Introduction: Downtown Orlando Market Report Summary for Fourth Quarter 2017

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1 Introduction: Downtown Orlando Market Report Summary for Fourth Quarter 2017 The Downtown Development Board/Community Redevelopment Agency (DDB/CRA) retained GAI Consultants, Inc. to prepare summaries of Downtown Orlando market activity on a quarterly basis. Due to the length of the document, the DDB/CRA prepares a market report summarization to condense the information found in the full report. Areas that are currently covered include: Business Hospitality and Tourism Residential Market Commercial Office Market Major Downtown Developments Please note that Major Downtown Developments is the only section that does not originate from the GAI report. This information is compiled by the DDB/CRA staff through the use of information gathered by various City boards, along with communications from project representatives. If you have questions regarding the information contained herein, or to request a copy of the full GAI report, please contact Kimberley Allonce at or at Kimberley.Allonce@DowntownOrlando.com. Downtown Development Board Community Redevelopment Agency City Hall 400 S. Orange Ave, 6 th Floor P.O. Box 4990 Orlando, FL p: f:

2 Downtown Orlando Market Report Summary for Fourth Quarter 2017 Business For the 4 th quarter 2017, 26 business licenses were issued within downtown Orlando; this is a 49% decrease over the third quarter of 2017 and a 40.9% decrease compared to the same quarter last year. Approximately 61.5% of the licenses issued within the CRA were for professional establishments. Please note that business data provided for this quarter may have limitations as the City Of Orlando continues to improve business license data reporting functions in Infor, its new permitting system. The three largest employment sectors in downtown Orlando remained Educational Services with 24,286 jobs (30.3% of total jobs), Public Administration with 17,698 jobs (22.1% of total jobs), and Professional, Scientific and Technical Services with 12,384 jobs (15.5% of total jobs). Additionally, employment in Professional, Scientific and Technical Services increased by 9.8% compared to the same quarter last year. During the 4 th quarter 2017, the total sales tax collection within the CRA was $14,533,210 which is a 3% increase compared to the 3 rd quarter The three largest sales tax collection sectors were Lease and Rental of Commercial Property with $3,105,283, Restaurants, Lunchrooms, and Catering Services with $2,328,902, and Hotel/Motel Accommodations with $2,025,590. Not all sales are subject to sales tax; for instance, sales tax is not collected on purchase of groceries and medication along with certain services. See Figure: Figure 1: Top Ten Sales Tax Collections by Type of Business within the CRA Hospitality and Tourism With 1,883 available hotel rooms, approximately 126,000 guests were lodged in downtown Orlando s hotels for the 4 th quarter The average hospitality occupancy rate decreased from 77.1% to 75.9% compared to the previous quarter; this is understandable as the number of available rooms increased in downtown with the addition of the newly opened Marriott Orlando Downtown. The average hospitality occupancy rate for the 4 th quarter 2017 increased by 3.3% and 0.5% compared to the same quarter in 2015 and 2016 respectively. Downtown Orlando s average daily rate (ADR) was $153.43, which is the highest when compared to Metro Orlando with an average daily rate of $121.53, Orange County with $129.28, and the City with $ Additionally, downtown Orlando s average daily rate (ADR) increased by 5.4% and 2.2% compared to the same quarter in 2015 and 2016 respectively. See Figures: Figure 2: Hotel Occupancy Comparison Figure 3: Hotel Room Average Daily Rate Comparison Page 2

3 Residential Market During the 4 th quarter 2017, the average sales price per square foot in downtown Orlando was $242 which is higher than that of Orange County at $148 and that of the City at $145. Approximately 92% of the total residential dwelling unit sales were condominium units; total residential dwelling unit sales was 71 which is lower than 93 sales reported in the 3 rd quarter Total residential dwelling unit sales increased by 33.96% compared to the 4 th quarter Overall, the rental market in downtown Orlando continued to perform well with an average occupancy rate of 95% not including the newly opened Citi Tower which is still in lease up. This is a decrease compared to the 95.4% occupancy of the 3 rd quarter Among rental apartments surveyed during the 4 th quarter 2017, the average rent was $1,632 per month which is higher than the 3 rd quarter 2017 average of $1,560 per month. For the 4 th quarter 2017, the average price per square foot increased to $1.87 which is a 10.65% increase compared to the 3 rd quarter See Figures: Figure 4: Average Residential Sales Price Figure 5: Total Residential Sales, Downtown CRA Planning Areas by Average Price per Unit Figure 6: Occupancy of Major Apartment Buildings in downtown Orlando CRA Figure 7: Average Rental Price per Square Foot, Major Apartment Buildings in downtown Orlando CRA Commercial Office Market In the 4 th quarter 2017, the office occupancy rate in downtown Orlando was 90.5% which is higher than the previous quarter; it is lower than that of the City (91.7%) and that of Orange County (93.3%). There has been a downward trend in vacancy rates which indicates that the commercial office market continued to perform well. The average price per square foot was $24.29 which is lower than the average price of $24.37 per square foot reported for the 3 rd quarter of 2017 but higher than the average price of $23.95 reported for the same quarter last year. Office Space categorized as Class A had the largest percentage (54.3%) contribution in downtown Orlando while office space categorized as Class C had the highest occupancy rate (97%). Compared to other major cities in Florida, downtown Orlando had the second lowest occupancy rate (90.5%) for CBD office buildings compared to Miami (82.6%), Jacksonville (91.3%), Fort-Lauderdale (91.4%), and Tampa (92%). Downtown Orlando also had the second lowest rental rate ($24.29) per square foot compared to Jacksonville ($20.36), Tampa ($26.56), Fort-Lauderdale ($35.81), and Miami ($38.23). See Figures: Figure 8: Office Vacancy Rate Comparison within downtown Orlando CRA Figure 9: Average Office Rental Rate per Square Foot within downtown Orlando CRA Figure 10: Office Space Distribution as Percentage of All Classes Figure 11: Comparable CBD Office Buildings, Percent Occupancy Figure 12: Comparable CBD Office Buildings, Rental Rate per Square Foot Page 3

