ORLANDO-Orlando’s office market may be bouncing along the bottom, but some submarkets are beginning to show signs of life. Grubb & Ellis just inked two office deals in separate Orlando submarkets that could represent a trend in the making.
Anne Deason Spencer, vice president of the Office Services Group at Grubb & Ellis, negotiated long-term leases in the Airport and Millenia submarkets that signal the days of free rent may be coming to an end. Spencer represented the Devereaux Foundation in a 17,529-square foot lease in the Airport submarket and Currency Exchange in a 3,944-square foot lease in the Millenia submarket.
The Devereaux Foundation, which provides services to children with health or developmental disabilities, renewed its lease at Citadel One. Although financial terms of the deal were undisclosed, Spencer tells GlobeSt.com that she negotiated a “significant rate reduction.”
Located at 5959 TG Lee Blvd. in southeast Orlando, Citadel One is a 26-year-old, 150,000-square-foot building owned by Boca Raton-based Penn-Florida Realty Corp. The building is currently 86% leased. Penn-Florida Realty Group could not be reached for comment.
“The Airport submarket doesn’t have any new construction,” Spencer says. “The buildings are older and have seen high vacancy rates for some time. Citadel One got hit pretty hard when DR Horton gave back about half of its 35,000 square feet of space. But activity has picked up a little bit in the Airport submarket lately.”
Currency Exchange International inked a new lease agreement for 3,944 square feet at Millenia Park One at 4901 Vineland Rd. in southwest Orlando. MIL Owner owns the 10-year-old, 157,000-square-foot property. Emily Zinaich of Morrison Commercial Real Estate represented the landlord. Financial terms of the deal were not disclosed.
“The Millenia submarket is rocking and rolling, despite having seeing some major homebuilders vacate office space there,” Spencer says. “We got in just under the wire. If we had waited until February 2011, we wouldn’t have gotten such a good deal.”
The overall vacancy rate for Orlando decreased to 18.8% at the end of the third quarter of 2010, down from 20.0% at the end of the second quarter, according to Cushman & Wakefield. However, year-to-date absorption rate was negative 1.25 million square feet at the end of the third quarter, a 96% year-over-year increase. Rental rates for Orlando fell during the third quarter to $24.11 per square foot, down $0.08 from $24.19 at midyear 2010.
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