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ORLANDO-Bracing for a projected population growth of 15.5% over the next five years, Central Florida retail developers have 2.7 million sf of new projects under construction with another 4.5 million sf on the drawing boards, according to a new industry analysis by the local office of Colliers Arnold Commercial Real Estate Services Inc.

Average occupancy in the 50.9-million-sf market is 91% with the Sand Lake submarket at 98%. About 278,000 new residents are expected to boost the Orlando MSA over its existing 1.8 million population. The projected arrival of new residents and an improved labor market is fueling the development surge, the report states.

“With mixed signs of national economic recovery surfacing weekly, Central Florida’s economy is improving faster than other parts of Florida and the country,” says Colliers Arnold analyst Bobby Palta.

Rental rates are rising and leasing activity “across the market is very active,” Palta says. “Well-maintained centers with good positioning in solid or growing submarkets are filling vacancies quickly.”

Besides Sand Lake, strong submarkets include Winter Park/Maitland and West 50, both at 96% occupancy. Lagging, however, are Apopka in northwest Orange County at 74%, and Casselberry at 81%.

Of the smaller submarkets, the booming Clermont and 192/Four Corners areas near Walt Disney World are at 98% occupancy.

Lease rates vary widely. Downtown leads the market with an average asking rent of $30.03 per sf. Some prime space is going as high as $120 per sf “in trendy, new mixed-use developments,” Palta says. Theme/festival shopping centers command an average $43 to $75 per-sf rent. Mixed-use properties are getting an average $34.25 per sf.

The largest project under construction is the 450,000-sf Altamonte Towne Center, about seven miles north of Downtown. The Kissimmee/St. Cloud area is the leading submarket in proposed retail development with 1.9 million sf.

“Downtown Orlando is seeing a development boom, with several new mixed-use project planned or under construction,” Palta says. City View on the west side of Interstate 4 is nearing completion and will bring 23,000 sf of new retail. In the Thornton Park district, the Sanctuary condominiums are going vertical with its 30,000 sf of commercial space.

“However, the real buzz around town is 55 West on Church Street,” says Palta. Leasing activity on the retail portion is reported to be “very strong” while the 248 high-end condo units with hotel amenities are “expected to go to contracts” in September. The Sanctuary project and other planned developments will add 1,869 units to the 1,639 recently completed multifamily units in and around the central business district.

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