Q1 2022 Orlando Market Report
With so many macro issues affecting our economy, no one knows for certain which way the economy is heading. Rising interest rates and inflation, coupled with the war in Ukraine, is casting tension in the markets. Real estate, long considered a safe haven for investors, remains a magnet for fresh capital especially multifamily and industrial sectors. And why not, rents continue to escalate at a record pace.
In the office market, the Omicron scare has subsided, and we are seeing renewed interest with office users returning to the workplace. The numbers indicate this demand is tempered at a positive net absorption of 81,000 SF in the first quarter. Orlando’s sublease inventory of 1.2% vacant is at the national average, yet still above pre-pandemic levels. We are forecasting positive demand to continue for the next several quarters, but at low levels. New construction starts are tempered as well with only 6 buildings totaling 394,000 SF currently under construction, most of which are build-to-suits.
Industrial leasing continues to be active with a positive net absorption of 335,000 SF down from the average of 693,000 SF per quarter over the last 2 years. With 700,000 SF of new deliveries, vacancies climbed for the first time since the second quarter of 2020 (from 3.3% vacant at the start of the year to 3.6% at the end of March 2022). With 2,367,000 SF under construction, industrial rents should stabilize at this $8 psf level for the remainder of the year.