Industrial Vacancies Down as Demand Rises for Limited Space

ORLANDO-These are good times and not so good times for the area's 111.6-million-sf industrial real estate market, according to a new analysis by the Orlando office of Colliers Arnold Real Estate Services Co.

The good times for owners are reflected in the 8.3% vacancy level, one of the lowest in years. The not-so-good times are voiced by brokers who see a diminishing supply of industrial leasing space due to a lack of available developable land.

"As lack of product continues to effect the numbers, absorption is down slightly from 1.95 million sf to 1.13 million sf," says Stan J. Sarnowski, director of market analytics and geographic information systems at Colliers Arnold. "Demand for Central Florida industrial space remains high and available space low."

Vacancies are down all over Central Florida, except in Osceola County and Southwest Orange County. Market activity in Osceola County's 4.5-million-sf industrial inventory "has been relatively dormant for some time now," Sarnowski notes. "Much of the product in this market consists of class B, 20-year-old, owner-occupied space. The trend here is that owners and investors are holding onto product and developable land." The researcher adds, "Lack of spec construction and build-to-suit is displacing vacancy in the area."

In metro Orlando's largest industrial submarket, the 36.4-million-sf Southwest Orange area, overall vacancy increased slightly. "However, at 7.8%, there is still considerably less overall vacant space than the 9.3% recorded at the same time last year and only a negative .5% from last quarter," Sarnowski says. Direct vacancy is up to 7.2%.

Southwest Orange rents average $4.25 per sf triple net for warehouse and distribution space; $6.10 per sf NNN for manufacturing product; and $5.90 per sf NNN for flex and service space.

"Although things are slowing down a bit in Southwest Orange County, the market is still steady," Sarnowski says. "Demand remains constant and rates continue to go up with slight increases recorded for warehouse, distribution and manufacturing rents."