Industrial Leasing Picks Up as Vacancies Shrink

For example, seven out of 10 submarkets monitored show positive net absorption in the 1Q after being negative at the end of 2002. "That number is now down to one, and that is largely the result of a vacant, newly delivered building," says Advantis research director Lisa M. DeVore.

The overall vacancy factor is 9.2 %, down 1.1% from 10.3% in 4Q 2002. Vacant space totals 6.3 million sf. The average asking rent is $5.20 per sf.

"Speculative development activity remains restrained and the former glut of sublease space is slowly beginning to dwindle," says DeVore. Strong 1Q net absorption was recorded in the submarkets of Longwood/Lake Mary/Sanford, Silver Star and South Orlando.

"While the national economy continues to struggle with rising unemployment, slowing economic growth, a widening trade deficit and disappointing retail sales, it now appears as though the engine of the local industrial market may well be starting to rev up once again," DeVore says.

"Long considered the bread and butter of any commercial market, the industrial sector tends to rebound at a faster rate than other sectors, and this quarter was no exception," the researcher says. "This does not mean that the ride is over, of course, but that the market is now approaching a return to normal."

Major leases signed during the 1Q were SDE Logistics Inc. at Orlando Central Park, 7575 Chancellor Drive, 201,600 sf for five years; ConStar at Airport/Southeast, 901 W. Landstreet Road, 180,000 sf for 10 years; Central Florida Press, 33rd Street submarket, West Park XI, 159,000 sf for four years; Florida Extruders Inernational Inc., Longwood/Sanford/Lake Mary, 2000-2002 E. Lake Mary Road, 144,000 sf for five years; Sygma Network of Ohio, Orlando Central Park 300, 120,388 sf for five years; Windoor, Silver Star corridor, 1978 Stanhome Way, 49,000 sf for three years; Bluworld Innovations, Orlando Central, 635 W. Michigan Ave., 30,000 sf for three years; and Nina Plastics, Orlando Central Park, Presidents Drive III, 25,600 sf for three years.

Year-to-date net absorption over the entire market is 856,602 sf. "The South Orlando industrial market has rebounded well, although uncertainty regarding the health of companies such as Recoton and Siemens may potentially further aggravate the vacancy rate, should those companies continue to downsize," DeVore says. "The development pipeline remains fairly small and the former glut of sublease space has diminished, both factors that will assist the market's recovery." Sublease space totals one million sf.