MIAMI—For all the talk of Miami's industrial commercial real estate industry, Orlando—and all of Central Florida—is also on a rapid rise. Specifically, Orlando will deliver another 1.5 million square feet of new industrial buildings in 2018, with industrial building sizes growing larger to accommodate the tenant demand, according to Foundry Commercial's stats.
Justin Ruby, Foundry's senior vice president of Brokerage Services, offers a look at the state of the industrial commercial real estate industry in Orlando. He also makes some predictions about the year ahead in this exclusive interview.
“Often times, a big splash in the market becomes the easiest way to describe what's happening, but in truth, e-commerce giants have impacted a lot of big box locations but the real 'splash' in the market is more about the organic growth being driven by the fundamentals,” Ruby tells GlobeSt.com. “Those fundamentals are tourism, population growth and construction growth.”
In Orlando specifically, Ruby says, the trend in 2017 was evident: the size of transactions was scarce in the 30,000 to 80,000 square foot range. What's more, he explains, much of the industrial product was delivered to serve this size tenant.
“It's been pretty dry for the last nine months,” Ruby says. “What's on fire is less than 20,000-square-foot greater than 100,000-square-foot where this is little inventory to fit it. Retail companies that have an online shopping component are going to really take up the space in the outer markets. E-tailers are competing with the one e-commerce giant.”
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So, what's next for Orlando industrial real estate? Ruby predicts the next layer of land targeted for new speculative industrial development will be in the west and northwest Orlando submarket. That, he says, is because there is ample land and a new roadway system—Wekiva Parkway—will be nearing completion. This area is still close to the demand drivers in Orlando, such as theme parks, visitors, convention center and roads.
“There will be a boomerang effect for core tenants in the 30,000- to 80,000-square-foot range due to strong Orlando fundamentals,” Ruby says. “2017 saw a slight dip in these users and their need for class A rear load buildings, but landlords with new inventory will be the winners in 2018.”
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