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Central Florida Market Reports

Central Florida Office Market Report

Average Asking Rent (Price/SF)       $24.22
Vacancy Rate (%)           7.6%
Net Absorption (SF)       298,961

Central Florida's office market experienced moderate demand growth in 2019 despite a 27.9% drop in absorption from last year, when more than 842,000 square feet was absorbed. The region recorded 607,500 square feet of positive net absorption during 2019, the lowest level of annual growth since the recovery began. Overall vacancy held level at 7.6% for the third consecutive quarter as the region undergoes a more balanced approach between supply and demand. The Class A segment dominated with more than 510,000 square feet of net absorption during the year. This was in stark contrast with the Class B market, which remained in second place with approximately 102,000 square feet. Lower-tier Class C space struggled during the year with 4,944 square feet of negative absorption. The three buildings totaling 490,000 square feet that were completed during the year had little impact on the market as strong pre-leasing helped. Nine buildings totaling more than 1.2 million square feet were under construction, the most seen during this economic cycle. Landlords have begun to increase asking rents, as the quoted average increased to $24.22/SF from $23.09/SF one year ago, in what was the strongest year-over-year increase since the last economic upswing. Class A space increased by $1.44/SF to $28.58/SF, the highest rate recorded for trophy properties. Class B experienced a smaller increase of $0.75/SF to $22.28/SF during the same time period. Despite limited availability in high-end space, rent increases have yet to discourage tenants from leasing, as Class A rents in Central Florida are much more affordable than in South Florida. Rents should continue to push upward over the next year and level off, but hold steady if the market cools.

Central Florida Industrial Market Report

Average Asking Rent (Price/SF)                $6.31
Vacancy Rate (%)                  5.3%
Net Absorption (SF)           1,374,646

After its hiccup in the previous quarter, Central Florida's industrial market rebounded during the fourth quarter of 2019 with more than 1.0 million square feet of absorbed space, bringing positive net absorption for all of 2019 to 2.1 million square feet. This was modest compared with the 6.4 million square feet absorbed one year ago and the lowest annual absorption since the market began to recover from the Great Recession, indicating that cooling may have begun. Despite the moderate growth, overall vacancy rose by 80 basis points from one year ago, largely because of the more than 5.5 million square feet of new inventory delivered throughout the year. In a two-year span, the industrial segment has accounted for more than 12.2 million square feet of new construction added to the market. Construction starts slowed by more than 50% from the record 6.2 million square feet posted in second-quarter 2019. Developers may be pumping the brakes on groundbreakings for new projects. Asking rents continued to push steadily upward, although not to the levels seen in other markets across the nation. The overall average asking rental rate increased a modest $0.22/SF to $6.31/SF from last year at this time. Warehouse/distribution space increased $0.47/SF from $5.47/SF, moving closer to the $6.00/SF mark, while general industrial space saw a slight decrease of $0.08/SF to $6.50/SF.



Central Florida Office Market Report
4Q19
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Central Florida Industrial Market Report
4Q19
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