Third Quarter 2017 / Office Market Report Market Facts Strong Leasing Fundamentals and Sustained Job Growth are Paving the Way for Major New Office Developments Economic Drivers 37.0 MSF Total office inventory in the office market 730,366 SF Direct net absorption for YTD-2017 10.71% Overall Vacancy $25.79 PSF Average rental rate for class A space in on a fullservice gross basis 's economic engine continues to perform as exhibited by the sustained decline in the unemployment rate, which stood at 3.8% as of August 2017 a marked 90-bps decrease from the previous year. Economic fundamentals remain solid, the pace of job growth continues with over,0 new jobs added in the trailing 12-month period, healthy leasing activity is occurring, and new class A office development has returned to the urban core. Office Market Snapshot At the close of the third quarter, office fundamentals in remained strong with robust net absorption of 730,366 sf and continued incremental gains within asking rents. Sustained leasing activity has tempered the effect of the rollover of space during the first half of the year, and the vacancy rate has dropped 17 basis points since the end of 2016 to a current 10.7%. Vacancies are tightest (with respect to total inventory) in the, Mary/Heathrow, and Southeast submarkets, although Maitland has also been a strong performer with a direct vacancy rate below 10%. Rental rates continue to inch up in most areas, rising by $0.33 since the end of 2016 to a current $21.86 per sf on a full-service gross basis, with class A rates up $0.8 over the same period to $25.79 per sf. There is a current glut of over 230,000 sf of sublease space in the downtown core, a majority of which is comprised of law firm space. It is noteworthy that the direct vacancy for class A space in Downtown is a very healthy 8.1%. Leasing was positive once again during the third quarter, with several key deals signed in excess of 20,000 sf. The largest lease was signed in the new class A Kirkman Point II building currently under construction in the Southwest
Office Market Report Third Quarter 2017 Downtown is seeing its first class A office construction in a decade after the much-anticipated Church Street Plaza (formerly Tremont Plaza) broke ground during the third quarter. Average Asking Rent Rate ($/SF/FS) $30.00 $25.00 $20.00 $.00 $10.00 $5.00 $0.00 Vacancy Rate 20.0%.0% 10.0% 5.0% 0.0% 2013 201 20 2016 3Q-2017 Class A Class B Total 2013 201 20 2016 3Q-2017 Direct Sublet YTD Net Absorption (SF),000 00,000 3,000 300,000 2,000 200,000 1,000 100,000,000 0 CBD Non-CBD Total Class A Class B submarket. Lockheed Martin took 33,0 sf in that building, which is scheduled for completion late in the fourth quarter of 2017. The Downtown, Southwest, Maitland and Mary/Heathrow submarkets all benefited from additional leasing activity during the third quarter. New Class A Tower Underway in Downtown Downtown is seeing its first class A office construction in a decade after the muchanticipated Church Street Plaza (formerly Tremont Plaza) broke ground during the third quarter. The $100 million development is underway with site work and vertical construction expected to begin during the fourth quarter. The 26-story, 601,225-sf tower will house 217,000 sf of modern class A office space, retail space on the ground floor, a 9-story parking garage with 600 spaces, and a 180- room hotel carrying the Marriott flag. A relative dearth of large blocks of quality office space downtown has led to speculation that corporate relocation prospects may be limited in the future, and development plans moving forward on this tower have allayed much of that concern. The project is scheduled for completion in the third quarter of 2019. Situated adjacent to a SunRail commuter rail station, the building will help link the core of the downtown area to the evolving west side of I-, where planned projects include the massive Creative Village development and the Magic's planned sports and entertainment district. Lincoln Property also recently acquired the south portion of downtown's historic Church Street Station, a popular entertainment district immediately adjacent to the new Church Street Plaza. While construction on the tower is the sole focus for now, a second development phase could involve razing the adjacent Ballroom at Church Street to make room for a multi-residential tower. The Edison at Primera Breaks Ground in Mary Seminole County's dominant Mary/Heathrow submarket also has an exciting new project underway as The Edison at Primera broke ground during the third quarter. Situated near the pivotal intersection of Interstate and Mary Blvd, the first phase of the project consists of a 1,000-sf class A building that is expected to deliver during the spring of 2018. The building's large and open floor plates, high ceilings, lifestyle amenities and neighborhood walkability will appeal to the area's more discerning technology firms and its growing Millennial workforce. Looking Ahead 's speculative office development pipeline is in a state of expansion, corporate relocations continue to put on their short list, the area's bio-medical, healthcare and tech industries are expanding, and job growth remains strong. Heading into the final quarter of 2017, Avison Young expects leasing activity to remain steady, allowing for continued positive absorption, that rental rates will continue to strengthen, and that investment sales interest will remain strong as investors scour for opportunities. Providing there are no unexpected economic fluctuations, 's office market should remain on its upward trajectory.
