Orlando’s Office Market Shows Signs of Recovery

Orlando’s Office Market on the Mend

Orlando, a city known for its sunshine and theme parks, is also turning heads with its office market improvements. As we rolled into 2024, there are signs of optimism surrounding the city’s commercial real estate scene, which had faced quite a bit of turbulence in recent years.

Positive Trends Spark Interest

The last quarter of 2024 marked a notable shift, with the Orlando office market absorbing 7,000 square feet of space—a huge contrast compared to the significant move-outs that characterized 2023. What this means is that businesses are starting to feel a bit more secure and are ready to settle into new spaces rather than fleeing from them.

Improving conditions also brought a decrease in office vacancy rates, which dipped by 10 basis points down to 15.5% by the end of 2024. Definitely a sign that things are moving in the right direction! Additionally, average direct asking rents on office spaces in Orlando saw a slight bump, increasing by 2% to reach $28.31 per square foot for full-service listings. JLL, a real estate services firm, is optimistic, expecting this growth in rents to continue into 2025.

Key Areas Seeing Growth

Some particular spots in the Orlando area are outshining others. For instance, prime submarkets like Maitland, Lake Mary, and Lake Nona have seen an exciting uptick in move-ins. Perhaps one of the biggest headlines in commercial real estate recently is the news that Charles Schwab has made a splash by purchasing multiple Class A office buildings in Maitland, covering over 500,000 square feet. Excitingly, the move-in process for Schwab is scheduled for late 2025, showcasing their commitment to the area.

Renewals and Upgrades

But it’s not just new businesses moving in. Existing firms are also committing to staying put. General Dynamics recently renewed their lease for 50,368 square feet at Resource Square III in Orlando. This location is part of a larger campus that spans 245,000 square feet situated in the Central Florida Research Park, a mere 14 miles from downtown Orlando. CP Group, the owner of Resource Square III, originally acquired the complex for $50.4 million back in January 2020 and has made some upgrades to enhance the property. These improvements include inviting outdoor seating and other common area upgrades, which really help make office life more pleasant!

Steady Market Across Different Sectors

10% as of the second quarter. In Lakeland alone, leasing activity has been robust, with reports counting upwards of 100,000 square feet leased for distribution use. It seems that institutional investors are keen on Florida’s industrial developments, further strengthening this market.

Meanwhile, in the multifamily sector, the demand for rental units remains strong, boasting a vacancy rate of only 6% to 7%. This indicates that whether it’s for office space or residential needs, Orlando is certainly showing that it’s a city on the rise!

A Brighter Future Ahead

With the continuous adjustments in the Federal Reserve’s interest rates contributing to improvements in the Orlando office market, residents and investors alike are right to feel a sense of optimism. It’s clear that the momentum is shifting, and as 2025 approaches, Orlando’s commercial property sector seems set for even brighter days ahead.