Industrial Market Healthy with Lower Vacancies and Strong Demand for Smaller Projects

ORLANDO-Like metro Orlando’s 39 million-sf office market, the area’s 92 million-sf industrial sector is showing no signs of a slowdown. Third-quarter vacancies of 8.9% are down from 9.1% in the second quarter, even though 657,140 sf of new product was delivered. “The market continues to defy predictions of a slowdown,” Michael Shelton, vice president of Grubb’s Orlando industrial services group, tells GlobeSt.com.

Net absorption is averaging 800,000 sf per quarter with a nine-month absorption tally of 2.55 million sf. What the Orlando industrial market could use, however, are more spec warehouse and distribution projects in the 25,000-sf to 50,000-sf range to accommodate smaller users, according to a third-quarter study by Grubb & Ellis Co. Developers are largely ignoring the little guy to focus on big-box projects for national clients.

“Although we are seeing an extensive amount of new construction (1.4 million sf in the third quarter), the product being built serves the needs of flex space users and large, 150,000-sf-plus warehouse/distribution tenants,” Shelton says. The shortage of smaller product is triggering an active built-to-suit category.