Office Sales Strong in First Quarter

ORLANDO-Despite an unchanged overall vacancy level of 17.4% and negative absorption in six of nine monitored submarkets, institutional investors completed four transactions in the first quarter, buying an aggregate 653,828 sf in four buildings for a total $74 million or an average $109.79 per sf, according to a new analysis by the Orlando office of Advantis Commercial Real Estate Services/GVA.Birmingham, AL-based Parkway Properties LP logged the largest sale with the $26.3-million purchase of the 206,057-sf Maitland 200 building in January. Parkway paid $127.61 per sf for the Maitland-Center submarket property that was bought at a 9% cap rate.”There is some level of concern among investors nationwide that the office investment market could be headed toward a price correction–the fear being that values have risen too high too fast and that growth is not sustainable,” notes Lisa M. DeVore, Advantis’ research director. “Coupled with the fact that the leasing market has been lackluster in many markets and job growth has been, at least up until now, relatively slow due to increased productivity among fewer workers and over-hyped concern regarding the off-shoring of jobs, it seems feasible that there could be reason for concern.”However, investors “fortunately, continue to find considerable value in the metro Orlando office investment market and there has been no shortage of activity,” she adds.And while there hasn’t been a lack of activity in the office-leasing arena, Advantis’ first-quarter numbers, at least, show this market is still in the red. Total net absorption in the nine monitored submarkets is a negative 163,275 sf. In 2003, the number was a positive one million sf but in 2002, net absorption again showed a negative 159,892 sf.