Millennials will be the driver of Orlando’s continued resurgence as they continue moving to the area to take advantage of the jobs, amenities and residential building that is going on.
That was the assessment of John Sikaitis, US research director at JLL, during a broad panel discussion Thursday that developers, builders and others in the construction industry participated in at the Dr. Phillips Center for the Performing Arts.
Sponsored by JLL, the discussion touched on the prospect of overbuilding, how costs are rising for developers and builders and how prime land, after several years of aggressive construction, is becoming scarce.
But downtown Orlando should flourish, panel members said.
“Where we build and who we build for” should take into account millennials, Sikaitis said. “Downtown will propably see a renaissance” because of them.
Millennials are certainly a group to be courted. Numbering roughly 77 million, they make up about one-fourth of the US population, according to Nielson. Most economists use birth years ranging from the early 1980s to early 2000s.
Builders acknowledged they have to be attuned to millennials’ wants, like renting rather than owning, and working in offices with plenty of natural light and high ceilings to give an open feeling, panelists said.
“Only 13 percent are homeowners,” said Jeff Morris, managing director of capital markets at JLL. “It’s a giant renter situation.”
Millennials also “wants services, like entertainment and restaurants close by,” said K.C. Conway, senior vice president for credit risk at SunTrust Bank.
Millennials were seen as complementing the demand being seen from other segments of the population. “I think we are pretty early in the game,” said Craig Ustler, head of Ustler Development, who cited growth for the multifamily market. “Orlando is a lagging market. I think our better days are ahead.”
What Orlando needs “is to become the center of the world for something unique and very compelling,” said M. Jayson Lipsey, COO of Parkway Properties.
The simulation industry work that is being done here is a definite step in the right direction, panelists said.
Still, Ustler was cautious about office properties, which are not part of the area’s growth boom. For a developer to come in and want to build an office building, it would take $36 a square foot to $38 a square foot rents “and we’re not there yet,” he said, noting that rents are in the high $20s to low $30s right now.
But other types of buildings—homes, stores, commercial structures—continue going up, begging the question about overbuilding. Conway gave a firm, “No.”
Based on job creation versus supply, “We are nowhere near the saturation point,” he said.
As for land, Ustler said, “It’s very hard to find land,” and properties he does locate carry very high prices.
Since 2010 construction costs are up over 40 percent, Ustler said. “And I’m not encouraged for the next 12 to 18 months.”
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