$1,451 1Q 2024
-3.8%
90.5% 1Q 2024
-210 BASIS POINTS
12.1% (FEB 2024)
-2.0% (FEB 2024)
* Please note that these employment figures have been adjusted for seasonal variations and are based on Moody’s Analytics forecast as of January 1, 2024.
** Please note that these unemployment rates are estimates that have not been adjusted for seasonal variations, and they are derived from Moody’s Analytics forecast as of January 1, 2024.
QUARTERLY DEMAND
QUARTERLY COMPLETIONS
In the first quarter of 2024, Jacksonville’s apartment market demonstrated signs of recovering demand with a net absorption of 1,448 units, matching roughly half of the units completed in the same period—an improvement from the previous year. Over the last year, the Southside and Saint Augustine submarkets have continued to be the primary demand hotspots in the Jacksonville market. Notably, at the end of the first quarter, the Southside submarket reported a notable net absorption of 321 units, despite no new completions.
Jacksonville is experiencing one of the largest supply surges in its history, with developers completing 8,040 units in 2023, which expanded the rental housing stock by 6.8%. Although the pace is expected to slow, 2024 will still see an elevated number of new units, with 2,585 already completed in the first quarter and an additional 4,500 projected by year’s end. However, construction starts have declined by about 70% over the past year, signaling a return to more typical levels of new deliveries by 2025. On a submarket basis, Saint Augustine leads in ongoing unit development with 2,295 under construction, closely followed by the Southside submarket with over 2,000 units.
The recent surge in housing supply in Jacksonville significantly impacted occupancy levels, with a notable 210-point year-over-year decline and a 40-point drop over the quarter, reducing the average market occupancy rate to 90.5%. At the submarket level, occupancy rates varied widely, ranging from a low of 86.3% to a high of 97.1% in Baker County. Despite the general downturn, high occupancy persisted in Jacksonville’s more affluent areas during the first quarter. Alongside Baker County, the Beaches and Nassau County submarkets maintained occupancy rates above 95.0%. These were also the only submarkets to show positive year-over-year improvements in occupancy rates, increasing by 3.9% and 0.9%, respectively.
Average Monthly Mortgage Payment
The introduction of 8,200 new rental housing units over the past year has created significant competition in Jacksonville, posing a short-term challenge that has hindered the ability of operators to increase rents as newly completed projects compete for tenants. Effective rents decreased by 0.1% on a quarterly basis and by 3.8% year-over-year, bringing the average effective rental rate down to $1,451. Among Jacksonville’s eleven submarkets, only three saw annual rent increases in the first quarter. Central Jacksonville experienced a 2.8% annual rise, while the more upscale submarkets of Baker County and Nassau County saw increases of 2.0% and 0.7%, respectively. Sluggish rental performance is expected for much of the year. However, a significant slowdown in new construction starts that began last year could lead to a modest recovery in rental rates by the end of the year. This is anticipated to set the stage for a more robust recovery, with rental growth rates possibly accelerating to between 3% and 4% in 2025.
Average Monthly Rent
Investor interest in Jacksonville remains healthy despite challenges in local apartment market fundamentals. Investors appear to recognize the market’s inherent long-term strengths- Jacksonville was the top U.S. metro for population growth on a percentage basis from 2022 to 2023-even amid a sluggish market. Preliminary data from MCSI shows that in the first quarter of 2023, the transaction volume for single-asset traded, conventional multifamily properties reached $186.3 million across five deals, a significant improvement from the previous year, which saw a decades-low activity of only three deals totaling $39.3 million. While comparing just two quarterly transaction totals can be misleading, examining historical first quarter activity against this year offers a clearer view of investor sentiment toward the Jacksonville market. The average transaction count and sales volume for historical period between 2014 and 2023 typically saw 7 deals and $136.4 million respectively. The first quarter of 2024 performed well in comparison, and indicating despite sluggish market dynamics, investors are still drawn to Jacksonville. However, it should be noted that rising insurance costs, especially in coastal areas, could drag on investor enthusiasm in the near future for Jacksonville.
* Trailing 4Q average PPU
* Preliminary Data from RCA – Individual transaction $2.5M +
Please note that the income and expense data presented in this section is sourced from third-party providers. Our firm does not provide any warranty or guarantee as to the accuracy or reliability of this information. We recommend that users exercise their own discretion and professional judgment when interpreting and utilizing this data.
| Income Assumptions | Value / Unit | Year Change (%) |
|---|---|---|
| Rental Income / Occupied Unit | $1,477.72 | 5.7% |
| Recoverable Expenses / Occupied Unit | $68.31 | 7.7% |
| Other Income / Occupied Unit | $88.99 | 1.4% |
| Total Income / Occupied Unit | $1,635.02 | 5.5% |
| Rental Income | $1,361.92 | 4.2% |
| Recoverable Expenses | $62.97 | 6.3% |
| Other Income | $82.05 | 0.1% |
| Total Income | $1,506.94 | 4.1% |
| Operating Expenses | Value / Unit | Year Change (%) |
|---|---|---|
| Payroll | $136.78 | 4.8% |
| Repairs & Maintenance | $44.34 | 9.5% |
| Leasing | $61.65 | 3.5% |
| General | $30.79 | 1.1% |
| Marketing & Advertising | $19.45 | 12.3% |
| Repairs & Maintenance | $98.87 | 9.9% |
| Cleaning | $18.64 | 10.2% |
| Roads & Grounds | $19.39 | 5.2% |
| General | $60.84 | 11.3% |
| Administrative | $38.35 | 16.3% |
| Security | $5.45 | 39.8% |
| General | $32.90 | 12.9% |
| Management Fees | $40.83 | 4.0% |
| Utilities | $79.21 | -1.2% |
| Electric | $18.04 | -5.7% |
| Gas | $0.95 | -6.2% |
| Water/Sewer | $60.22 | 0.3% |
| Real Estate & Other Taxes | $208.46 | 12.9% |
| Insurance | $78.24 | 57.6% |
| Other Operating Expensees | $2.22 | |
| Total Operating Expense | $702.40 | 12.1% |
| Value / Unit | Year Change (%) | |
| Net Operating Income | $804.53 | -2.0% |
|---|
Jacksonville’s multifamily market fundamentals have faced pressures from a recent surge in rental housing supply, despite demand remaining relatively healthy and sustained economic growth. Key drivers of this growth include significant projects such as the University of Florida and UF Health’s UF Health Durbin Park. This 42.5-acre health and wellness campus, whose construction began in early 2024 in South Jacksonville, is expected to create thousands of jobs and inject substantial economic activity with its $1 billion development. Additionally, Jacksonville’s port is undergoing a major upgrade, set to complete in 2025, which will expand its capacity by 150%. This enhancement is already stimulating the metro area’s industrial sector, notably increasing the demand for warehousing. These expansive developments are poised to significantly boost apartment demand in Jacksonville in the near future. The influx of jobs and economic activity from UF Health Durbin Park and the port upgrades will likely attract more residents to the area, increasing the need for housing. As a result, despite the current supply surge, the long-term outlook for Jacksonville’s multifamily market remains positive, with expectations of heightened rental demand driven by these major economic developments.
