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ORLANDO-Third-quarter activity in Metro Orlando's eight-million-sf, 90-building service center and flex space market produced a modest net absorption of 65,729 sf compared to a record second quarter of 314,900 sf, according to a new Rebman Properties Inc. survey. However, vacancy at 7.74%, was the second lowest rate since 1986. Second-quarter vacancy was 7.7%. A total 618,643 sf is available for lease.
"All indicators show this [third] quarter was a pause before another strong surge of leasing and sales activity," says Lyle N. Nelsen, corporate industrial specialist at Winter Park-based Rebman Properties. Nelsen has been compiling the market's statistics since 1986. He calls the third-quarter performance "a correction" and says "a number of agents are reporting another surge of leasing activity is building up for the fourth quarter."
Nelsen notes there was "a noticeable drop" in the number of large leases over 5,000 sf in the third quarter. The two over-10,000-sf transactions included the 21,000 sf leased by Floors Inc. at the 33rd Street Industrial Center and the 10,8441 sf taken by Applied Industrial Tech at Southridge IV. Two new flex buildings were added to the Rebman survey in the quarter. They are the 22,300-sf I-4 Commerce Center at I-4 and 33rd Street, and the 76,862-sf DrewTina II at Crownpoint.
The service center rate range is $6.50 per sf to $14 per sf triple net, depending on the amount of office space involved. Flex space ranges from $5.75 to $10 per sf triple net, also depending on the amount of space leased. Several centers have increased rents. "Negotiating strength still leans toward the landlord side with landlords offering very few concessions," Nelsen says.
On another service center front, the Rebman researcher says condo sales are "holding strong" with the inventory shrinking. Of the total condo inventory of 1.05 million sf, only 111,103 sf remains available, producing a 10.6% vacancy. "Sales are not as hot as they were last year…[but] prices are holding and resales are minimal," Nelsen says. But new development "has come to a standstill, as developers pause and try to evaluate the potential of the market in the near future."
Still, a total 285,445 sf of new product is scheduled to come on line in the fourth quarter. Nelsen continues to predict there will be a total 700,000 sf of net absorption posted by year end. Through the third quarter, the total stands at 464,903 sf.
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