// OFFICE MARKET OVERVIEW
• Overall, the Orlando office market is on pace to experience its strongest
performance since 2006 alongside an economy that is rapidly improving.
The overall market has seen five straight quarters of positive absorption. In
that time, tenants have taken back over 906,000 square feet, or 3.2 percent
of total stock.
• As a result, occupancy has increased to 84.6 percent, the highest it’s
been since mid-2008, before the effects of the Great Recession took hold.
Further, nearly all of those occupancy gains occurred in Orlando’s Class A
product, which has accounted for over 91.0 percent of all absorption gains
since mid-2014.
• Since year-end 2014, vacancy among Class A product in the CBD has
dropped 320 basis points to 12.9 percent, a seven year low. Similarly, Class
A vacancy in the suburbs – where tenants have occupied over 342,000
square feet year-to-date – has slipped below 14.0 percent for the first time
since 2008. In every major submarket, Class A vacancy has declined so far
this year as tenants expand footprints and new businesses are established
on the back of improved confidence in the national and local economy.
• Though still below peak levels, it is expected that rental rates will continue
their upward trajectory, particularly as large availabilities dwindle. The limited
large blocks on the market have sizable tenants contemplating built-to-suit
options.
• Given the limited development pipeline, with only 228,000 square feet
currently under construction, rents should rise faster than the 3.0 percent
annual increases seen recently, especially considering the robust demand
on the horizon.
• The increased demand is being driven by traditional office using tenants
such as law firms and financial services; however, there has been an
increase in demand among technology and healthcare/life science firms.
• Investors have also taken note of the market’s strong performance. Since
the beginning of 2014, over $1.2 billion in trades has occurred (much و B