4 Major Downtown Developments There are currently 13 projects underway in downtown Orlando representing more than $4 billion ($1.1 billion in private and $2.9 billion in public) in investment. These projects include nearly 2,062 residential units, 180 hotel rooms, 69,465 sq. ft. of retail space, and 306,500 sq. ft. of office space. Furthermore, there are 12 proposed projects representing more than $386 million in investment, 403 residential units, 531 hotel rooms, 191,557 sq. ft. of retail space, and 319,006 sq. ft. of office space. Downtown Projects - In Progress Project Investment Residential Units Amelia Court $ 60,000, Church Street Plaza 125,000,000 Colonial Pedestrian Overpass $ 9,100,000 Dr. Phillips Center for the Performing Arts (Phase 1 & 2) $ 550,000,000 Eola North $ 4,600, I-4 Ultimate Improvement Project $ 2,300,000,000 Irving on Park $ 4,000, Modera By Mill Creek, Central 74,000,000 Novel Lucerne 62,000,000 SunRail $ 615,000,000 The ,000,000 UCF Dr. Phillips Academic Commons 65,000,000 UCF Student Housing 105,000,000 Totals 4,061,700,000 Hotel Rooms Retail (sq ft) $ 180 8, ,500 $ ,465 $ ,000 Office (sq ft) Other (sq ft) $ 363 6,800 $ 148,000 $ 600 (beds) 10, ,000 50,000 $ 2, , , ,000 Downtown Projects Proposed Project Investment Residential Hotel Units Rooms Retail (sq ft) Office (sq ft) Other (sq ft) 107 Hillcrest TBD 10,950 2,356 94, North Rosalind $ 95,000, , E. Washington Street ,477 Big Squeeze Brewery TBD Cambria Suites Hotel $ 20,000, Élan on Marks Street $ 7,000, Fountain Vu 5 $ 4,000,000 Magnolia Hotel TBD 126 7,000 Pararmore Oaks $ 24,900,000 Sports Entertainment District $ 200,000, , ,000 2,500 Orlando Health Team Member Garage TBD The 500 $ 36,000, ,650 Totals $ 386,900, , , ,367 Page 4

5 $4,500,000 $4,000,000 Figure 1 Top Ten Sales Tax Collections Type of Business Within the CRA $3,500,000 $3,000,000 $2,500,000 $2,000,000 $1,500,000 $1,000,000 $500,000 $0 Other *** Lease or Rental of Commer cial Real Property Restaura nts, Lunchro oms, Catering Services Hotel/M otel Accomm odations, Rooming Houses etc. Drinking Places (Alcoholi c beverag es) General Miscella neous Merchan dise Stores Automot ive Dealers (Sale & Lease), Tag Agencies Food & Beverag e Stores Itinerant Vendors, Peddlers, Direct Selling Establish ments Privately Owned Parking Lots, Boat Docks & Aircraft Hangars 4Q 2017 Kind Code $4,225,44 $3,105,28 $2,328,90 $2,025,59 $664,354 $527,165 $388,262 $388,135 $154,810 $139,606 Page 5

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10 Figure 11 Comparable CBD Office Buildings Percent Occupancy 94.0% 92.0% 90.0% 88.0% 86.0% 84.0% 82.0% 80.0% 78.0% 76.0% Ft. Orlando Jacksonville Tampa Miami Lauderdale CRA 4th Qtr % 92.0% 91.4% 82.6% 90.5% $45.00 $40.00 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 Figure 12 Comparable CBD Office Buildings Rental Rate Per Square Feet $0.00 Ft. Orlando Jacksonville Tampa Miami Lauderdale CRA 4th Qtr 2017 $20.36 $26.56 $35.81 $38.23 $24.29 Source: GAI Consultants, Inc. Page 10