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Central Florida Market Reports

Central Florida Office Market Report

Average Asking Rent (Price/SF)      $23.69
Vacancy Rate (%)          7.7%
Net Absorption (SF)   204,201

Central Florida's office sector improved slightly over the previous three quarter performances, as demand outpaced supply with 204,000 square feet of positive net absorption at the close of the second quarter of 2019. This accounted for the majority of absorbed space for the first half of the year, as the region recorded year-to-date absorption of 242,325 square feet. Despite the gain, overall vacancy held steady at 7.7% over the last three quarters, holding occupancy to 92.3%. The Tampa/Saint Petersburg market took the lead for demand during the second quarter, while Orlando held onto the lead in overall demand in the first half of 2019. The Class A segment posted more than 333,000 square feet of net absorption, while the lower-tier segments struggled during the first two quarters, as 55,427 square feet of Class B space returned to the market, and the Class C recorded 37,365 square feet of negative absorption. As higher-tier space dominated, the gap in demand between the Class A and Class B segments remained consistent. The quoted average rental rate ticked upward, rising to $23.69/SF from $22.84/SF one year ago. Higher-tier space increased $0.85/SF to $27.85/SF, while Class B space experienced a slightly smaller increase, from $21.44/SF to $21.95/SF, during the same time period. Asking rents in high-end space have yet to rise to levels that discourage tenants from leasing. Development remained tepid throughout the region, with two buildings totaling 240,000 square feet completed and five buildings combining for 792,000 square feet still under construction. The majority of new development has seen strong pre-leasing activity and should have little impact on market fundamentals when delivered.

Central Florida Industrial Market Report

Average Asking Rent (Price/SF)                $6.18
Vacancy Rate (%)                  4.9%
Net Absorption (SF)           346,811

The Central Florida industrial market saw another quarter of positive net absorption, as approximately 350,000 square feet was absorbed during the second quarter of 2019. Year-to-date absorption came in at just over 1.0 million square feet, a noticeable decline from the 3.1 million square feet recorded one year ago. The region had recorded over a million square feet of net absorption every quarter from the start of 2014 until the end of 2018, when demand for industrial space outpaced supply in the six-figure range each quarter. Seven buildings totaling more than 1.5 million square feet were delivered during the quarter, and more than 96.0% of the space remained available for lease, contributing to an increase in vacancy rate of 30 basis points to 4.9% from the previous quarter. The continued surge in industrial development brought an additional 6.4 million square feet of new warehouse/distribution space over the past 12 months. Notably, the region's healthy demand prevented the historic construction taking place from increasing vacancy, which rose only 50 basis points from its rate of 4.4% reported last year. The 28 buildings still under construction, which will total almost 6.0 million square feet and are projected to complete over the next four quarters, could push the vacancy rate above 5.0%. Landlords continued to take advantage of strong market fundamentals, slowly pushing up quoted rents. Year over year, the overall weighted average asking rental rate increased $0.33/SF to $6.18/SF. The amount of new high-end warehouse product coming to the market could push up average rents.



Central Florida Office Market Report
2Q19
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Central Florida Industrial Market Report
2Q19
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