Jacksonville's office tenants are re-examining their office needs in the wake of the pandemic. With the potential for permanent remote work or at least in the near-term a decreased need for office space, office leasing activity will likely continue to be a challenge for the new year, according to a new report from Colliers International.

The report says that the vacancy rate and sublease supply are the two best illustrations of the challenging office leasing market. Jacksonville vacancy has climbed 300 basis points this year to 9.4%, and the sublease supply has increased three-to-four times from pre-pandemic levels to 2.5 million square feet.

The decline in office leasing activity has destabilized rents and put downward pressure on investment activity. Currently, this has caused a wide bid-ask gap on pricing. However, deals are still getting done. In the fourth quarter, Hertz Investment Group sold the Bank of America Tower for $75.5 million or $108 per square foot to Buyer Group RMC. 6675 Corporate Center Pkwy also traded hands in the quarter for $9.4 million or $150 per square foot, and 1 News Place sold for $7.5 million or $112 per square foot.