Three years ago, the Jacksonville Port Authority (Jaxport) signed Mitsui to a 30-year lease for 158 acres at Dames Point, on which the Japanese shipping firm planned to develop a cargo terminal that would establish the city as its East Coast operations center. Mitsui subsidiary TraPac Inc. won't complete the new facility for another six months, but the shipper decided to launch its East Coast-South China Express service ahead of time because of high demand.
The Mitsui deal attracted the attention of other shippers, and in 2006 Denmark's Nordana Line, which provides service to Mediterranean and West African ports, announced plans to shift some of its services from Savannah to Blount Island. The same year, Atlantic Container Line of Iselin, NJ began exporting cars and trucks from Blount Island to West Africa. Early this year, Crowley Maritime signed a 10-year lease with Jaxport for seven acres and a 10-year sublease for 3.8 acres. This spring, Jaxport signed a detailed agreement with Korea's Hanjin Shipping Co. for development of a 170-acre container terminal to open in 2011.
The deal also attracted retailers and developers. Shortly after the Mitsui announcement, Michael's Stores Inc., which uses Mitsui to import much of its holiday merchandise, initiated plans to move its seasonal distribution center from Savannah to Jacksonville, leasing a 285,000-sf building from Boston-based First Winthrop Corp. Since then not only has development has continued unabated, but major new players have discovered the market. Among the first were Majestic Realty Co. of City of Industry, CA, which purchased 47 acres for development of 833,000 sf of distribution space, and Dallas-based Jackson-Shaw Co., which acquired 995,000 sf of buildings on 77 acres along with 86 undeveloped acres.
The most recent entrants are Denver-based ProLogis and Atlanta's Oakmont Industrial Group. The former paid $7.8 million late last year for 97 acres in Westlake Industrial Park for the 1.5 million-sf ProLogis Park Westlake; and in April it paid $4.1 million for 53 acres in another location for development of the one million-sf ProLogis Park 295. Oakmont recently acquired 75 acres only 2.5 miles from the TraPac site for development of NorthPort Logistics Center and has begun construction of an 849,042-sf bulk distribution building.
Despite the growth, the city still has not broken into the upper tiers of port activity. While total cargo grew from 7.3 million tons and 692,422 20-foot equivalent units (TEUs) in '03 to 8.3 million tons and 710,073 TEUs last year, it still ranks behind some 30 other North American ports in terms of tonnage and 25 ports in container totals. It ranks second, however, in vehicle imports, with 614,647 cars and trucks handled last year. Perhaps more importantly, Jacksonville has greater capacity and more room to grow than many of its rivals. According to Jaxport, the market has 17,000 acres of available buildings and expansion capacity.
In general, brokers describe the leasing market as strong. Though the vacancy rate rose a full point in Q1 to 6.1%, according to Colliers International, the level remains among the lowest in the country and more than two points below the national average. The completion of the TraPac facility and subsequent expansion to a full schedule of Mitsui arrivals is expected to push absorption by the end of the year. Even with delivery of more than 10 million sf of new bulk distribution product for '08, brokers project little in vacancy from the current level.
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