Industrial and Retail Real Estate Updates: A Bullish Ending to the Forum

The 10th Annual Real Estate Forum left no aspect of the industry out of the conversation. Rounding out the evening were two more speakers with positive updates and optimistic outlooks for the industrial and retail real estate markets.


Perry Pursell had some startling information about the cost of building new industrial properties instead of buying existing inventory.

“If you want to go build, it’s going to cost you over $100 a square foot,” said the commercial Realtor with Coldwell Banker Commercial M.M. Parrish.

He then contrasted that with the $53/square foot price with existing industrial property. After looking at both sides of the coin, it’s easy to see where most people want to put their money.

However, there’s just one problem with this bullish segment of real estate: Inventory is low. According to Pursell, the vacancy rate for such properties is 6%. It’s a figure that’s quite low for the industry. The lack of available inventory has become the biggest challenge in this part of the real estate business.

That said, the capitalization rate on these properties is steady at 7%. This makes area industrial real estate a great investment—if you can find it.


Jason Hurst, senior vice president at Avison Young in Gainesville (formerly Front Street) also had an impactful angle to discuss at the forum. His focus, however involved an industry that many feel is in jeopardy.

“Retail is not dead,” he proclaimed. “I repeat… retail is not dead.”

Indeed, retail vacancy rates are at just 2% in our area, which is about a third below the national average. So while brick-and-mortar stores across the country have been heavily impacted by e-commerce, many local establishments seem to be holding their own for now.

That said, Jason admitted that “we’ve had to change the rules of engagement” when it comes to use of retail square footage. He cited the new UF Health facility at the Oaks Mall, which took the big-box space once occupied by Sears. There’s also the new Crunch Fitness in a space that had housed several grocery stores over the years.

Plans are also in the works to add 300,000 square feet of retail space in the next year. The majority of this will be around the Archer Road corridor and near the University of Florida. The west side will also be a hot spot for retail development.

This added space does have a consequence. “For the first time in 10 years, the absorption rate is going to dip into negative territory,” said Jason, “which means that demand will not outpace actual deliveries.” He also expects the retail rental rate to stay at its current $20/square foot rate for some time while new inventory is absorbed.

Finally, Jason mentioned that capitalization rates on retail properties are at 6-8% and should stay there for the next five years. This is much higher than in other parts of the state, which means that people outside of North Central Florida are looking here for retail investment.

“So I’m happy we’re bullish on retail,” said Jason. “We’ve had to get a lot more creative… but it’s here to stay.”

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.