Orlando's Industrial Vacancy Rises to 12% in 1st Quarter

CBRE Orlando First Quarter Industrial Mkt Report 2009

ORLANDO, FL-Asking Lease Rates:

The overall weighted average asking lease rate for all industrial product types was $6.87 NNN per sq. ft. at the end of first quarter of 2009.

This is a slight decrease from the average rate of $6.93 NNN in the fourth quarter of 2008.

To entice tenants, more rental concessions are being offered, including free rent and unprecedented first year rates.

(Ashley Furniture Distribution Center at Airport International Park of Orlando, middle left photo)

Vacancy Rates

The industrial vacancy rate was 12.0 percent at the end of the first quarter 2009, a slight increase from the 11.5 percent reported in the fourth quarter of 2008. The vacancy rate one year ago was reported as 8.8 percent.

Net Absorption

The first quarter of 2009 industrial absorption was a negative 460,111 sq. ft. That compares to a negative 434,475 sq. ft. in the fourth quarter of 2008.

(Kraft Foods Nabisco Division distribution Center at Airport International Park of Orlando, bottom right photo)

Industrial Market

Availability rates for warehouse/distribution buildings continue to rise, largely due to falling retail sales, especially in markets that were most affected by the housing crisis, such as Florida and many coastal California markets.

Furthermore, the global manufacturing slump has broadened.
With the auto industry on the precipice of an historic re-organization, Chrysler and General Motors announced shutdowns in January 2009 to curb production and preserve cash flow.

This move will affect parts manufacturers and distributors as well. With the pervasive economic slowdown, the auto sector is expected to continue adding to the labor market's losses.

(33rd Street Industrial Park, bottom left photo)

The Institute for Supply Management's manufacturing index fell to 32.4 in December 2008 – its lowest level since the early 1980s.

New orders were down and most capital expenditures have been deferred.

The industrial availability rate is expected to continue to rise, with rents softening.

Manufacturing job losses continue to mount, totaling close to half a million for the year.