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Industrial buildings could be players in land around OIA's south expansion

Bent Oak Industrial Park, at 1801 Boice Pond Road, is believed to be the largest speculative industrial development in Orlando, at 483,080 square feet. The building was completed in the second quarter of last year and is 60 percent leased.
Bent Oak Industrial Park, at 1801 Boice Pond Road, is believed to be the largest speculative industrial development in Orlando, at 483,080 square feet. The building was completed in the second quarter of last year and is 60 percent leased. (Cite Partners)

Industrial buildings around Orlando were in considerable demand last year and are expected to continue their momentum for at least a couple more years, with the area south of Orlando International Airport becoming increasingly popular.

There are several thousand acres of undeveloped land lining Boggy Creek Road, the thoroughfare that leads southward from the airport. While Adventis Health System and developer Tavistock Group (through its Lake Nona affiliate) hold a couple thousand acres in the heart of the area, there is still plenty of property held by small land holders and organizations that might be compelled to sell.

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"Groups out there are looking for space in and around the airport's southern part," said Wilson McDowell, a managing director specializing in industrial properties at Cite Partners. "The problem is there is not a lot of land," when you consider some companies want to build huge warehouses and other industrial sites.

Still, smaller projects are very possible, McDowell said. "The (coming) south terminal is an opportunity, and the Boggy Creek Road interchange has improved transportation, which has opened up more opportunities for industrial development."

There are presently 34 Orlando industrial properties for sale in the Orlando area, according to LoopNet.com. The average price is $44 a square foot, which puts the properties at the lowest end of the building food chain that includes retail, residences and even offices, the latter of which has been struggling.

The biggest industrial site by price is a retail showroom/warehouse going for $4.2 million, according to LoopNet.com. The property is 110,203 square feet and sits on 3.36 acres along Colonial Drive, adjacent to the Central Florida Fairgrounds.

Last year's biggest transactions by square footage included the $35.5 million sale of a CVS-leased building in South Orlando to commercial real estate investor Kinsey Capital from real estate investment trust Liberty Property Trust, at 740,000 square feet.

"There is a ton of institutional money out there looking for deals," said McDowell. "The challenge is there is not a ton of industrial products on market."

More than 50 percent of industrial properties, which include warehouses and factories, are in South Orlando near the intersection of Orange Blossom Trail, the Beachline Expressway and Florida's Turnpike. That's because the industrial market needs quick access to transportation hubs to move goods in and out.

Sales volume of industrial sites was $397 million last year, compared with $156 million in 2014. Several large institutional purchases helped up last year's tally, and showed this kind of money is still finding Orlando appealing.

The number of transactions was the highest since 2007, just before the recession. There were 94 sales of properties with more than 10,000 square feet in Central Florida last year, for a total of $311.9 million, according to Cite. This is a 20.5 percent increase in the number of sales and a 90 percent jump in total volume from 2014, according to the brokerage.

A large percentage of transactions were "off market" sales, which showed demand as the buyer approached the seller.

And while no properties came on the market in the fourth quarter, there are seven industrial buildings with a total of 660,000 square feet expected to be completed in the first and second quarters of this year.

For those buildings already here and despite new construction, vacancy rates have decreased for 10 straight quarters. The vacancy rate at the end of 2015 was 8.1 percent, which represents a 5 percentage point decrease from the same period the year before, per Cite.

The data show the market is very strong, said McDowell. "The concern of every buyer and seller is how long will it stay that way."

Have a tip about Central Florida development? Contact me at ktalley@growthspotter.com or (407) 420-5176. Follow GrowthSpotter on FacebookTwitter and LinkedIn.

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