GETTING THE MAGIC BACk Medical Office Buildings
and Tourism Have Helped Stabilize the Orlando Real Estate Market
HUNT IS A
JPM. IF YOU
the sunshine state May have seen
sunnier days, But the real estate
Market in OrlandO, home of the 2010
IREM iCon conference in October, appears to
“The commercial market is vibrant. The multifamily housing market is vibrant. I’m not
saying everything is peachy and rosy, but we’re
seeing some stability,” said Mez Birdie, CPM®
and director of retail and investment services
for NAI Realvest, in Maitland, Fla.
A decrease in construction of commercial
retail properties is one factor keeping the market intact. During the past 12 months, 475,000
square feet of space has been added, a significant drop from the 2. 5 million square feet that
entered the market in the preceding one-year
stretch, according to Marcus and Millichap’s
Retail Research Market Update for the second
quarter of 2010.
Still, Orlando rents are projected to decrease
around 3 percent in 2010 to $16.81 per square
foot, according to the report. It also indicated the
vacancy rate for all retail properties increased to
about 11 percent in the first quarter of 2010.
The commercial retail markets surrounding the Orange County Convention Center
and Disney World are fairly stable, though,
Birdie said. Vacancies are relatively low, and
even though rents are flattening out, the retail
spaces can command higher rents—$18-$22 per
square foot—than in other areas.
And while tourism and the convention busi-
ness have declined during the economic down-
turn, they appear to be stabilizing, too. Tourism
is expected to increase 1. 7 percent in 2010, after
sharp declines in 2009, according to information
from the Orlando/Orange County Convention
and Visitors Bureau. That increase will likely
further help the commercial retail market near
Tourism is actually not influencing another area
of Orlando that has proved fairly resilient during the downturn—the 600-acre “medical city”
in Lake Nona. Already home to the Sanford-Burnham Medical Research Institute and the
University of Central Florida’s new medical
school, the area is anticipating more biotech
and pharmaceutical companies to enter the
market, generating more than 30,000 jobs.
A children’s hospital is currently being built
on the site, and a VA medical center, Florida
hospital clinic and employee housing are also
expected to be located within the development.
Although Barrett is not yet involved in managing any “medical city” properties, the medical
office arena in other areas of Orlando has been
a bright spot in the real estate market as well.
“I have a captive audience,” Barrett said. “It is
a luxury right now to not have to beat the streets
to find tenants.”