The dust seems to be settling in northeast Florida’s industrial market after the recession. Sales are still down and asking prices continue to decline for traditional industrial properties, but institutional investors throughout the state seem to be in acquisition mode. While investors are looking, there are not many properties for sale. Despite the fact that Jacksonville is the third largest industrial market in Florida, not many institutional-quality industrial properties come onto the market frequently. Rental rates seem to have stabilized for quality properties and landlords are beginning to reduce the value of concessions offered to tenants. The current overall industrial vacancy rate for northeast Florida is about 9.6 percent compared to 9.7 percent this time last year. Although this is still on the high side for our market, it is still much more favorable than Savannah, Georgia, where the reported vacancy rate is close to 16 percent. Savannah is one of the more competitive markets with Jacksonville, due to its vibrant port traffic. Recent transactions that have helped northeast Florida maintain single- digit vacancy rates include Saddle Creek Corp.’s 213,000-square-foot lease in the former General Motors parts distribution center, which is owned by Cabot Properties and located in the Flagler …
Market Reports
South Florida, the densely packed grid squeezed between the Atlantic Ocean and the Everglades, is back on the priority list of retailers that, until recently, were content to hang out on the beach and wait for more inviting waters, so to speak. Over the past few months, the list of the most active newcomers has included Toys “R” Us, Babies “R” Us, Ross Dress for Less, Sports Authority and Dick’s Sporting Goods, just to name a few. And while the region is still a long way from the blistering pace of activity that was evident during the housing boom, there are other positive signs of life. A year and a half ago, similar to most major cities across the U.S., shopping center landlords in Miami and South Florida were fending off an overabundance of aggressive rent requests from retailers. All too often, in an effort to grasp some security for the future, many had to give in to retailers’ insistent demands for relief. In fact, many chains managed to lock into long-term leases at low- to mid-double-digit rent amounts in class “A” centers that used to command $25- or even $30-per-square-foot. During the past few months, however, the flood of …
Like most cities, Miami’s class A office market suffered during the depth of the recession: vacancy rates doubled, tenants gave back space, and many landlords offered significant incentives to close leases. Interestingly, the market bounced back sooner than many projected with leasing activity accelerating. New to market tenants began filling and backfilling space, foreign investment dollars began pouring in, and the market has benefitted from a flight to quality. There has been a real gravitation toward urban submarkets. Business hubs with residential and retail amenities such as Coral Gables, Doral and the Brickell Financial District have fared well despite the arrival of new product. We’re seeing an overall shift from suburban markets back to urban ones, which is consistent with what’s happening in cities across the U.S. The downtown Miami/Brickell market in particular is seeing high demand as the area comes to life as a 24/7 urban district with lively retail, available housing product at all points of the price spectrum, and many of Miami’s cultural and entertainment amenities. Planned upgrades to the nearby Port of Miami will stimulate further activity. 1450 Brickell office tower is now 80 percent leased just 18 months after delivery. The building has attracted many …
Most Tampa Bay-area businesses look forward to 2012 with more cause for optimism than they had heading into 2011. In prior quarters, the positive direction of the market was largely anecdotal. Over the last few months, though, tangible signs of broad-based improvement have emerged, suggesting that the obstacles to a stronger recovery may be weakening. Hiring activity has spread from a narrow set of countercyclical sectors such as healthcare and education to a broader group of industries such as hospitality and tourism, as well as professional/business services. Housing sales have started to pick up and hotel occupancy rates have increased as business travel and tourism rebound. The rate of growth still falls well short of its heady pace during the 1990s and the post-dot.com years between 2003 and 2007, yet 2011 brought clear signs of forward movement. The resurgence of cost-driven relocations of major businesses to Tampa Bay, combined with significant expansions by locally based firms, has been particularly encouraging. The headlines have been dominated not only by news of firms that are deciding to move to Tampa Bay from other cities, but also of existing companies that weathered the storm of the Great Recession and are moving forward with …
The Orlando office market has been recovering during the past 90 days in all aspects and classes. The vacancy rate has been improving. During the third quarter of 2011, it was between 16 percent and 18 percent, which is in line with the national average. According to REIS, the Sanford and Maitland submarkets have the lowest vacancy at 12 percent and 14 percent, respectively. Sales have been steady, especially bank-owned office buildings, which are trading around 20 to 30 percent below cost. One of the most noticeable sale transactions was $60.8 million sale of the 476,000-square-foot Bank of America Center in downtown Orlando, which Eola Capital sold to Parkway Properties Office Fund II LP in May of last year. Additionally, in October of 2011, Blackstone purchased Duke Realty’s office portfolio, totaling 10.1 million square feet for $1.08 billion. Included in that portfolio were a few assets in Orlando. There are also a few bank-owned office buildings that are under contract and expected close early next year. The Interstate 4 corridor from Disney to Sanford seems to be a hot spot for development as many companies are looking for more exposure and better access. Duke Realty is building the 133,000-square-foot Kirkman …
