"Fast-food chains such as Burger King, McDonalds and Chic-Fil-A saw some activity, though it is clear that Orlando, particularly along the tourist corridor, has become saturated for the moment," Steven M. Ekovich, vice president/regional manager, Marcus & Millichap, tells GlobeSt.com. "Major single-tenant construction will likely not occur for at least another year."

The construction decline eventually will help the occupancy numbers, the studies project. The current 6.4% vacancy level, though, is first expected to rise to 6.9% in 2001, then drop to 6.7% in 2002 as much of the new inventory is leased. A total 2.95 million sf is currently available. Net absorption for all of 2000 among properties 50,000 sf or greater was 1.45 million sf.

"Big-box retailers and free-standing drug stores will continue to find choice locations as they compete head-to-head in capturing market share," Grubb & Ellis executive vice president/managing director Jeffrey S. Sweeney tells GlobeSt.com.

Average asking rents across Central Florida are creeping up to $13.20 per sf. Tourist retail locations are getting an average $34 per sf; regional malls, $28 per sf; community shopping centers, $19 per sf; power centers, $18 per sf; and neighborhood centers, $11 per sf.

Growth in asking rents was largely held in check in 2000. But "asking rents are anticipated to rebound in 2001, although this may be difficult, given that most development is occurring off the Interstate 4 corridor," Ekovich says.

Both studies agree the southwest Orlando submarket will emerge as the region's new high-end shopping district in both 2001 and 2002. For instance, Bloomingdale's, Macy's and Nieman Marcus will anchor the Mall at Millenia, a 1.2 million-sf venture being jointly developed by Forbes Co. and Taubman Centers Inc.

Florida Mall in south Orlando, which just completed a 600,000-sf expansion, is growing again. By 2003, the total rentable sf there will be 2.2 million sf, second largest in Florida next to the 2.3 million-sf Sawgrass Mall in Broward County, south Florida.

Investment activity in retail product in 2001 remains a question mark for both research houses but they agree no record of volume sales is in the offing. Last year's volume was 110 sales totaling $270 million, half of the 1999 performance.

A lack of available product in 2000 pushed prices up to an average $93.76 per sf. The highest recorded deal was in Brandon, FL, a Tampa suburb, where a 16,000-sf Walgreens store sold for $4.9 million or $306 per sf.

In Orlando, the highest prices are in the Northeast-University and Southeast-Airport submarkets at $105 per sf to $110 per sf. Tourist corridor sales activity was slow but a few single-tenant deals drove the average price in this area to more than $280 per sf.

"Volume in Orlando will likely rebound more than in Tampa, provided selling interest picks up to meet demand," Ekovich tells GlobeSt.com.

Instant Insights /

Retail Taking a Breather This Year as New Construction Expected to be Down 50%

Related Stories

Recommended For You