IRR-Orlando Mid-Year Viewpoint 2015 Local Market Report - Industrial
The overall Orlando industrial market has experienced a moderate to high increase in demand over the trailing 12-months as evidenced by just over a 13% decrease in the vacancy rate. However, when broken down to warehouse and flex space the two property types are recovering at differing rates.
The warehouse market has experienced over 1,000,000± square feet of absorption over the last four years, while delivering under 800,000± annually over the same term. With demand out stripping supply the vacancy rate has decreased 12.2% to a current rate of 7.2%. Additionally, the majority of new space is pre-leased or owner-occupied (example: Publix Distribution Center 1,000,000± SF), negating the risk from spec construction. However, the abundance of available land for construction, the lower vacancy rates and rental rates climbing to levels experienced pre-recession; indicate that increased speculation builds and over supply could threaten in the foreseeable future.
Flex properties have experienced increased demand, albeit much lower than traditional warehouse product. Vacancy rates have only decreased 6.7% over the last four years, with annual absorption just over 270,000± square feet annually. Furthermore, rental rates have increased at less than 5.0% over the same period. The slower growth in flex product is a hangover from the years prior to the recession as this property was over-built on a large scale. Overall, this product category is likely to continue to trail the traditional warehouse market into the foreseeable future.
Again, while the market continues to recover, there is over 8.0± million square feet of product expected over the next five years, with the majority of that space being traditional warehouse. Overall, the presence of partially built industrial parks coupled with the availability of additional land and relatively cheap construction costs should caution market participants to avoid excessive new construction.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.