2017 was a strong year for the Orlando market, supported by strong demand for office space that led to high occupancies, steady growth in rental rates and considerable amount of new construction. Several office projects broke ground in 2017, including the first major speculative off building in downtown core since 2011.
Institutional investors took notice of Orlando’s industrial market in 2017, driving investment sales volume to 4.2 million square feet, up 1250 bps from a year prior. This heavy institutional interest resulted in peak pricing for well-located Class A warehouse/distribution assets.
Commercial real estate dynamics for the Orlando MSA are expected to stay positive throughout 2018, as demand from existing and new-to-market tenants is bolstered by solid growth in hiring and positive economic fundamentals. The market will also enjoy the economic benefits of job creation and population growth.
Now that we’re well into 2018, we asked some of our top brokerage professionals what Orlando’s success in 2017 means for the year ahead.
1. “It’s an exciting time for the Orlando market, with significant development activity occurring in both urban and suburban submarkets. Between the Creative Village mixed-use project in downtown and the 7,000-acre Lake Nona master-planned development, just southeast of the airport, it’s no stretch to say Orlando is currently seeing some of the most interesting and innovative projects in the state.” — Larry Richey, Florida Market Leader
2. “Investor demand for industrial assets in Orlando is exceptionally strong, however, there is a lack of product to buy as owners are reluctant to sell despite record pricing. On the office side, investor interest is stronger so far in 2018 than it has been in the past couple of years and sources of capital are becoming more diverse.” — Michael Lerner, Executive Director
3. “We anticipate continued strength in the sale of residential land, including multifamily development land, due to strong population growth in Orlando. Retail follows rooftops, so sales of land for shopping centers will accelerate as well.” — Margery Johnson, Senior Director
4. “The industrial market continues to strengthen through the first quarter of 2018 for the Central Florida market. With significant drivers such as tourism, the convention center, eCommerce and new construction all pointing in the right direction for the I-4 corridor, we fully expect to see a continued run forward for industrial for at least another 18 months.” –– Jared Bonshire, Director
5. “Office space fundamentals are the strongest they have been in more than 30 years. The overall vacancy rate for all classes of office space in Orlando is approaching sub 8% and concessions are tightening. New office building construction is on the new term horizon for 2018.” — Damien Madsen , Managing Director
6. “Medical office space in Central Florida will continue to become scarce, especially on or near hospital campuses. As local hospitals continue to grow, physician demand for space will get stronger. However, with the high cost of land and construction, coupled with high physician demand, rental rates for quality medical space will be at a premium.” — Anne Spencer , Director