(Carl Cronan is editor of Real EstateFlorida.)

ORLANDO, FL-The local office sector is being affected by declining job growth, conservative leasing strategies and the opening of new office space, according to a new research report by Marcus & Millichap. More than 800,000 sf is expected to debut throughout the market by the end of this year, pushing local office vacancy to 11.4%.

On the bright side, the second-quarter report states that the sales market for Orlando's class A office assets should remain stable as competition among prospective buyers keeps current pricing level. Office properties have maintained a median price of just under $200 per sf over the past year, even though transaction velocity is down 27% through the first half of 2008.

"Despite cooling economic conditions, institutional and fund investors will continue to target premier properties in the CBD, with assets trading near current cap rates," says Bryn Merrey, regional manager of Marcus & Millichap's Orlando office. He notes that cap rates have averaged between 6% and 7% for top-tier properties, while tighter lending may drive up cap rates beyond the current mid-7% range for lower-tier buildings.