Scott Bell Senior Vice President Carter & Associates

For the past 2 years, like most other markets across the nation, office development in Orlando, Florida, has been slow. With such a flat — and in some cases, negative — demand for space, the market isn’t seeing much office development. “From an economic standpoint, many tenants find it more advantageous to look at sublease or existing space rather than anchor a new building,” says Scott Bell, senior vice president with Carter & Associates.

Orlando has not seen any significant new developments in the suburbs; however, CNL, one of the largest real estate companies in the U.S., is planning to build a 12-story building in downtown Orlando with Carter & Associates as a development partner. This will mark the first office tower in downtown Orlando in 3 years and will accommodate approximately 400 new employees. CNL already occupies a 14-story, 350,000-square-foot office tower downtown. The new tower is scheduled to come on line in 2005. While CNL will occupy a portion of the tower, Carter & Associates will lease the remaining space.

No substantial projects have really gotten underway in the past year or so. “Key factors for future growth will include lowering vacancy rates. And, with downtown having one of the lowest rates, we may begin seeing future development plans take shape in that submarket, following the example of CNL,” says Bell.

Recent leases include the approximately 70,000-square-foot lease Hartford Insurance signed at Colonial Center 200 in the Lake Mary submarket. Law firm Rumberger Kirk took 35,000 square feet in Lincoln Plaza in downtown Orlando.

Class A rental rates for the suburbs are hovering between $19 and $22.50. For downtown Orlando, the rates are a little steeper, at $25 to $28.

Overall market vacancy is about 17 percent, while Maitland is 20 percent; Lake Mary is at 25 percent; and downtown is around 12 percent.

Some of the more established submarkets, which offer developments that are mixed-use in nature, should be successful in the near future. Baldwin Park and Altamonte Town Center are two in-fill sites that should see some growth in the future.

“As we move into 2004, the market should continue to improve,” Bell notes. “Downtown vacancy rates should begin to dip into single digits, while I expect suburban rates to stabilize by 2005.”

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