Prime warehouse properties and small buildings in good physical condition are on the buying list of institutional investors these days, Livingston says. The only problem: Little product is available.

"This is driving down the sales cap rate," the developer says. Single-family lots are also high on big-name buyers' shopping lists. "Land sales for development are strong," as are home sales, Livingston tells GlobeSt.com.

But the office development segment "remains weak due to lack of demand from expansions or relocations," he says. "Significant sublease space (estimated by Grubb & Ellis Co. at 650,000 sf) overhangs the supply."

The industrial market is improving with local users in the 10,000-sf to 30,000-sf range leading the way, Livingston says.

The area's industrial inventory is up 4% to 96.8 million sf, Grubb & Ellis Co. says in its latest market analysis. R&D/flex space is growing modestly. Warehouse distribution is flat, supporting Livingston's observation. Concessions are widespread.

Net industrial absorption of 2.42 million sf is the highest since 1997, according to Grubb & Ellis vice president Steve Flanagan. Warehouse/distribution product accounted for 1.4 million sf; R&D/flex, one million sf. Warehouse/distribution space is 10.3% vacant; R&D/flex, 10.6%.

"Landlords face challenges as tenants have numerous opltions in the market (today," says Bryan Burns, market research analyst in the Orlando office of Grubb & Ellis.

Livingston says hotels are "slowly improving with convention hotels leading and small mom-and-pop variety trailing." Still, the developer says, "the general real estate market (in metro Orlando) continues to firm."

On the west coast of the Central Florida corridor, property management business is surging in the Clearwater-Tampa hub. Colliers Arnold Commercial Real Estate Services Inc. has added 1.9 million sf of office, retail and industrial product to its total five million-sf management portfolio since September 2001, according to Colliers president Pat Duffy.

As local developers continue to spot new niches in the Clearwater-Tampa market, out-of-state firms such as Atlanta-based Post Properties Inc. are exiting. Post sold its 11-year-old, 228-unit Post Court apartment for $16 million or $70,175 per unit to an affiliated of San Antonio, TX-based Internacional Realty Inc.

Instant Insights /

GlobeSt.com UPDATE: Market Firm, Prime Warehouse a Rarity

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