JACKSONVILLE -- There will be a significant hole in the Jacksonville office market, the Florida Times-Union reports.

By the end of the year, when CSX Transportation vacates the 550 Water Street building, there will be 180,000 square feet of available office space in the downtown building, according to Wayne Stringer, president of Foram Management and Leasing Inc. a Miami-based management company.

"You are never happy to lose a quality tenant like a CSX," Stringer said. "We are excited because it creates an opportunity for us to lease to companies that we have had to turn away in the past because we were full."

The vacancy at the 14-story building comes at a time when there is no new downtown office space under construction. The vacancy provides an opportunity for a company in an older downtown Jacksonville building to make a move into a new building or for an out-of-town company to relocate to Jacksonville.

CSXT's office space at the building, commonly referred to as the "550 building," is no longer needed, so the company will move most of the 550 workers to the BellSouth building, located on Forsyth Street, and the remainder to CSXT's headquarters, next door at 500 W. Water St., according to CSXT spokeswoman Kathy Burns.

"Frankly, we did it because we can save some money by moving them into existing space," she said.

Burns said she expects the move to happen during the last three months of the year.

CSXT, which is the largest tenant in the 240,000-square-foot building, has occupied space in the building for the past 10 years.

The vacant space will likely be occupied because it exists in a relatively tight market, according to local commercial real estate observers.

"To build a new downtown office building you will have to have base rents at about $22 to $23 a square foot, and the tenants are not willing to pay that much," said Hobart Joost, a commercial real estate broker at Colliers Dickinson, a commercial real estate company in Jacksonville.

The average rental rate in the downtown office market is $18.42 per square foot, compared with $16.83 per square foot in office buildings in the suburban market, according to first-quarter 2001 statistics provided by CB Richard Ellis, a commercial real estate company in Jacksonville.

Rental rates at the 550 building range from $12 to $18 a square foot, according to Foram officials.

More office space is being built in areas outside of downtown.

In the suburban office market, there is 435,200 square feet of office space being built, according to CB Richard Ellis. Meanwhile, there is no new office space being constructed downtown.

The vacancy rate during the first quarter of 2001 in the downtown office market was 8.5 percent; it was 18.6 percent in the suburban market.

The downtown office vacancy rate compares with 7.6 percent during the first quarter of 2000. The 550 building, which is considered the 11th-largest building in downtown Jacksonville, is owned by Sherlon Investments Corp. N.V., a Dutch company.

CSXT's departure will leave about eight existing tenants, including MCI Worldcom, which uses the 14th floor, Sprint Communications Co. L.P., which occupies the 12th floor, and other companies that have space in the building.

Jim Citrano, who is chairman of the Downtown Development Authority, said the vacancy allows for an opportunity for the DDA to attract a new company to downtown.

Foram Management and Leasing is part of the Foram Group, which was founded in Atlanta in 1978. Foram Management specializes in property acquisition, management and leasing in the southeastern United States. Along with the 550 Water Street building, the company has real estate holdings in Savannah, Ga.; Boca Raton, Fort Lauderdale and Miami.