Central Florida office landlords have been feeling the pinch in the current landscape — but the underlying fundamentals look encouraging.
While leasing is up "slightly" in the second quarter (328,151 square feet) compared with the previous three-month period, net absorption is negative (-5,772), according to a regional report from Colliers. The latter figure compares to a positive 69,309 square feet posted in the same period 12 months prior. The CRE firm noted that office renters are becoming more "selective" about the space they secure.
"Tenants continue to favor high quality, flexible space, reinforcing a cautious but stabilizing trend across Central Florida’s office market," Colliers explained.
Central Florida, which includes cities like Winter Park, Maitland and Orlando, is appealing more to skilled high-growth workforces currently, Colliers further noted. Of the second quarter move-ins, more than 65 percent came from sectors including healthcare, manufacturing and professional services.
Year-over-year, vacancy was up by a slight 10 basis points to 14.2 percent. But Colliers said that the segment has "plateaued."
Another important trend is that no new supply has entered the market for at least the past two quarters.
Additionally, even though interest rates remain high, coupled with tariff uncertainty, Central Florida's economy looks strong. Over the past year, the region has welcomed 78,500 new residents and added 31,600 new jobs. The trend bodes well for the future.
"Population and job growth continue to support long-term demand, even as some firms pause expansion amid elevated costs and evolving workplace strategies," a bullish Colliers noted.
"Orlando’s fundamentals remain firmly intact."
And lastly, don't ignore the impact that the elimination of the sales tax on commercial leases in The Sunshine State could have, which is set to officially take effect on October 1. The Toronto-based firm noted that the result will allow for increased competition in Central Florida and lead to a reduction in occupancy expenses.
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