2012 Global Market report - NAI Global

Orlando, Florida
Palm Beach County, Florida
Contact
NAI Realvest
+1 407 875 9989
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
Total Population
Median Age
2,184,763
2,386,133
1,147,210
$70,031
$52,721
35
The Orlando economy benefits from a tourism industry that
had 51.5 million visitors in 2010. This sector alone has an
economic impact of more than $27.6 billion. Life sciences
are a major growth sector thanks to the Lake Nona Medical
City which consists of; Sanford-Burnham Medical Research
Institute, the UCF College of Medicine, M.D. Anderson –
Orlando Cancer Research Institute, Nemours Children’s
Hospital, Orlando VA Medical Center and the VA Medical
Simulation Center of Excellence.
The Orlando office market is improving with an overall
vacancy rate of 13.7% at the end of Q3 2011. Year-to-date
absorption was 811,570 SF. Absorption has been strongest
in the CBD and University Research submarkets. Average
rental rates are virtually unchanged over the previous year.
A total of 457,500 SF is under construction marketwide.
Office cap rates have averaged 8.4%. Price per square foot
has averaged $73, down from $117 during the first half of
2010.
The Orlando industrial market ended Q3 2011 with a
vacancy rate of 12.0%. The vacancy rate was down over
the previous quarter, with net absorption totaling 1.2 million
SF year-to-date. Absorption has been strongest among
warehouse and distribution buildings. Average rental rates
ended Q3 at $5.36/SF, no change over the previous quarter.
Industrial building sales activity is up compared to the
previous year. The average price is $46.64/SF. Cap rates
have been higher, averaging 8.63%.
Improvements continue in the retail market with an overall
vacancy rate of 7.3% in Q3. Year-to-date net absorption is
807,900 SF. Lease rates, however, have trended lower over
the year. New construction is low at 123,000 SF. New
tenants were gradually filling formerly vacant big box space
as Borders closed its Orlando area stores. The Mall at
Milenia submarket is the desired location for high-end
retailers.
Investment interest is strongest for well managed rental
apartment communities with above average occupancy.
With minimal new construction over the past three years,
occupancy and lease rates are improving. Resurgence
in job growth is expected to benefit the rental apartment
market over the next year.
Contact
NAI Merin Hunter Codman
+1 561 471 8000
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
Total Population
Median Age
1,343,541
1,437,190
650,283
$84,446
$56,120
42
Palm Beach County continues to suffer from the housing
crash. As of August 2011 the median single family home
price was 20.5% below August 2010 and unemployment
stood at 11% representing a slight improvement over the
12.3% in the prior year. The leisure, education and health
sectors added 9,800 jobs. However, sustainable job growth
is not yet on the horizon. This coupled with a significant
increase in commercial foreclosures indicates a continuing
struggle for commercial property.
Stagnant job growth continues to challenge the office
market. Vacancy remains flat at 20%. Most leasing consists
of tenants upgrading to better buildings at discounted rates.
Landlords compete fiercely with aggressive concession
packages including free rent, TI upgrades and leasing
bonuses. There is no new office development as current
rents cannot support construction costs.
Retail vacancy remains flat at 8% while rents have
decreased 3.5% over the past year. However, there is good
retail news as tenants like hhgregg Publix and Dollar Tree
have begun to absorb vacant "big boxes". No new projects
are under construction although a 250,000 SF Delray center
should break ground soon.
Industrial vacancy remains flat at 10%. Rents average
$8.00/SF with flex at $10.70/SF and warehouse at
$7.50/SF. Three 30,000 SF leases were completed in 2011
and with less than 55,000 SF of new construction the
prospect for modest rental growth is good.
Palm Beach County remains a “Tale Of Two Cities” with
respect to investment sales. Thanks to an abundant supply
of capital chasing decreasing yields, Class A properties with
strong tenants have sold for peak prices. City Place Tower
(office, $425/SF, 5.5% cap rate), Mirasol Walk (retail,
$244/SF, 7% cap rate) and the Premier Portfolio (industrial
$92/SF) represent recent sales to institutional buyers at
pre-crash prices. Conversely, properties with high vacancies
and non credit tenants are selling for $50 to $80/SF.
With the number of South Florida properties in CMBS
Special Servicing growing from $1 billion to $2.5 billion
between January and August, 2011, expect an increasing
number of distressed sales. This will result in new landlords
with reduced basis applying downward pressure on rents
for the next several years.
Orlando At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
$ 26.00
$ 16.00
$ 14.00
$ 18.00
$ 16.00
$ 12.00
$ 28.00
$ 32.00
$ 26.00
$ 24.00
$ 28.00
$ 24.00
$ 26.75
$ 23.50
$ 19.90
$ 23.00
$ 21.85
$ 17.80
30.00%
18.20%
14.10%
72.00%
20.30%
12.80%
Bulk Warehouse
$ 2.95 $ 6.50 $ 4.76 12.30%
Manufacturing
$ 1.50 $ 10.50 $ 4.00 11.00%
High Tech/R&D
retaIl
Downtown
$
$
8.50
9.50
$ 30.00
$ 32.50
$ 30.00
$ 23.25
5.20%
4.10%
Neighborhood Service Centers
Community Power Center
Regional Malls
$ 10.00
$ 16.00
$ 14.00
$ 26.00
$ 26.00
$ 35.00
$ 15.20
$ 16.30
$ 23.00
11.30%
7.20%
5.00%
deVeloPment land Low/Acre High/Acre
Office in CBD
$ 1,307,000.00 $ 3,500,000.00
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
$
$
$
$
$
175,000.00
108,900.00
61,000.00
218,000.00
50,000.00
$
$
$
$
$
653,400.00
218,000.00
196,000.00
700,000.00
109,000.00
Palm Beach County At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
Premium (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
$
$
$
$
N/A
30.00
20.00
N/A
25.00
20.00
$
$
$
$
N/A
50.00
30.00
N/A
35.00
28.00
N/A
$ 37.52
$ 24.72
N/A
$ 30.86
$ 23.26
N/A
19.40%
18.60%
N/A
18.20%
20.30%
Bulk Warehouse
Manufacturing
$ 4.00
N/A
$ 9.50
N/A
$ 7.41
N/A
9.20%
N/A
High Tech/R&D
retaIl
Downtown
Neighborhood Service Centers
Sub Regional Centers
Regional Malls
$
$
$
$
$
6.50
12.50
15.60
13.35
21.50
$
$
$
$
$
12.00
40.00
36.31
18.00
31.60
$ 10.53
$ 24.06
$ 19.17
$ 15.46
$ 27.21
12.20%
5.00%
3.80%
9.00%
9.60%
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2012 Global Market Report n www.naiglobal.com 93