SOUTHEAST SNAPSHOT, AUGUST 2008

Orlando Industrial Market

Just about everyone loves a good mystery, but trying to figure out the conundrum that is commercial real estate today is another story. 

Recent headlines aren’t much help. Fast Company pronounced Orlando one of the world’s 12 best cities for innovation. NAR says Florida has fared worse than most with job losses. It adds up to a reluctant appetite for real estate at best. The quarter’s numbers are still being totaled, but anecdotally, it’s more of the same: plentiful vacancies, negative absorption and a moderate number of sales or lease transactions.

Still, all in all, Orlando is holding its own for the usual reasons: increasing population, central location, access to major roads and airports. 

The local industrial pipeline is chock-full of projects that should deliver new product as the economy emerges from its current condition. Recent transaction activity is most robust in Orlando’s south and east submarkets. International Corporate Park is a planned community with abundant warehouse space moving full steam ahead in the so-called “Innovation Way” corridor of southeastern Orange County. And Taurus continues to develop and lease more than 600,000 square feet of distribution space strategically located near 417, I-4 and Florida’s Turnpike.

AMB Properties scored a victory by completely preleasing more than 400,000 square feet of space in south Orlando months ahead of schedule. As of early June in the second quarter, two other sizable lease transactions took place in the tri-county area totaling over 68,000 square feet. Additionally, there have been 22 sales transactions of industrial space in the tri-counties area totaling more than $38 million and representing 522,605 square feet. (This excludes the $175 million, 10-property multi-state portfolio recently purchased by Sam Zell’s The Tribune Co., which owns The Orlando Sentinel and includes their offices in downtown Orlando.) Considering those transactions, sales and lease transactions have dipped from the first quarter but remain consistent.

Nearly 700,000 square feet of industrial space, comprising 26 properties at 20,000 square feet each, is currently under construction in the area, much of which will deliver by the end of 2008. Records show preleasing of this space is flat, however. Another 1.38 million square feet is currently proposed for the tri-county area through 2009; only 51,000 square feet is preleased. This leaves a big question mark in net absorption numbers for next year to 18 months.

As Orlando’s submarkets push the boundaries into ever-rural areas, the relevance of Polk County with I-4 barreling through can’t be ignored. With a lower cost of living and wide open spaces, the Central Florida Development Council in Bartow is working diligently to attract business to the county. Though it remains a citrus/cattle/mining powerhouse, Polk County has nearly 5.5 million square feet of industrial space available for lease with 65 structures at 20,000 square feet to more than 400,000 square feet. Sources list RSF as low as $3.50.

So the questions continue as we lurch toward the third chapter … or quarter. In any event, it’s a real page turner.

— Shelli Browning is director of research & marketing with the Orlando office of GVA Advantis.

©2008 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.