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Central Florida Market Reports

Central Florida Office Market Report

Average Asking Rent (Price/SF)      $23.52
Vacancy Rate (%)          7.7%
Net Absorption (SF)   (52,516)

Central Florida's office market saw demand growth decelerate for the second consecutive quarter, as supply outpaced occupations during the first quarter of 2019, resulting in more than 52,500 square feet of negative net absorption. This was significantly less than the 500,000 square feet absorbed at the same time one year ago. At 7.7%, the vacancy rate held level year-over-year but increased 10 basis points from the previous quarter. The region's disciplined construction activity shielded the market from any significant impacts, as landlords continued to push asking rents upward. The overall average asking rent increased by $1.01/SF from one year ago to $23.52/SF. This marked the strongest year-over-year gain of this economic cycle. Concessions have all but disappeared for smaller companies, while midsize and larger companies are not seeing the free rent and tenant improvement dollars once offered a few years ago. Orlando saw moderate demand growth during the first quarter, while Tampa's office market continued to struggle, as vacancy pushed upward from negative absorption for the second quarter in a row. Construction activity in the region exceeded 1.0 million square feet for the first time since the Great Recession, as seven buildings totaling almost 1.1 million square feet are underway. . No significant impacts should occur when these buildings are delivered over the next two years, as healthy pre-leasing levels should combat rising vacancy. The only delivery of the first quarter was the Edison @ Primera I, a 115,000-square-foot Class A building, which will be more than 50.0% pre-leased and occupied when completed.

Central Florida Industrial Market Report

Average Asking Rent (Price/SF)                $6.28
Vacancy Rate (%)                  4.6%
Net Absorption (SF)           507,104

The Central Florida industrial market posted continued growth in demand at the start of 2019, as another 500,000 square feet was absorbed in the first quarter. However, this also marked the second consecutive quarter since the beginning of 2014 to post less than 1.0 million square feet of absorption. Demand appears to be slowing, as the development of new industrial inventory has reached record levels never seen in the region's history. More than 5.5 million square feet of projects were under construction at the close of the first quarter, almost double the 3.0 million square feet underway in the previous quarter. Vacancy was unchanged both quarter-over-quarter and year-over year, as the recent surge in industrial development coupled with slowing demand helped keep the vacancy rate at 4.6%. The overall weighted average asking rental rate increased 9.5% year-over-year to $6.28/SF, the result of gains in all three sectors. General industrial space saw growth of $0.58/SF from $5.79/SF one year ago. Warehouse/ distribution saw a $0.39/SF increase from $5.29/SF, and R&D/flex pushed past the $9.00/SF mark with a $1.26/SF increase from $7.77/SF. In the past, significant increases in the weighted averages were hindered by the pre-leasing of newly delivered inventory.



Central Florida Office Market Report
1Q19
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Central Florida Industrial Market Report
1Q19
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