Orlando Office Eyes More High Rent Growth

Hurricane Milton wrecked havoc across Central Florida but fortunately the worst case scenario in terms of deaths and damages appear to have not materialized. As Floridians begin to clean up and recovery, Ethey can expect certain trends that had begun to manifest in the industry to continue.

Particularly, a recent JLL report analyzing the performance of the asset class in the third quarter for the Orlando market, noted that rents have remained “high” at $27.75 per square foot. The global real estate firm expects that trajectory to continue.

“Rent growth is expected to remain high over the next two years as activity continues to propel an upcycle in the market,” JLL wrote.

Overall leasing in Orlando’s office sector in the last six months accounts for 70 percent of the pre-pandemic levels. Leading the charge in activity have been Class A buildings (where average rents are ($30.10 per square foot) in primary markets including Maitland. A major deal was Ke’Aki Technologies’ lease of a 60,000-square-foot space in the University Area’s Discovery Point. According to JLL, architecture, engineering, and law businesses have accounted for the largest share of leasing.

For vacancy, Orlando at 15.6 percent remains low compared with the national average of 22.2 percent.

“Vacancy is also expected to decline in the next several quarters as deals commence in spaces that have been contributing to elevated vacancy since mid-2023,” JLL said.

However, the year-to-date net absorption of nearly 183,917 square feet is expected to increase.

But overall, JLL is bullish about office in the Theme Park Capital of the World.

“The Orlando office market continues to favor tenants with rising concessions and attractive rates,” it said.

“Along with a rise in population and residential development, Orlando is a hub for advancement in defense and technology, finance, and healthcare.”