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ORLANDO-With a first-quarter net absorption of only 36,000 sf, the 7.1-million-sf south Orlando service center/flex market could face a record oversupply of product as it prepares to usher in 459,377 sf of new space from 10 locations this year on top of 846,950 sf of existing space.

“I cannot remember when we have had almost 850,000 sf of inventory and another 450,000 sf coming on line this year–over 1.3 million sf of available space,” notes Lyle N. Nelsen, a corporate and industrial specialist at Maitland-based Rebman Properties Inc. “At 300,000 to 400,000 sf average absorption per year, that is over three years of inventory.”

The service center/flex market’s vacancy level of 11.86% is about the same as last year’s 11.4% mark. Nelsen says brokers in the field are telling him leasing activity slowed during the first quarter; prospects for smaller spaces are “very active”; rents are rising; “very little” free rent is being offered by landlords; and several centers are raising the annual rent escalation rate to 4%.

“The challenge in this market is the abundance of inventory,” Nelsen says. “With the shortage of developed industrial land, this market could be in real trouble without a strong inventory of spaces.” He tells brokers they are “in a prime position to handle leases of all sizes. The Orlando economy is strong. Let’s take advantage of it.”

Among the larger first-quarter leases were Munters Corp., 16,276 sf at Park South Business Center; ORHF Foundation, 16,000 sf at Southgate East; Four Front Interiors, 13,660 sf at Sunport IV; Curascript Pharmacy, 12,582 sf at Lee Vista Service Center; Rotech Corp., 11,400 sf at Vineland Road; and Starbuck Coffee, 10,500 sf at the Quorum.

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