A Chicago-based institutional investor is preparing to sell 101 acres in Orlando's tourism corridor -- an increasingly rare large undeveloped block in the submarket that's being pitched as "the hole in the donut," with potential for mixed use or large-scale industrial.
Located in the 5000 block of W. Sand Lake Road directly east of Lockheed Martin's campus, the property has immediate access to all the major distribution corridors for statewide delivery, including Interstate 4, the Florida Turnpike, John Young Parkway and S.R. 528.
Almost entirely upland, the site is an opportunity to create a new Class-A business park from scratch that's 3 miles to the Orange County Convention Center, 3 miles to the established Universal Orlando parks, and directly adjacent to the majority of 474 acres that Universal's parent company Comcast bought in December 2015, where a future theme park is anticipated.
The asset is one of many that Highlands REIT is attempting to unload, after being created in April 2016 and inheriting more than 22 non-core assets from InvenTrust Properties, another public REIT formerly known as Inland American Real Estate Trust.
An Inland affiliate bought the property in 2011 for $9,100 through foreclosure from former owner and Georgia-based developer Stan Thomas, who had planned a large retail center there in the mid-2000s.
CBRE's Orlando office recently won a competitive bid process for the right to list the property, and began a joint marketing effort this week by brokers Robert McEwan and David Murphy for tourism-related and industrial uses.
McEwan was the lead on CBRE's Land Services team that successfully drew Comcast to pay $130 million for the 474-acre, 19-parcel package from Colony Capital. The majority of that lies directly south and adjacent to this Highlands land.
Infill sites this large in mature submarkets like Orlando's tourism corridor are a thing of the past for industrial users, said CBRE's Murphy.
"Normally to do large-scale industrial today you have to develop way out on the fringes, like we're seeing on S.R. 429, the I-4 corridor and east Orange County," he said. "But the center of the industrial market is right at Sand Lake Road and John Young Parkway, and this site is right on its doorstep. You could find a 3- or 4-acre parcel in this submarket, but not 101 acres. This is a very unusual opportunity."
The southwest Orange County submarket is Orlando's second largest for industrial today, with close to 26.3 million square feet and a low vacancy rate of 5.2 percent.
Planned Development zoning for the land carries industrial and mixed-use commercial entitlements. The site could accommodate 1.2 million square feet or more of warehouse space, everything from flex-service center and light industrial to a massive logistics center of 800,000-plus square feet, like Amazon is now building in Lake Nona.
"Two years ago it would have been right to focus this property on tourism or retail, but today industrial is the highest and best use," Murphy said. "The combination of low industrial Cap rates and lease rates through the roof have made industrial sites the star of the investment sales world. As people get more familiar with e-commerce and how industrial is taking the place of retail space, these are becoming a hot commodity for institutional investors."
Future extensions of Kirkman Road west of the Highlands REIT property and Mandarin Drive directly through it are planned by Orange County, and would extend southward to Universal Boulevard.
CBRE will market the property through mid-October, when a call for offers is anticipated. Due diligence would be limited to 45 days after with a 15-day closing to follow, in order for the sale to complete before end of December.
CBRE and Highlands will allow the market to set the price, but similar high-profile sales may offer context.
From the tourism perspective, the $130 million paid by Comcast/Universal for the nearby 474 acres breaks down to about $274,000 per acre, well below the $1 million or more per acre currently being asked for land on International Drive and Universal Boulevard. That property came well-entitled, but raw and unimproved.
And for large-scale industrial, this past July Seefried Industrial Properties paid $26.9 million for 130.6 acres south of Orlando International Airport for a new Amazon fulfillment center site. That breaks down to roughly $294,246 per net usable acre, based on the parcel's maximum allowable impervious area of 91.42 acres.