Q4 2022 Orlando Market Report
Orlando’s office market has been moving sideways. Most companies have adopted some form of work from home model and as leases rollover, many of those companies are terminating or downsizing. The few corporate relocations to Orlando have minimized the negative absorption we’ve seen over the last 12 months. Rental rates have held steady, but higher concession packages are more prevalent.
There are few speculative office projects in the works mostly because of the diminished demand and partly because of eroding capital markets due to rising interest rates. Central Florida’s vacancy rate of 10.4% is well below the national norm of 13.5% which is a sign of the health of the local economy. Fortunately for Orlando and the Sunshine State, population growth is high, and tourism remains elevated, so any recessionary effects have been diminished.
Overall, there has been a flight to quality with class A being in higher demand. Companies are competing for labor in a tight market using building amenities to attract the best talent as they give back larger blocks in older, less functional buildings. This trend will continue throughout 2023.
The industrial market had another blowout quarter with 1.15M square feet of net absorption. Rents are at a historic high, a 13% increase YOY. 3.1M square feet is under construction and while activity has somewhat slowed, there is no sign that the market will correct this year.