Finishing 2016 on a strong note, the Central Florida office and industrial markets entered 2017 more robust and thriving than ever. Although external factors like the presidential election and global terrorist attacks disrupted many economies throughout the United States, Central Florida markets remained strong. Additionally, several market drivers are propelling continued growth in the first quarter of 2017.
Before we dive into what’s driving the market forward, let’s recap last quarter’s indicators:
The industrial market performed extremely well during the fourth quarter of 2016. For example, industrial space under construction has increased each quarter throughout the year, net absorption versus vacancy is moving in a positive direction, and the number of building sales and dollar volume are rising at a considerable rate.
The office space market had similar positive movement last quarter. The number of buildings and total square footage grew in 2016, total vacancy steadily decreased each quarter, and net absorption and total vacancy finally reached similar levels after years of absorption falling significantly behind vacancy.
Now, let’s discuss which factors are currently driving the Central Florida market:
The theme parks will be quite busy throughout 2017. Disney is constructing the Star Wars venue and recently announced the company’s Avatar World project. Universal is finishing up Volcano Bay and recently purchased land near Sand Lake Road. This activity will create jobs and continue to be one of the main drivers of Central Florida’s economy – tourism.
Driven mostly by tourism, construction, retail, technology, and health industries, the Orlando MSA unemployment rate dropped to 4.5 percent in the fourth quarter of 2016. This decrease in unemployment is having a direct effect on the demand for office space and the uptick in sale and leasing activity. Both the Orlando office market and the Central Florida industrial market saw quarter-over-quarter declines in vacancy, and this trend is expected to continue.
The I-4 Ultimate, Sun Rail expansion, Wekiva Parkway, airport expansion, and All Aboard Florida are not only shaping the future of Central Florida transportation networks but also regions where employers decide to locate. In a competitive hiring market, employers are wary of choosing locations that are far from access to public transportation, amenities, nearby housing and more. Thus, Downtown Orlando and submarkets like Lake Mary, which has access routes I-4, 417 and eventually 429, are more attractive than Maitland Center, where I-4 is the primary access road. These expansions and additions will eventually help Central Florida prosper and handle large economic growth periods.
Fortunately for Central Florida, many of these drivers are long-term projects. Notwithstanding interference from external factors, market indicators should remain positive throughout the first quarter of 2017 and on into the second quarter.
By Cite Partners Wilson.McDowell@citepartners.com.