I am pleased with this quarter’s findings, not ecstatic, but pleased. After adding more than 200,000 square feet of office space to the market in the last two quarters, I am happy to announce that we have absorbed nearly 60,000 square feet this quarter. This is the first decrease in the amount of office space since the fourth quarter of 2010. This was due in large part to the sale of the CH2M Hill building along Williston Road, which accounted for 31,000 square feet of the 60,000 square feet in this report. Nationally, we saw the largest absorption of office space since third quarter 2007 (12 million square feet). Office fundamentals have improved locally. Vacancies are decreasing, there are fewer concessions, rates are stable, and lease terms are increasing. Regarding concessions, for those being asked for by tenants, landlords are replying with a demand for longer-term leases. The good news is that tenants are agreeing to them, hopefully because they see a brighter future in their own business. In terms of vacancies, there is a notable difference in showing and lease activity, perhaps because there is less uncertainty in the business world. This is further evidenced by the longer-term deals …
Amid the current economic uncertainty, the office market continued to mark positive gains within the third quarter seeing 193,955 sq. ft. of positive absorption. Although well short of pre-recession levels, this quarter’s performance shows a steady increase in leasing velocity as the Orlando market has averaged only 119,881 sq. ft. of quarterly absorption over the past year. The Orlando economy has continued to stabilize. Monthly decreases in unemployment have become somewhat of a trend as the latest local unemployment statistics for August saw a year-over-year decrease from 11.7% to 10.3%. This sustained trend does wonders for local economic sentiment, especially among small business owners whose bottom line is highly dependent on the spending habits of other businesses within the local market. The Orlando CBD saw another quarter of positive absorption with Class B space leading the submarket to a total net gain of 26,352 sq. ft. Maitland Center is also beginning to show improvement with 31,289 sq. ft. of positive absorption. The majority of this quarter’s positive gains were seen in the Southwest submarket which absorbed 93,145 sq. ft. of space amid a mix of expansion and new tenants. Average rental rates rose slightly to $20.68 overall. Also noteworthy this …
The Orlando multifamily market has exhibited noticeable improvement this year, and is gaining momentum toward a very strong recovery. After 3 years of rent and occupancy losses due largely to the global recession, apartment fundamentals in Central Florida have registered gains again in 2010. With more than 207,000 new jobs expected locally through 2015 and a very favorable supply/demand balance during the next few years, investors see strong upside in the Orlando apartment market moving forward. Sales volume in Orlando has increased significantly through mid-year, and is up from the historic lows of 2009. Through June, the local market has seen approximately $188 million in multifamily sales — already approaching last year’s total of $219 million but still largely off the 2005 high of $3.2 billion. Cap rates have compressed considerably during the last several months, and most buyers are securing Freddie Mac debt on new acquisitions. Lenders have been the most active sellers in 2010 thus far, and institutional buyers have returned to the acquisition market. New private equity groups — both national and foreign — have also been drawn to Orlando during the last 12 months. Average rents are projected to increase about 1 percent in the second …
Orlando retail vacancy will rise again in 2010, partly as a result of significant blocks of vacant space in properties built during the past few years. While slumping demand has affected all vintages of assets, the vacancy rate in shopping centers constructed since 2007 topped 20 percent last year, much more than the marketwide rate for all properties. Continuing softness in the job market will reduce store visits and suppress spending, further influencing spacial demand and limiting the number of tenants available to fill new shopping centers. Additions to supply will not be a major factor this year, however, as completions will fall to the lowest annual level in at least 30 years. Housing starts, typically a precursor of retail property development, declined for four consecutive years through the end of 2009. Home building will likely remain depressed in 2010 while the economy continues to stabilize, thereby deterring retail developers. Following a year in which 39,400 jobs were eliminated, employers in Orlando will trim 1,000 positions this year, a 0.1 percent decrease. Completions will drop from 900,000 square feet in 2009 to 300,000 square feet this year. Falling rents and rising vacancy will force the delays of some developments currently …
The Tampa market has passed through the most severe phase of the recession, a period during which the apartment vacancy rate climbed 360 basis points. In some Pinellas County submarkets, vacancy will surpass 11 percent this year as the local unemployment rate exceeds metro and state levels, while subdued population growth will reduce housing demand. Hillsborough County submarkets, meanwhile, will fare somewhat better as completions slow. Still, sluggish demand will be behind apartment performance, forcing owners to continue to offer concessions to maintain sufficient occupancy levels. The metro area’s vacancy rate is expected to be among the highest in the country this year, and revenues will contract sharply. In 2010, employers will cut 4,000 jobs, a 0.3 percent reduction, but an improvement from last year, when 51,000 positions were eliminated. Developers are forecast to complete 1,000 units this year, down from 1,400 new rentals in 2009. Planned projects total about 5,100 units, or 3 percent of existing stock. Although supply growth will ease in 2010, demand will remain weak, resulting in a 30 basis point rise in vacancy to 10.8 percent. Last year, vacancy climbed 180 basis points. This year, asking rents should fall 3.8 percent to $767 per month, …