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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)                $6.28
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
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Central Florida Industrial Market Report
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