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ORLANDO-Newly converted condo service center buildings and the addition of 232,502 sf of new product is hurting leasing activity within the 81-building, 7.5-million-sf south Orange County service center and flex office space market, according to a new analysis by the Winter Park office of Rebman Properties Inc.

Vacancy of 12.45% is the highest since 2003 and compares to 12.03% in the second quarter and 11.86% in the first period. Lyle N. Nelsen, a corporate and industrial specialist at Rebman for 25 years, calls the market “sluggish” but still projects total net absorption for the year will come in at 600,000 sf. For the second quarter, Nelsen projected 400,000 sf. Net absorption for the third quarter was 193,470 sf, down from second quarter’s 200,370 sf.

Nelsen says part of the slow-leasing pattern is due to new product. The new 232,502 sf delivered compares with 148,933 sf added in the second quarter. Under construction is another 260,000 sf. The service center and flex market also lost a major tenant when Walgreens vacated 36,980 sf at Sandlake West.

However, Nelsen remains bullish on the south Orange County market, the largest in Central Florida and one that Rebman has been tracking quarterly for 19 years. “Rents are moving high and activity in all of the centers is very healthy,” Nelsen says. “With almost a million sf [936,967 sf] of available space, we are ready for whatever this market will attract.”

Large closed lease deals were absent in the third quarter with only two 40,170-sf leases topping the list. Fed/Ex and American Woodmark separately took the space at Orlando Corporate Center.

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