Gainesville’s Economy:

In 2022, it became clear that Gainesville has been able to fare well through the pandemic recovery. While economic growth has remained behind the country’s average, steady growth is still forecasted for the area. Additionally, unemployment has fallen over 600 basis points from the pandemic’s peak to a final 2.7% in August of 2022.

UF and its health care centers are considered to still be the largest employers in the market. Government is the largest industry, representing about 30% of the current workforce. The University is a medical research hub and generates about 300 patents a year, mainly in life sciences.

The market continues to serve as a strong central location as it is near numerous major highways and railroads and near major metropolitan areas with Jacksonville, Orlando, and Tampa all only two hours away.

Industrial Market:

The past few years, the industrial market in Gainesville has been supply-constrained with a stable vacancy rate remaining between 1 and 3 percent the past few years. This has led to strong rent growth for industrial properties over the past few years.

In 2022, rent rose 11.4 percent and is growing faster than the US average and is more on pace with larger Florida cities like Orlando and Jacksonville. The average market price per square foot is now $108, compared to the average industrial price of $150 to $160 across the country.

Market Cap rates are averaging 6.7%, remarkably similar to rates seen in the Jacksonville market. This is the lowest cap rate seen in Gainesville in the past five years but is still structurally higher than rates across the United States.

 Despite a slight downshift from 2018 to 2020, the sector has proven essentially immune to any long-term effects of the pandemic and has seen a marginal boost from additional e-commerce spending. Industrial supply is expected to remain limited due to restrained available space and competitive leasing.

Office Market:

Alachua’s office market continues to have strong market fundamentals with strong net absorption, low vacancy rates, and slow acceleration in rent growth. This vacancy rate of 5.5% is well below larger nearby markets, including Orlando and Tampa.

The average asking rent is equal to $20 per square foot. The sector has annual rent growth at 2.6%, higher than the U.S. average at 1.1%, and is in-line with smaller office markets in Florida.

The sector has little new construction, with currently 57,000 square feet (0.5% of current inventory) of 100% pre-leased spaces being added to the inventory.

While the sector has stable fundamentals, the sector is facing challenges with the emerging hybrid workplace trends that will likely prevent landlords from pushing major rent growth and cause tenants to avoid longer-term leases.

Retail Market:

In Gainesville, discount retailers have driven leasing over the past year. There have been a significant increase the past 2 quarters of restaurants and fast-food locations as life returns to normal after the pandemic.

The average asking rent is $24 per square foot, substantially higher than Ocala’s asking rate at $15.60 per square foot.

Investors have been active in retail capital markets the past year. Despite significant price growth, retail acts as one of the most heavily traded submarkets in the region.

Multi-family Market:

Over the past year, rent growth was 6.2%, significantly above the average annual growth of 4.6% over the past decade. Rents, currently averaging at $1,330 a month, have grown significantly with a 57.9% increase over the past decade.

Overall, the sector has faced significant development. There have been 420 delivered units in the past year, above the five-year average, and development is expected to continue. There are currently 1,100 units under construction, which will expand existing multifamily inventory by 4.9%.

Gainesville’s multifamily market has experienced about 70 trades over the past three years. The current market price has risen dramatically in the past three years, about 9 percent last year alone, and now standards at $140,171 per unit.

Data provided by Co-Star.