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New construction is slowing in metro Orlando’s booming 45 million-sf retail market but is expected to bounce back in the fourth quarter, a new Grubb & Ellis Co. study predicts.

Second-quarter construction activity totals one million sf, down from 2.3 million sf in the comparable 1999 period. About four million sf of new product has been added to the market since 1997.

Vacancies are at the 6.03% level, versus 6% in 1999; 6.2% in 1998; 6.5% in 1997; and 6% in 1996. The current vacancy mark noted by Grubb & Ellis differs from the 9% threshold monitored by another brokerage, Real Property Specialists Inc. and reported by GlobeSt.com on Aug. 2. Both studies, however, project a decline in activity after current projects are completed.

The biggest project under way is the 1.2 million sf Millennia Mall planned for southwest Orlando. Amazone Entertainment is considering building a 157,000 sf interactive entertainment center at Festival Bay, a new 1.1 million sf development. Entering the market in 2001 will be CVS, the nation’s largest drugstore chain. The first location will be on Conroy Road at Dr. Phillips Boulevard in southwest Orlando.

Rental rates are rising gradually but not as swifly as some industry watchers had feared earlier. The average weighted rate is up 22 cents psf since the first quarter.

The highest average rent of $20.65 psf is in the Orlando Central/Colonialtown submarket. Other average rents are $18.18 psf in the southwest/tourist hub; $15.39 psf at Osceola/Kissimmee/St. Cloud; $13.67 psf at Heathrow/Lake Mary/Sanford; and $12.04 psf at Winter Park/Maitland. Average rents on tony Park Avenue in Winter Park are approaching the $30 psf range.

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