Office Market Report Third Quarter 2017 ORLANDO MSA TOTAL Class Breakdown Total RSF Direct Vacant SF Sublet Vacant SF Avg Rent Rate % Occupied % Vacant % Sublet Vacant % Total Vacancy Under Construction Net Absorption Class A 16,603,761 959,81 363,73 $25.79 9.22% 5.78% 2.19% 7.97% 68,000 399,1 Class B 20,398,18 2,300,92 338,330 $20.22 88.72% 11.28% 1.66% 12.9% 117,000 330,865 Total 37,001,95 3,260,23 701,803 $21.86 91.19% 8.81% 1.90% 10.71% 585,000 730,366 CBD Class A,07,777 331,80 185,693 $26.79 91.86% 8.1%.56% 12.70% 217,000 93,767 Class B 3,036,12 302,766 9,192 $2.69 90.03% 9.97% 1.62% 11.59% 0 37,79 Total 7,111,189 63,570 23,885 $25.79 91.08% 8.92% 3.30% 12.23% 217,000 131,26 Non-CBD / Suburban Class A 12,,98 627,677 177,780 $25.26 9.99% 5.01% 1.2% 6.3% 251,000 305,73 Class B 17,361,772 1,998,176 289,138 $19.55 88.9% 11.51% 1.67% 13.17% 117,000 293,386 Total 29,890,756 2,625,853 66,918 $20.91 91.22% 8.78% 1.56% 10.35% 368,000 599,120 Corridor Class A 339,75 11,6 6,791 $26. 96.71% 3.29% 2.00% 5.29% 0 (205) Class B 1,000,992 110,127 17,279 $18.79 89.00% 11.00% 1.73% 12.73% 0 3,92 Total 1,30,67 121,283 2,070 $19. 90.95% 9.05% 1.80% 10.8% 0 3,287 Altamonte / Longwood Class A 0 0 0 $0.00 0.00% 0.00% 0.00% 0.00% 0 0 Class B 2,58,7 66,818,173 $17.6 81.01% 18.99% 0.17% 19.16% 0 (7,30) Total 2,58,7 66,818,173 $17.6 81.01% 18.99% 0.17% 19.16% 0 (7,30) Downtown Class A,07,777 331,80 185,693 $26.79 91.86% 8.1%.56% 12.70% 217,000 93,767 Class B 3,036,12 302,766 9,192 $2.69 90.03% 9.97% 1.62% 11.59% 0 37,79 Total 7,111,189 63,570 23,885 $25.79 91.08% 8.92% 3.30% 12.23% 217,000 131,26 Mary / Heathrow Class A 3,780,231 232,710 12, $2.2 93.8% 6.16% 0.33% 6.9% 1,000 233,992 Class B 1,93,260 188,729 65,222 $18.77 90.29% 9.71% 3.36% 13.07% 0 10,272 Total 5,723,91 21,39 77,666 $21.89 92.6% 7.36% 1.36% 8.72% 1,000 338,26 Maitland Class A 2,036,67 52,807 26,877 $21.39 97.1% 2.59% 1.32% 3.91% 0 59,585 Class B 3,973,999 538,636 5,367 $18.82 86.5% 13.55% 0.1% 13.69% 0 (3,997) Total 6,010,66 591,3 32,2 $19.05 90.16% 9.8% 0.5% 10.38% 0 2,588 Southeast Class A 919,96 79,319 0 $30.87 91.38% 8.62% 0.00% 8.62% 0,725 Class B 25,39 10,982 0 $19.59 97.2% 2.58% 0.00% 2.58% 0 (,017) Total 1,35,385 90,301 0 $29. 93.29% 6.71% 0.00% 6.71% 0 11,708 Southwest Class A 3,82,8 181,377 131,668 $25.1 90.37% 9.63% 1.26% 10.89% 136,000 (11,987) Class B 3,078,208 36,381 6,788 $21. 88.75% 11.25% 2.10% 13.36% 87,000 17,55 Total 6,902,692 527,758 196,56 $22.52 89.6% 10.36% 1.6% 11.99% 223,000 135,68 University / Research Class A 1,329,06 70,308 0 $2.72 9.71% 5.29% 0.00% 5.29% 0 7,53 Class B 3,23,91 272,6 127,95 $23.07 91.60% 8.0% 3.93% 12.3% 30,000 30,630 Total,573,320 32,952 127,95 $23.1 92.% 7.% 2.79% 10.29% 30,000 38,083 / Lee Road Class A 298,795 0 0 $0.00 100.00% 0.00% 0.00% 0.00% 0 1,171 Class B 1,237,803 63,859,81 $19.5 9.8% 5.16% 0.39% 5.55% 0 22,891 Total 1,536,598 63,859,81 $19.5 95.8%.16% 0.31%.7% 0 2,062 Reporting Methodology: This report includes all class 'A' and 'B' office buildings and parks 20,000 SF and greater in the MSA that are not owner occupied, office medical, or government owned. All rents are reported on a full-service gross basis. The information in this report has been collected by the Avison Young research team via sources that are deemed reliable but is not guaranteed.
