Orlando Posts Record Industrial Year

Orlando’s industrial segment set records in 2020.

Orlando hit 7.3 million square feet leased in 2020, which was the most on record for a calendar year. It had 4.3 MSF of new inventory, which was also more than any year on record, according to Cushman & Wakefield. Additionally, it had 4.6 MSF in net absorption, which outpaced deliveries.

Overall, demand is outpacing supply in Orlando. In the last five years, 26.6 MSF of industrial property was leased in the market, according to C&W. New construction created almost 14.3 MSF of new space since 2015.

Overall, the market has 114.6 MSF in industrial space, with a 7.5% vacancy rate, according to C&W. Its absorption as a percentage of inventory is 4.0%.

Orlando is second in industrial square footage to Miami/Dade, which has 158 MSF. At 2.0 MSF, Miami/Dade saw half of the new deliveries that Orlando did. Miami/Dade absorbed 1.9 MSF square feet in 2020.

The increase in industrial supply in Central Florida should be no surprise. Sitting at the crossroads of Interstate 4 and Florida’s Turnpike with close access to Interstates 75 and 95, the area is a major distribution hub for the entire state. In fact, the whole state is within a six-hour drive.

“Positive traction in key fundamentals supported growth in construction and the expansion in delivery direct to consumers fueled by changes from the pandemic benefitted e-commerce firm looking for last-mile spaces,” according to C&W.

C&W says the industrial market in Orlando and throughout Central Florida is in full expansion mode with limited headwinds in the short term.

Industrial construction is increasing in several Florida markets. In an earlier report, C&W said large-scale speculative construction projects or expansions at existing industrial parks were announced in multiple Florida markets, according to Cushman and Wakefield’s “Florida Industrial Construction” report. 

There was 15.4 million square feet (MSF) under construction at the end of 2020 in Florida. Also, another 29.7 MSF is poised to come online in the next three years.

Out of this new construction, speculative building dominated. At the end of 2020, 5.8 MSF of speculative building had been completed. C&W says Build-to-Suits accounted for 43% of all completions.

Many of those speculative projects under construction have yet to attract tenants. By the end of 2020, only 56% achieved any pre-leasing.

“In several cases, developers moved ahead with entitlements hoping to land a sizable build-to-suit for a new-to-market or expanding tenant,” according to C&W.