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Central Florida Office Market Report

Average Asking Rent (Price/SF)    $22.04
Vacancy Rate (%)      9.2%
Net Absorption (SF)    53,016

The second quarter of 2017 marked a significant slowdown for Central Florida's office sector, as demand barely outpaced supply. Only 53,016 square feet of positive net absorption was recorded during the second quarter, pushing year-to-date absorption to 863,128 square feet. Overall vacancy remained level with the previous quarter but dropped 170 basis points from one year ago to 9.2%. Overall occupancy rose to 90.8%, its highest level ever recorded. The Class A segment saw supply barely outpace demand for the first time in five years with 1,529 square feet of negative net absorption, while the Class B market saw occupancy growth with 43,871 square feet of absorbed space during the second quarter of 2017. The trend between the Class A and Class B segments reversed, as second-tier space took the lead with 408,977 square feet of year-to-date net absorption, while Class A space trailed with 338,064 square feet absorbed. The quoted average rental rate ticked upward for the 14th consecutive quarter, rising to $22.04/SF from $21.20/SF one year ago. Class A rates increased $1.00/SF to $25.68/SF, the strongest year-over-year growth since the recovery began. The Class B segment experienced a smaller increase, from $20.63/SF to $21.08/SF, during the same time period.

Central Florida Industrial Market Report

Average Asking Rent (Price/SF)             $5.40
Vacancy Rate (%)              5.3%
Net Absorption (SF)        554,710

The Central Florida industrial market grew steadily yet much more slowly during the second quarter of 2017, as 554,710 square feet was absorbed. This marked the first time in 13 quarters that less than 1.0 million square feet was recorded, as demand outpaced supply on a quarterly basis. Year-to-date positive net absorption remained consistent with almost 3.0 million square feet recorded, thanks to the first quarter's robust performance. Increased development contributed to the unchanged vacancy rate of 5.3% from the previous quarter, which is still down 90 basis points from one year ago. Landlords remained reluctant to take advantage of tight market conditions, as they slowly pushed up quoted rents, whereas South Florida rents have significantly over the past two years. Year-over-year, the overall weighted average asking rental rate increased $0.22/SF to $5.40/SF. General industrial space saw the strongest increase of $0.38/SF from $4.93/SF one year ago. Warehouse/distribution rates increased $0.18/SF from $4.88/SF, as R&D/flex rates were up $0.34/SF from $7.03/SF. Significant increases in the weighted averages were hindered by the pre-leasing of newly delivered inventory, which increased lower-tier availabilities. The amount of new high-end industrial product coming to the market could begin to push up average rents over the next year. The region's affordability is attractive to major companies that do not want to pay South Florida prices.



Central Florida Office Market Report
2Q17
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Central Florida Industrial Market Report
2Q17
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