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ORLANDO-The office leasing market in metro Orlando grows dimmer by the quarter as new numbers from Cushman & Wakefield of Florida Inc. show the overall vacancy level at 19.7%, up from 18.9% in the second quarter.

Subleased space has swollen to 969,960 sf even as property owners give away free rent of three months to one year on five-year leases. Honors for the worst submarket go to the southwest sector with a 29% vacancy at a time when a paltry 13,000 sf of new product is surfacing.

The University of Central Florida and Orlando Research Park hub turned in the best leasing report card with only 7% vacancy. Net absorption totaled 93,000 sf.

Area brokers are guessing the leasing quagmire will continue through mid-2003.

“It all hinges, to a large extent, on the economy and the weekly numbers coming out of Washington,” Dean Fritchen, senior associate, Coldwell Banker Commercial NRT, Winter Park, FL, tells GlobeSt.com. “Tenants aren’t comfortable with their own business projections for the next year and, as a result, are sitting tight or even reducing space.”

Still, the University/Research Park submarket in east Orange County is expected to continue showing positive growth as several area defense contractors gear up for new federal government work, area economists report. About 400,000 sf of new office product arrived in the third quarter. Elsewhere, new construction was flat.

No blockbuster leases of 100,000-sf-plus were reported in the quarter but mid-sized deals included CHEP International, 61,022 sf at GranPark at SouthPark; University of Phoenix, 17,000 sf and Gallagar Asset Services, 14,300 sf, both at Alafaya Corporate Center I.

The only eye-opening investment sale of the quarter was the $149.1 million sale of Columbus, OH developer Ronald A. Pizzuti’s eight-building, 960,000-sf Heathrow International Business Park in Heathrow, FL to Colonial Properties Trust Inc. of Birmingham, AL. Other smaller sales pushed the total square footage sold to 1.77 million.

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