Service-Center Leasing Hits Soft Patch

ORLANDO-The seven-million-sf, 69-building south Orange County office and flex-space market tracked by Maitland, FL-based Rebman Properties Inc. has hit a bump on its recovery trail. So says a new survey by from the firm, which has tracked this market for 18 years.Net absorption of 124,904 sf is down from the 221,593 sf posted in fourth-quarter 2003. The number of signed leases in excess of 5,000 sf is also down from the last quarter. But there are some positive signs the market is gearing for a rally, says Lyle N. Nelsen, Rebman’s corporate industrial specialist and a former senior broker at Coldwell Banker.”Companies in this market are feeling more optimistic, expressing their pent-up demand,” Nelsen says. “Hiring is up. Jobs are available. And tenants are expanding.” He is also seeing “more activity in tenants negotiating early renewals, taking advantage of the lower rates today.”On the flip side, however, rent concessions remain. “The service-center market is attracting sizable tenants–some of the largest tenants in our industrial market,” Nelsen says. “These are difficult leases to negotiate with considerable rate-reduction pressure. These large tenants are definitely more bullish and demanding.”The only new construction in the niche scheduled for completion by June is the 35,000-sf Global Business Center on Hoffner Road. ComTech Properties is the leasing agent. The slowdown in new product is helping the vacancy levels at most properties where the overall rate is down to 11.4% from 13.19% in the previous quarter. “That’s the lowest it’s been since 1998,” Nelsen says.Still, only 13 of the 69 centers monitored showed a positive first-quarter absorption. Ten showed negative results and the 46 remaining centers stayed even. “It’s obvious that the large leases carried this market during the first quarter,” Nelsen says.Among the 10,000-sf-plus leases recorded in the first quarter were Leslie’s Poolmart, 20,509 sf at 2100 Consulate Dr., handled by John Frederick of Prologis; Rotech Oxygen & Medical, 18,000 sf at 3600 Vineland Rd., brokered by Dan Webb of Webb International; Segmentz Corp., 15,000 sf at Airport Distribution Center, handled by David Murphy of CB Richard Ellis Inc.; Southshore Logistics, 13,566 sf at Sunport IV, brokered by Mike Borling of EastGroup Properties; Design Group, 11,500 sf at Cypress II, handled by Stephen Whitley of Liberty Property Trust; and Humana Corp., 10,800 sf at Cypress II, also handled by Whitley.