Orlando Office Eyes More High Rent Growth

Hurricane Milton caused significant disruption across Central Florida, but fortunately, the anticipated worst-case scenario in terms of fatalities and damage did not occur. As residents begin the cleanup and recovery process, certain industry trends are expected to persist.

A recent report from JLL, which examined Orlando’s market performance in the third quarter, indicated that rental rates remain “high” at $27.75 per square foot. The global real estate firm anticipates this trend will continue.

“Rent growth is expected to stay elevated over the next two years as activity drives a market upcycle,” JLL stated.

In the past six months, leasing in Orlando’s office sector has reached 70% of pre-pandemic levels, with Class A buildings leading the way, averaging $30.10 per square foot in key areas like Maitland. A notable transaction was Ke’Aki Technologies leasing a 60,000-square-foot space in the Discovery Point area.

JLL noted that the architecture, engineering, and legal sectors have dominated leasing activity.

Orlando’s vacancy rate stands at 15.6%, which is significantly lower than the national average of 22.2%.

“Vacancy rates are also expected to decline in the coming quarters as new deals are finalized for spaces that have been contributing to higher vacancy rates since mid-2023,” JLL mentioned.

Additionally, year-to-date net absorption of nearly 183,917 square feet is projected to rise.

Overall, JLL maintains a positive outlook on the office market in Central Florida.

“The Orlando office market continues to favor tenants, with increasing concessions and appealing rates,” they noted, adding that the region is experiencing growth in population and residential development, along with advancements in defense, technology, finance, and healthcare.

Source:  GlobeSt.