Laura Street expensive office space

[CCMjax]

This one is sort of counter-intuitive considering all the vacant office space and the general state of downtown.  How is the office space on Laura Street some of the most expensive in the country?  If true, would this not make the Trio and Barnett all that more attractive for a developer?

http://www.bizjournals.com/jacksonville/news/2015/11/20/these-two-jacksonville-streets-are-among-the-most.html

[thelakelander]

Laura Street is not one of the most expensive streets in the country. I doubt it's one of the most expensive in the state. You'll need to look at the details of how this particular ranking was developed.

Downtown's Laura Street is one of the most expensive central business district streets in America to rent office space ranking at 38 in the nation. Laura Street tenants pay on average an extra $1.76 over other Downtown businesses.

This seems to be comparing the rent of Laura Street to the rest of downtown Jacksonville's streets.

[Gunnar]

Checked JLL and while I could not find the entire report (you can see the top ten) rent appears to be based on absolute values (average street full service rent), i.e. not how much more rent on one street is compare to others in the same area.

You can find the top-ten here:

http://www.us.jll.com/united-states/en-us/research/office/americas-most-expensive-streets

To know more how Jacksonville ranks it would be interesting to see who's ranked #30 to #40

[fieldafm]

It would be incorrect to say that Laura Street is the 38th most expensive street to rent office space across all CBDs in the country. The report ranks the top streets in each city against each other, meaning its comparing the street with the highest rent in one particular city versus the street with highest rent in another city.

Forget about Manhattan, do you really think that there aren't streets in downtown Buckhead or Brickell that aren't commanding more than $19.98/sq ft in rent? LOL

It's somewhat helpful to compare the most expensive streets in one city against the most expensive streets in another city if you are trying to recruit a business to a particular region that requires Class A office space, and one of your main selling points is cost (which in Jacksonville's case is certainly a major selling point)... but to claim that Laura Street is the 38th most expensive downtown street in the country to rent office space is laughably inaccurate.

[thelakelander]

Here's the full list:

http://www.us.jll.com/united-states/en-us/Documents/Research/JLL-2015-most-expensive-streets.pdf

I'd imagine nearly every street in a place like Manhattan, San Francisco, Chicago or DC would be more expensive than Laura in reality.  However, this appears to take what they have determined is the most expensive street in the CBD and suburbs for each of the largest cities in the US.

[Gunnar]

Thanks! Looking at the most expensive list they seem to take the most expensive street for a city and then rank only those streets by rent.

So yes, this would mean that pretty much every street in Manhattan (average rent per sf $68.17) is more expensive than Jacksonville's most expensive street.

There is also an oddity in the list: Charlotte's most expensive street is on average lower than the market average.

Not sure if this is a meaningful comparison - a bit like picking each car manufacturer's fastest car and then ranking only them, even though it could well be that even the slowest car of one manufacturer is quicker than another one's fastest.

[Downtown Osprey]

Click bait at its finest. 

[CCMjax]

Pretty misleading article regardless of the point they were trying to get across. 

[simms3]

Also looks at asking rents for available and (maybe) sublease space as well.  The article in Jax says that businesses on Sand Hill Rd pay an average of $141/sf or whatever it is.  That's not true.  Businesses signing new leases today are paying that on average.  While Sand Hill Rd and parts of Silicon Valley and San Francisco have always been expensive, neither these areas nor Manhattan have been this expensive forever.  Manhattan was in the financial boom of 2003-2007.  San Francisco was during the first tech boom.  But these are either new high water marks or are pretty close to the existing.

The other thing not mentioned is that difference cities/markets have different practices for setting leases.  In the office market, some markets have mostly moved over to NNN lease structures whereby the face rate of the rent is lower, but excludes pass throughs (taxes, insurance, and operating expenses), which are paid separately pro rata by the tenant to varying full degrees.

Most markets are still almost exclusively practicing full service gross leases where the year 1 face rate is assumed to entirely encompass the tenant's pro rata share of building expenses to the extent that tenant and landlord negotiated.

Then there are some markets that have some unique, but commonly practiced lease structures that tend to fall in the bucket of "modified", which is a mixture of the two bookends (NNN or FSG).

And as everyone said, the report picks one singular street in any given market of any given size.  I can't think of one submarket, regionally, let alone in the more urbanized areas, of the Bay Area that have any office rents as cheap as the average asking rent today on Laura St, Jacksonville's most expensive.

Meaning, even for a shit building in the East Bay not in Oakland or Walnut Creek, you're going to be paying more in rent than you would for the top floor of the Bank of America building in Jax.  So yes, places like Manhattan, maybe all of metro New York City, the Bay Area, Boston, and DC won't even have office stock that comes down to Jacksonville's most expensive.

The average office asking rent for class A space in America today is north of $30/sf in the industry standard for reporting rents (which is what JLL would have used).  Means Jacksonville's most expensive rents are still only 2/3 as high as the average rent in all of the US.  The US number exceeding $30/sf is driven almost purely by Manhattan and San Francisco.

Manhattan has call it 500 million sf of office space, all basically at $30 or higher.  San Francisco is also a large market with closing in on 100 million sf and you'd be hard pressed to find space anywhere in the city asking less than $50 FSG today.  In fact, maybe even $50 NNN (add $8-35 depending on building for FSG equivalent).

So, I chalk this article and headline up to a complete lack of understanding about real estate and a pathetic fluff piece.