Office Market Report Third Quarter 2017 Heading into the final quarter of 2017, Avison Young expects leasing activity to remain steady, allowing for continued positive absorption, that rental rates will continue to strengthen, and that investment sales interest will remain strong. Leading Indicators (Y-O-Y 3Q-2016 to 3Q-2017) Vacancy Rate 10.71% Net Absorption 730,366 SF Average Asking Rate (FS) $21.86 New Construction 585,000 SF Total Employment 1.26 MM Significant Third Quarter 2017 Lease Transactions - Sorted by SF Tenant Property Type SF Submarket Lockheed Martin Kirkman Point II New Lease 33,0 Southwest Industrious Lincoln Plaza New Lease 2,113 Downtown Launch That 1 S Orange Ave New Lease 20,010 Downtown Enterprise Florida One Centre Renewal 19,620 Downtown Siemens University Corporate Center I Sublease 18,30 University/Research Cole, Scott & Kissane, PA Liberty Summit New Lease 18,107 Maitland Cole Engineering The Pointe New Lease,800 University/Research Centene 300 South Center Expansion,265 Southwest Robin Hood Markets* 0 Town New Lease 1,72 Mary/Heathrow * Avison Young handled this transaction Significant Third Quarter 2017 Sales Transactions - Sorted by Sale Price Property SF Sale Price Price/SF Buyer Submarket DRA Portfolio Mary 795,69 $1,100,000 $190 Starwood Capital Mary/Heathrow 901 International Pky 178,21 $39,000,000 $219 Starwood Capital Mary/Heathrow 1001 International Pky 192,9 $36,000,000 $187 Starwood Capital Mary/Heathrow 801 International Pky 1,567 $28,000,000 $186 Starwood Capital Mary/Heathrow 00 International Pky 100,821 $17,100,000 $170 Starwood Capital Mary/Heathrow 1000 Business Center Dr 87,066 $16,000,000 $18 Starwood Capital Mary/Heathrow 300 International Pky 86,80 $,000,000 $173 Starwood Capital Mary/Heathrow Maitland Preserve (3 bldgs) 306,119 $51,00,000 $168 Gladstone Commercial Maitland Center Belle Terre Building 62,000 $11,800,000 $190 BioSpine Institute Southwest 173 Center Dr 36,678 $3,900,000 $106 173 Center LLC Southwest 2017 Avison Young - Florida, LLC. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young.
Office Submarkets Eustis SUBMARKETS Mount 1 Third Quarter 2017 37 Dora LAKE MARY - HEATHROW Mount Plymouth ALTAMONTE - LONGWOOD Dora 6 6 ORANGE Heathrow Zellwood Altamonte 51 SunRail Stations S outh Ap opka 1 Forest Cit y 1 3 29 Jessup G arden 38 537 Orlovista 29 Butler Horizon West 23 Pine Castle Doc tor Phillips 536 Alafaya Conway B elle Isle Taf t Buena Vista 08 Conway 82 Hill Tibet Bay 527 Int l Airport 17 Williamsburg 23 Hunters Creek 92 1 S outhchase Meadow Woods Mar y Jane Nona Medical City Har t Buenaventura s Celebration POLK 192 Kissimmee Hart ORANGE OSCEOLA 192 Four Corners 27 R io Pinar Edgewo o d Oak R idge University Union Azalea Downtown Holden Heights 35 B ay 535 G oldenro d 08 Lisa McNatt Director of Research 135 W Central Blvd, Suite 700, FL 32801 813..0606 lisa.mcnatt@ 3 26 08 Butler Greg Morrison Principal and Managing Director 135 W Central Blvd, Suite 700, FL 32801 07.0.660 greg.morrison@ 600 23 G otha Windermere 26 O viedo Maitland 17/92 Tildenville 1 38 Pine Hills 39 19 Casselberr y Fairview Shores Ocoee Black Hammock Fern 1 Eatonville 0 35 17/92 3 Lo ck har t Clarcona Apopka LAKE Contact Information 19 Longwood Wek iwa Ap opka 1 SOUTHEAST ORLANDO Johns SEMINOLE SOUTHWEST ORLANDO Oak land Sanford Int l Airport CORRIDOR - E ORLANDO Mont verde Mar y 37 UNIVERSITY - RESEARCH Tangerine DOWNTOWN ORLANDO S anford LAKE MAITLAND WINTER PARK - LEE ROAD VOLUSIA Monroe 29 Sorrento East Tohopekaliga 17 92 Campb ell St. Cloud Loughman Tohopekaliga 192 1 2017 Avison Young - Florida, LLC. All rights reserved. E. & O.E.: The information contained herein was obtained from sources which we deem reliable and, while thought to be correct, is not guaranteed by Avison Young.