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Central Florida Market Reports

Central Florida Office Market Report

Average Asking Rent (Price/SF)       $23.94
Vacancy Rate (%)           7.5%
Net Absorption (SF)       82,258

Central Florida's office market reported net positive absorption of more than 82,000 square feet in the third quarter of 2019. This was a modest decline from the second quarter, when a pick-up in demand helped push year-to-date absorption to almost 400,000 square feet, beating out South Florida for the strongest growth in Florida. Overall vacancy dropped another 10 basis points from the previous quarter, pushing occupancy up to 93.5%, its highest level recorded during this economic cycle. Occupancy also remained level from one year ago, as the market held level over the last 12 months. The Class A segment has so far led the market in 2019, with more than 408,000 square feet of year-to-date absorption. The Class B market saw 2,003 square feet of supply returned to the market, signaling more of a balance between supply and demand, while lower-tier Class C space recorded negative absorption of 9,200 square feet. Asking rents continued their steady increase, as the quoted average ticked up to $23.94/SF from $23.14/SF one year ago. Class A space increased $1.00/SF to $28.13/SF, while Class B space experienced a slightly smaller increase, from $21.60/SF to $22.17/SF, during the same time period. It is likely that rents in high-end space have not reached levels that steer tenants from quality to cost, as Class A dominated demand activity. Class A development has picked up with two completions totaling 240,000 square feet so far this year; another five buildings totaling 790,000 square feet are under construction, but healthy pre-leasing will limit the impact of availability coming onto the market.

Central Florida Industrial Market Report

Average Asking Rent (Price/SF)                $6.25
Vacancy Rate (%)                  5.2%
Net Absorption (SF)           (780,630)

The third quarter of 2019 resembled a hiccup for the Central Florida industrial market, as a net negative 780,000 square feet was absorbed. This negative absorption, the first quarterly correction in more than six years, was the result of a single subtenant moving out of 1.0 million square feet in Orlando's industrial market. However, this move-out was not enough to negate Central Florida's healthy performance in the first half of 2019, as demand still outpaced supply with more than 440,000 square feet of absorption year-to-date. Overall vacancy rose 50 basis points to 5.2% from the previous quarter, pushing occupancy down 80 basis points from one year ago to just above 95.0% for the first time in more than two years. Since the beginning of 2016, robust development has accounted for more than 17.8 million square feet of new industrial product, increasing inventory more than 4.0%. Vigorous demand and strong economic fundamentals have aided the region and will likely help counteract the anomaly that occurred during the third quarter. The occupation of new industrial inventory delivered to the market lessened the quarterly impacts such strong development otherwise would have had on asking rent averages. The decrease in high-end vacancy translated into an average rent of $6.25/SF, a 4.3% increase from one year ago. Construction activity remained strong with 24 buildings totaling more than 4.5 million square feet of new inventory underway. As a result, vacancy rates are likely to inch upward over the next 12 months despite strong demand.



Central Florida Office Market Report
3Q19
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Central Florida Industrial Market Report
3Q19
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