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ORLANDO-Central Florida’s office-leasing market continues to improve with third-quarter net absorption of 642,977 sf and overall vacancy down to 10.1%. It’s the best performance for net absorption in seven quarters, according to a new analysis by the Orlando office of Grubb & Ellis Commercial Florida.

Class A vacancy is at 12.2%, class B at 9.2% and class C hovers at 8.2%. The last time the overall vacancy level was under 10% was at yearend 1999. The rate was 8.6%.

“The vacancy rate continues to decline and translates to a tightening market,” says Jeffrey S. Sweeney, managing principal of Grubb. “The construction numbers are still healthy and more construction is slated for early 2006.”

A total 1.67 million sf of new product is under construction, down from 1.84 million sf in the second quarter. Downtown and the Altamonte/Longwood submarkets are the largest growth areas.

“The recent natural disasters in the Gulf Coast have made already-elevated construction costs a focal point for most developers,” Sweeney notes. But he says all major developments are still under way and “projected to deliver on time.”

Slated to break ground in November is the 100,000-sf Dynetech Center at 111 N. Magnolia Ave. in Downtown Orlando. In December, the 265,000-sf CNL Center II building at 400 S. Orange Ave. is set for delivery. Two buildings are scheduled for completion in June 2006. They are the 390,000-sf Premiere Trade Plaza at South Orange Avenue and East Church Street, and the 100,000-sf 801 North Orange building Downtown.

The 317,647-sf Majesty Building at 123 Central Parkway in the Altamonte/Longwood/East Seminole submarket is expected to be completed in March 2007. Proposed in the MetroWest submarket is Millenia Park 2, a 208,000-sf, class A building on Vineland Road in southwest Orange County.The Lake Mary/Sanford submarket with about 200,000 sf of net absorption and the Lee Road/Maitland submarket with 177,464 sf led the submarkets in third quarter leasing activity. Rents remain “relatively steady” with slight decreases in class A space and a nine-cent per-sf increase in class B rents, Sweeney notes. Average class A rent is $23.48 per sf; class B, $19.96 per sf.

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