Global licensed sporting goods distributor Fanatics Inc. is leaving a distribution center in the Westside Industrial Park and relocating most of the 150 employees to a larger center on Commonwealth Avenue.
In addition to the Westside Industrial Park, the company continues to lease nearly 750,000 square feet of office and warehouse space in Jacksonville, where it employs approximately 1,500 people.
Industry sources close to the deal said Fanatics is leaving the center because owner Pattillo Industrial Real Estate has dramatically increased the rental rate.
“It would be inappropriate to comment on commercial terms discussed privately with our clients,” said Peter Anderson, vice president of new investments for Westside industrial park owner Pattillo Industrial Real Estate,
“Jacksonville’s industrial rents are lower than any other major Florida market, so rental costs are rarely the reason tenants leave our market.”
He referred the questions to the fanatics.
A representative for Fanatics declined to comment.
Anderson said Fanatics had leased 270,000 square feet of space at 4300 Bulls Bay Highway since 2014. He said the company informed Pattillo that it would not be renewing the lease.
“We value and value our relationship with Fanatics,” Anderson said.
At the signing of the lease, a Fanatics spokesperson said it was Fanatics’ in-house apparel division, including customizing and customizing merchandise.
Fanatics in Jacksonville
Fanatics, with its roots in Jacksonville, leases a 58,000 square foot corporate office at 8100 Nations Way in the Cypress Point Business Park in South Jacksonville, and two other Cypress area offices totaling approximately 100,000 square feet.
It leases an e-commerce distribution center at the Commonwealth Distribution Center at 5245 Commonwealth Ave. in West Jacksonville. It’s about 6 miles south of the Westside Industrial Park.
New York-based Commonwealth owner DRA Advisors says on its website that the warehouse is 588,267 square feet. Fanatics has been around since 2010.
Fanatics, founded in 1995 by brothers Alan and Mitchell Trager with a store in the Orange Park mall, is valued at $27 billion as it continues to expand its business, according to financial reports.
The Tragers sold the company in 2011 and it is now part of a Philadelphia-based holding company called Kynetic.
Fanaticsinc.com describes the company as “a large-scale, global digital sports platform and globally recognized consumer brand focused on serving over 81 million fans and over 900 top-tier sports properties.”
It has more than 50 offices and facilities around the world.
Its headquarters are located at 8100 Nations Way in Cypress Point Business Park in Jacksonville.
Other headquarters are Betting & Gaming, Collectibles and Candy Digital in New York; Marks in Tampa; European in Manchester in the United Kingdom; and Asia in Tokyo. The West Coast Innovation Center is located in San Mateo, California.
Fanatics has posted jobs in accounting, marketing, operations, human resources, technology, software engineering, and more for Jacksonville.
He says he has more than 9,000 employees “and hundreds of partners, suppliers and vendors around the world.”
In 2015, Fanatics announced plans to consolidate over 300 employees from multiple offices around Jacksonville into the Cypress Point Business Park building.
It had retained its headquarters in the Commonwealth Avenue warehouse.
Westside Industrial Park
Pattillo is renting out the former Fanatics property starting in September 2022.
Anderson said Pattillo is looking forward to getting the property back on the market.
Industrial vacancy rates are low for warehouses as demand continues from companies leasing distribution center space.
“We have strong potential interest in 4300 Bulls Bay Hwy because of the value it offers,” Anderson said.
He said the 270,000-square-foot building can be doubled in size on the 40-acre site, offers dockside trucking and can accommodate 400 car spaces.
Anderson said industrial rental rates have increased in Jacksonville but remain lower than most state and coastal U.S. markets that compete with northeast Florida.
“The rental rate that we can offer in this building to fanatics or anyone would be lower than the rate in other comparable markets,” he said.
Anderson said rates depend on rental terms and property upgrades.
“Would the rental rates have gone up from what they were paying?” I would expect that, but we find that our rents are very competitive compared to the rest of the competing municipalities,” he said of the Fanatics lease.
Real estate company JLL found that in the fourth quarter of 2021, Jacksonville’s direct asking industrial rental rate was $5.57 per square foot.
This compares to $10.32 in Miami; $7.32 in Orlando; $6.86 in Tampa; and $5.75 in Nashville.
Jacksonville’s rate was higher than what JLL found in Charlotte at $5.07 and Atlanta at $4.57.
Low vacancy rates are also influencing rents as tenants compete for less available space.
JLL found Jacksonville’s industrial vacancy rate of 4.3% to be in the middle of competing cities.
It compares to 2.6% in Miami; 4.9% in Orlando; 3.4% in Tampa; 4.8% in Nashville; 5.5% in Charlotte; and 3.6% in Atlanta.
JLL reported that nationally, the vacancy rate fell to 3.8% at the end of the year, the first time it was below 4%.
“Strong fundamentals seen in 2021 have resulted in extraordinary net uptake, exceptionally low vacancy rates and record rental growth,” JLL reported.
“The pressure to move goods with competitive delivery times has increased demand in 2021 with aggressive rentals by logistics and distribution companies and 3PL providers.”
He said national average rents were $7.11 per square foot, up 11.3% from the end of 2020.
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