March 28, 2024

Sector Portrait

Commercial Real Estate in Florida: What's HOT and What's NOT

Orlando/Central Florida

Office building
Conditions favor office tenants, with favorable lease rates and concessions still available. [Photo: Richard Given, CBRE]
On the rebound: Multifamily housing stands out as the strongest sector in this marketplace, buoyed by job growth and the large population of hospitality workers looking for temporary housing. Occupancy in apartments is up to 93%, and rents are forecasted to grow. Sales activity has increased steadily as well.

Still struggling: Orlando's office sector is still very much a tenant's market, with concessions available in addition to softened lease rates. According to CB Richard Ellis, downtown Orlando has seen some absorption and has the second-worst vacancy of downtown Florida markets, standing at 18.2%. However, in the industrial sector, Orlando's vacancy is the worst in the state, which includes more than 1.1 million square feet of sublease space.


Jacksonville/Northeast Florida

St Johns Town Center
St. Johns Town Center, Jacksonville [Photo: Simon Property Group]
On the rebound: Jacksonville's retail sector is showing signs of recovery. National tenants filled several large vacancies in the Southside, Regency and Westside submarkets, and three big investment companies purchased a total of 1.4 million square feet of retail space in the first half of 2011. "The recovery has begun in retail, but it is isolated to higher quality centers in better locations," says Cliff Taylor, a retail investment sales broker with CB Richard Ellis in Jacksonville.

Still struggling: Jacksonville's office market is considered one of the weakest large markets in the state, with vacancy above 20% for the ninth quarter in a row. Demand for downtown space shrank when CSX cut its space by 20% in the second quarter of 2011. Richey says the vacancy rate has been tied to lack of demand, rather than construction and oversupply. He believes the market will be stuck in neutral for at least another year with no new commercial buildings until occupancy rates rise.

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