ORLANDO, FL—There is a war going on among metro Orlando’s space-seeking small service center tenants – and the tenants are winning, reports Lyle N. Nelsen, (top right photo) corporate and industrial specialist at Rebman Properties Inc.It’s a war where existing and new tenants can quickly choose from 1,752,506 square feet of available service center/flex space in the heart of Orlando’s Industrial Market south of the 408 Expressway.
“Tenants are looking for deals,” says Nelsen who has been tracking this market for 25 years. “One leasing agent said this after a brutal renewal negotiation: “That’s the hardest I have ever worked on a deal that I gave away.”
In his latest market report, Nelsen says “agents are treating existing tenants as new deals – no sending out renewal notices – be aggressive early – get to the tenants before the tenant representatives move in.”
Concessions in the form of extended free rent, increased tenant improvements, lower first year base rents are available and readily offered to close a transaction,” he says.
Nelsen says, “As one agent told me, “we’re pulling out all the stops to fill this vacant space that has been vacant for six months.”
Bankruptcies and downsizing are“big factors in this market where unemployment and lack of business has forced the smaller companies to make tough decisions,” he adds.
The low number of large (over 5,000 s.f.) service center/flex space leases closed in this quarter again reflects “the stagnant economy we are experiencing,” Rebman says.
---Next Plumbing Supply, 21,295 sf, at Southridge VIII, agent Mike Borling – EastGroup
---Delivery Specialists, 21,000 sf, Beachline Commerce Center, Todd Watson – Liberty
---GTE, 12,936 sf, Sunport II, (top left photo) Mike Borling – EastGroup
---The Thomas Kinkade Co., 6,400 sf, Keene Crown, Morgan Wiseman – Realty Capital
The average asking triple net rental rate for a new or current flex building is hovering around $6 psf – down from $6.50 psf. at the end of 2008.
The condominium numbers remained fairly constant with a slight increase in the vacancy from 11.06% to 11.90%. The available condo space is being offered for sale and for lease in an effort to fill the vacant space, Nelsen says.
“The supply side of this market is strongly in favor of the tenant with empty space all over this market in new, fairly new or older buildings,” he says. “The tenant has never had a better selection to choose from in any location they want to be in.”
Forecast
“The ‘bottom’ of this market may not occur until the early party of 2010. The fallout for the ‘little guy’ in this market will continue and the bigger companies will be finding ways to downsize.
“Rental rates will continue to drop as more and more concessions will be needed to close a deal.
“The big question is whether the President’s stimulus package will affect our economy in Central Florida--and when.
“These are challenging economic times which many of us have never experienced in our lifetimes/ There will be an end to it – the question is, when?” #
