The pandemic has made the commercial real estate market in Jacksonville slightly sick, according to a report released today by Colliers International, a professional services and investment management company.

The analysts at Colliers report said, “Needless to say, the office market has been a challenging one for most of 2020 and we see the challenges continuing on a macro level for at least another year. Almost every tenant in the market is reevaluating its space needs and some are eliminating their offices completely.”

Office vacancy has increased substantially (300 basis points) since first quarter 2020 and the available sublease inventory is up three to four times its typical inventory at around 2.5 million square feet or more.

Colliers expects the vacancy rate to continue to increase and market rent to decrease.

On the bright side, over the next 24 months, an unusually large number of new leases could be signed as tenants leave their former spaces in search of options that are more reflective of their new needs for social distancing and cleanliness. Those with capital to spend on “reconfiguring and upfitting” space will have an advantage in what is expected to be a “highly competitive market.”

Development in the last quarter of 2020 in Jacksonville has slowed considerably and the analysts expect development to remain extremely limited for the foreseeable future.

Capital markets activity also remained challenging as investors and owner struggle to determine fair market value and appropriate rent, when it is still unknown what permanent work trends will look like going forward from or with the pandemic.

However, Colliers points out there were several large transactions, including Hertz Investment Group’s sale of the Bank of America Tower for $75.5 million or $108 per square foot and the sale of 6675 Corporate Center Pkwy for $9.4 million or $150 per square foot and the sale of 1 News Place for $7.5 million or $112 per square foot.

2021 does not look much better, “We expect to see further deterioration in fundamentals, with vacancy increasing and market rent decreasing. Transaction velocity should be notably stronger than 2021 as tenants begin to take a position regarding their long-term occupancy plans. We expect development to remain minimal and the capital markets to remain subdued until the second half of the year when we have additional clarity regarding tenant occupancy intentions.”