ORLANDO-The South Orlando submarket, with a total inventory of 25 million sf and net absorption of 775,950 sf in the second quarter, is leading the metro area’s 63-million-sf industrial real estate market out of a recessionary period but land for new development remains scarce, according to a new mid-year market analysis by the local office of Advantis Real Estate Services Co.

The overall vacancy rate has dropped eight-tenths of a percentage point since the first quarter to 10.7% and net absorption of 1.8 million sf is more than double the first period’s volume. Helping pad the net absorption number was the 565,927-sf lease signed by locally based Leisure Bay at the former Recoton plant in suburban Lake Mary, a deal which accounted for 31% of all net absorption so far this year.

“A quick glance at Orlando’s mid-year industrial statistics confirms what has been anticipated for several quarters–the market seems to finally have turned the corner,” says Advantis research director Lisa M. DeVore.

On the rental side, DeVore notes that “while the direct weighted average rental rate has in fact risen nine cents per sf since the end of the first quarter, that is largely a direct result of strong leasing activity in the bulk distribution sector.” She says “a decrease in bulk availability inevitably puts upward pressure on the average rate, so it should not be assumed that rates have yet begun to rise.”

Average asking rent for bulk, office/warehouse and manufacturing space is $4.44 per sf. Owners of flex space properties are getting an average $8.51 per sf. The average asking rent for the total market is $4.93 per sf.

Devore says “very aggressive leasing deals continue to be negotiated, but the upside is that with industrial production experiencing strong growth nationwide and retail sales beginning to rebound, many tenants are beginning to expand.”

She adds, “The other factor that must be considered is that several new sublease spaces came onto the market during the second quarter and now that space must be absorbed, along with new industrial developments now under construction.”

But land supply for new product development is dwindling, a fact that already is causing the metro area to lose big industrial deals to neighboring counties where dirt remains abundant and prices, so far, continue to be lower than the city’s dirt, area brokers continue to tell GlobeSt.com.

“Orlando has been rapidly running out of industrial land for the past few years,” DeVore confirms. “Companies that require large tracts for the development of distribution centers have been force out into peripheral areas, including Lake, Osceola and Polk counties.”

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