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ORLANDO-Office investment sales are setting no records in the first half of the year, totaling only $90 million, according to a new analysis by the local office of CB Richard Ellis Inc. But several deals still on the table could increase the dollar volume in the next 60 days.

“Year-to-date sales have been sluggish, given today’s fierce appetite from debt and equity investors,” says Ronald J. Rogg, CBRE’s vice president of investment properties. “Although sales appear to be behind projections, there remain numerous deals under negotiation” that could make final 2003 sales “fairly strong,” Rogg says.

Sales in the first six months covered 940,275 sf with an average per-sf-price of $96.98. The largest sale was the Downtown Citrus Center, a 258,321-sf, 21-year-old, multi-tenant building at 255 S. Orange Ave., brokered by CBRE and purchased by Parkway Properties for $32 million, or about $123.88 per sf.

The highest price per sf was achieved with the sale of the 72,000-sf single tenant, net-leased DeVry Institute building sold to a German-based buyer for $15.15 million, or about $209 per sf. The three-year-old property is at 4000 Millenia Blvd.

Rogg says the city’s average vacancy rate of 15% is “performing better than the state-wide average of 16.5%.” Still, the vacancy levels are high in most submarkets. For example, the 6.1 million-sf Downtown area is 11.2% vacant with net absorption of 83,253 sf, 195,000 sf of new space under construction, and average asking rents of $22.32 per sf.

The second largest submarket, the 5.65-million-sf Maitland Center area, has vacancies of 15.9%, net absorption of only 42,829 sf, and average asking rent of $19.24 per sf.

The five-million-sf East Orlando area shows the best vacancy mark at 9.4%. Net absorption for the first half was 75,994 sf; another 248,196 sf of new construction is under way; and average asking rents are $18.18 per sf.

South Orlando, with an inventory of 4.9 million sf, has the worst vacancy level at 19.5%. Net absorption was 40,011 and average asking rents are $19.38 per sf. The 3.69-million-sf North Orlando submarket is 17.5% vacant, has 335,000 sf of new construction in the pipeline, with average asking rents of $16.68 per sf.

Also hurting is the once-dominant Lake Mary submarket with an 18.5% vacancy mark. This 4.11 million-sf market had net absorption of only 34,522 sf at average asking rents of $19.50 per sf.

Roger Tutterow, director of the Economic Center at Kennesaw State University in Kennesaw, GA, doesn’t see an immediate improvement in the investment sales area.

“The demand for new commercial real estate properties will remain muted over the balance of the year, with many indicators pointing to sluggish growth in the coming months,” he tells Primary Capital clients in that company’s first newsletter.

Tutterow warns, “While borrowing costs are low, the combination of sluggish employment growth, businesses’ focus on cost containment, and vacancy rates that have risen significantly since late 2000, suggest that additional caution is prudent for those considering new office and industrial developments.”

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