Population Growth in Orlando Drives Office Demand and Investor Interest

Confidence in the Orlando office market is growing as businesses take up more than 25,000 square feet of office space this year.

That’s according to a Q2 Orlando Office Market report from Marcus & Millichap, which says those numbers have topped net uptake totals since 2020.

With a 3.9% increase in people using the office since the start of the pandemic, employment is expected to increase by 5.3% in the metropolitan area mainly due to hiring in the leisure and hospitality industries. With office rents falling and Orlando’s workforce growing, the report says the area has a good chance of attracting businesses returning from the work-from-home model or who have moved to Florida. .

Eating Recovery Center, a program that helps people with eating disorders, Astronics Test Systems, an aerospace company, and Luminar Technologies, an automotive technology company, are all examples of companies with renewed interest in the food market. city ​​offices. Each company has acquired over 50,000 square feet in the past four quarters.

As confidence in the market grew, so did buyer interest, with the number of transactions increasing 75% with an average selling price up 8% to 258 per square foot.

According to the report, investors are particularly interested in local medical office buildings, with Class B assets under 50,000 square feet selling the most.

Office space development is expected to increase this year by 1.3%, with medical office buildings taking up the majority of this space. One of the biggest projects underway this year is the AdventHealth Lego Building in Winter Park, which will span approximately 300,000 square feet. The building should be absorbed quickly.

Investors seeking mid-tier office space are active in Central Park and downtown Orlando, as well as southwest and southeast Orange County. Fully occupied properties in the $1-10 million price bracket are highly sought after, with first-year returns that can hit the low to mid-7% range.

Compared to other major metros in the state, Orlando sees the second lowest available office space at 12.7%, with an average demand rate of $22.87 per square foot, which is an all-time high for the city.

Investors interested in Class A offices are looking in the Lake Mary and Tourist Corridor areas and buying the properties through portfolio sales.

Luckily for buyers and opportunity seekers, Orlando’s delivery volume is expected to exceed the city’s 10-year average of 690,000 square feet. The office stock is expected to increase by 1% for the first time in five years. The majority of the projects nearing completion will be in Orange County.

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