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Several announced office projects will compete to land company HQs

Several announced office projects will compete to land company HQs
Located on Kirkman Road east of the International Drive intersection, Kirkman Point II (pictured above) is being built to the east of the existing Kirkman Point office building, with a new four-story parking garage built behind it to serve both buildings. (C4 Architecture)

Renewed demand in Greater Orlando for corporate headquarter space or large regional offices has prompted a half dozen new office developments to push forward with plans this year.

Veteran brokers tell GrowthSpotter the vibrant economy and market cycle now support such aggressive HQ-level office development, but challenges remain for owners to distinguish their properties in the critical pre-leasing phase.

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The Orlando Economic Development Commission has aided 29 headquarter relocations since 2012 in the city of Orlando, some new and others local expansions, with recent notable cases being Red Lobster and BBA Aviation. The EDC has been involved in another 52 deals with companies that have located headquarters in the four-county region of Orange, Osceola, Seminole and Lake.

Verizon's custom regional office build of 220,000 square feet and Deloitte's lease of 130,000 square feet last year in Lake Mary were notable catalysts that reinforced Greater Orlando as a focal point  for companies considering regional office or HQ relocations.

"I think Orlando is becoming more of a market for large regional offices to relocate to," said Bill Moss, senior managing director of CBRE Orlando. "We like corporate headquarters, but may be a more immediate draw for large regional offices of Fortune 100 or Fortune 500 companies."

There may be existing office parks where owners could move smaller tenants around to create large blocks of space. SouthPark Center on John Young Parkway holds such flexibility, Moss noted, but those locations are few and far between.

Greater Orlando's overall vacancy rate for office space was 16.9 percent after the second quarter of this year, down 210 basis points from Q2 2014, according to the latest report from CBRE.

Those numbers don't reflect Greater Orlando's lack of large existing blocks of 100,000 square feet or more for companies to move into immediately. New-build activity of multi-tenant buildings was minimal, with three properties under construction at the end of June totaling 99,624 square feet.

"Currently, the market is inverted. There are lots of medium-sized lots of space available but not large ones -- those of 75,000 square feet or more," said Rick Solik, senior director at Cushman & Wakefield.

"With only a handful of options when users visit the market, we've seen that they may, due to timeliness, choose another city. Developers have the opportunity to react, but few can 100 percent-spec build an office building," Solik continued. "The question is where each one is in their design plans. It can be a race to build in a year, often 24 months for downtown, assuming you have plans and permit in place."

C.T. Hsu, president of Orlando-based architecture, design and urban planning firm C.T. Hsu + Associates, and Tavistock Group are developing the 195-acre Infinity Park on S. John Young Parkway and plan to feature HQ-scale office space, with shovel-ready construction plans for two office buildings already completed.

That property is the latest to promote itself with 100,000-square-foot contiguous space availability, but Hsu said last week they won't build on spec.

"Hsu and other developers are all looking at similar projects right now," said Jeff Sweeney, senior director at Cushman & Wakefield. "He and others pursuing this segment are absolutely right to prepare for opportunities at this point in the market cycle. They are all unique projects, but they're by no means the only opportunity coming (for prospective tenants)."

One of the most difficult choices new users have when looking at Orlando is all the location opportunities, Solik said.

"You can go downtown, the Research Park, Lake Mary, S. John Young Parkway, they all offer positives," he said. "Choice is a good thing, but makes it difficult to hone in on one."

Other prominent HQ-level office buildings in varied stages of development include:

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-- Brazilian developers Megastron Development broke ground in July on Kirkman Point II, a four-story class A office building with 134,000 square feet and a parking garage that will neighbor the firm's fully occupied first building, near the intersection of Kirkman Road and International Drive. Megastron is building on spec, after pushing forward on the first Kirkman building in 2011 on spec and successfully leasing three full floors afterward to Walt Disney Parks & Resorts Technology.

-- TownPark Commons, a $220 million mixed-use project planned for the Lake Mary area, is currently proposed to have 800,000 square feet of office space between three buildings, along with a hotel, retail/dining and three eight-floor parking garages. Developed by Lake Mary-based realty firm Providence One Partners and Johns Creek, Ga.-based Piedmont Office Realty Trust, the project still requires final engineering work and permit approval from Seminole County and the St. Johns River Water Management District. Construction could start in mid-2016, but, like similar projects, will hinge on pre-lease activity.

-- Millenia Lakes IV and V, planned for a 12.8-acre parcel at 5450 Millenia Lakes Blvd., should boast two four-story buildings with 131,000 square feet each and a 1,046-space parking lot. The Orlando Municipal Planning Board is tentatively scheduled to hear the case on Aug. 18. The almost fully-leased three existing buildings in Millenia Lakes Office Park and these two pad-ready development sites were bought in August 2014 by Colorado-based real estate investment firm Cornerstone Holdings.

-- Tremont Realty Capital has filed plans to build a 25-story building at Garland Avenue and Church Street in Downtown Orlando with 206,500 square feet of office space. CNL Tower III at 455 S. Orange Ave. (250,000 square feet of office space), and Capital Plaza Three at 101 S. Rosalind Ave. are also in development for downtown. All are expected to pre-lease as multi-tenant towers, however.

bmoser@growthspotter.com or (407) 420-5685

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