Industrial Market Holding Up After Storms

Despite widespread damage to low-rise and mid-rise warehouse, distribution and shop properties by Hurricanes Charley, Ivan and Jeanne, third-quarter vacancies of 9.5% were an improvement from 10.5% in the second period. Positive net absorption of 2.8 million sf compared with 873,579 in the second quarter.

Average asking base rents, however, were down. Warehouse rents are averaging $4.78 per sf; flex space, $8.15. In the second quarter, warehouse average rents stood at $5.70 per sf; flex, $9.49 per sf. But warehouse rents this year are topping 2003 which wound up with an average $4.32 per sf for the year. Flex rents averaged $8.19 per sf for the entire 2003 period.

"While the full impact of three unprecedented natural disasters in a six-week period remains to be seen, the Orlando industrial market is showing signs of recovery," says Grubb & Ellis managing director Jeffrey Sweeney. "Metro Orlando is showing an increased intensity in private construction, despite a national shortage of building materials." he adds, "The Orlando area is also leading the state in job growth, all indications of a healthier industrial market."

There was more than 1.4 million sf of new product under construction in the third quarter compared with 2.5 million sf in the second period and close to 2.3 million sf for the entire 2003 period.

On the investment sales side, five properties turned over in the third quarter, none at record-shattering prices. ELK Properties LLC paid Engineering Support Systems nearly $4.4 million, or $25.34 per sf, for a 172,000-sf building at 2001 E. Lake Mary Blvd. in Seminole County. Ferraro Foods Inc. bought a 128,500-sf facility at 20100 Independence Rd., Lake County from Orlando developer Robert A. Mantovani for $4.3 million or $33.80 per sf.

In other deals, List Investments purchased a 110,724-sf building from West Orange Venture at 2821 W. Orange Ave. in northwest Orange County for $3 million or $27.55 per sf. McCraney Orlando-Parkline LLC acquired an 81,088-sf structure at 8350 Parkline Blvd. in southeast Orange County from Regional Development Group for $4.5 million or $55.50 per sf. And Danus Properties sold an 89,000-sf building at 9820 Satellite Blvd., also in southeast Orange County, to William M. and Deborah Dillard for more than $2.9 million or $32.97 per sf.