companies paused to assess the impact of shifting trade policies and tariff uncertainty. Many owners responded by offering shorter renewal terms – typically one to three years – which allowed them to retain tenants amid a wave of new vacancies and reduced demand.

“We heard many users cite tariff uncertainty as a reason for delaying expansion or consolidation decisions,” Cole explained. “Users today appear to be more comfortable with risk and uncertainty than they were for the last few years.  They’ve begun to shift back towards making decisions, whether it be expansion, contraction, or strategic relocations.”

This cautious approach led to fewer major expansions, but most companies simply delayed decisions rather than abandoning growth plans. Recently, tenant activity has picked up as users grow more comfortable with the new policy environment and realize that waiting indefinitely is not a viable strategy.

Differences in Landlord Response

Both institutional and private landlords have responded to the new market conditions, but their approaches differ. Private owners tend to react quickly to changes, adjusting pricing or lease terms as needed. Institutional operators are slower to react.  Many of them are also reporting to their lenders and clients, which means more time lost in communicating across larger teams of people.

“The lenders are more involved in the deal flow. They will join the leasing calls and remain active on email threads,” Cole said. This increased engagement allows all parties to discuss challenges and make decisions efficiently, which can help move deals forward in a slower market.

Outdoor Storage

The industrial outdoor storage segment, a niche but important subsect of the industrial markets, is experiencing its own dynamics. Pricing remains stable between $2,000 – 4,500 per acre per month, depending on location, size, and quality. However, demand is strongest for sites 2-4 acres with a building on site, ideally 5-10k square feet with at least one oversized drive-in door and minimal office space.

This segment’s resilience is partly due to ongoing needs from logistics, vehicle storage, and construction-related users, even as the broader warehouse market works through excess space.

Southside Sees Steady Activity

Within Jacksonville, the South Side submarket has been the most active over the past year. This area is dominated by smaller service companies — such as HVAC, plumbing, electrical, and home improvement businesses — that serve the local residential population. These users are less affected by global economic shifts and more directly tied to local demographic growth.

“The majority of the new leases done last year were 10,000 square feet or lower,” Cole noted. “We had fewer large leases done; there were fewer bulk distribution tenants in the industrial market. But the smaller, more localized service companies were still looking, still moving, expanding, consolidating, making decisions.”

This pattern reflects a shift in demand drivers. While regional and national distribution users remain important, local service industries are providing a steady base of leasing activity, helping stabilize the submarket during this stage of the market cycle.

Development Pipeline

One of the most significant factors shaping Jacksonville’s industrial outlook is the near absence of new projects in the pipeline. With very few new construction projects coming online this year, the leasing market has a chance to catch up.

“If you are looking to invest in Jax, it continues to be difficult to uncover new value-add opportunities.  There’s an exceptional amount of interest in the city today,” Cole said. “Developers that are interested in the Jacksonville industrial markets long-term should be familiarizing themselves with lease rates and existing opportunities today.”

Developers who are actively tying up land today will likely complete their projects in 2.5 to 3 years. This gap in new supply sets the stage for tightening conditions and renewed rent growth once vacancies return to more typical levels.

Market Outlook

Jacksonville’s market fundamentals can be characterized by a few important drivers. North Florida has the lowest cost of living compared to the major Florida metros. Combined with an excellent quality of life and plentiful career opportunities, the city will continue to attract new residents, fueling demand for goods and services that require industrial real estate.

“The population is going to keep growing. As that happens, more companies will move here. We’re going to require more goods and services,” Cole said. “I think we will steadily work through the existing vacancy over the next few years.”

The current challenges in the market are best understood as a healthy, limited incoming supply and renewed tenant activity positions Jacksonville’s industrial sector for a gradual return to equilibrium. As excess inventory is absorbed and new construction remains limited, the market is likely to see tightening conditions and upward pressure on rents by the latter half of the decade.

For investors, developers, and tenants, the key takeaway is that Jacksonville’s industrial fundamentals remain healthy. The city’s strategic location, diversified demand drivers, and stable growth trajectory suggest that today’s elevated vacancy rates are temporary. Those able to take a long-term view — and who can navigate the current correction — are likely to find opportunities as the market moves into its next growth cycle.