Nearly two dozen investors placed bids on an assemblage of land in Orlando, that from a bird’s eye point-of-view can best be described as a solitary green patch of land surrounded by a metropolis of concrete boxes.
“A typical deal will see six to 10 bids for something decent,” broker Josh Lipoff of JLL said. “So you’re getting double the amount of interest, just due to the prime location.”
The land, as several industry insiders agree, was one of the remaining infill investment opportunities for new large-scale industrial development near Orlando International Airport.
“This was one of the most competitive land sales in the county, probably ever,” Lipoff told GrowthSpotter. The bids are indicative of a growing appetite from businesses and investors alike to have a footprint by OIA, he said.
Coming out as winner was a bid made by Whitley Capital. The Winter-Park based development firm paid $12.2 million last month to acquire the 70 acres of timberland directly west of OIA.
Buying a similar development site that close the airport may be off the shelf, but the transaction embodies a shift in the types of opportunities available in the market that real estate pros are actively pursuing to meet the demand of a growing amount of interested investors.
For Estero-based TerraCap Management, that meant purchasing the Lake Point Business Center, a six-building, fully-leased flex business campus at 6200-6360 Hazeltine National Drive that spans about 134,400 square feet.
According to a deed recently recorded in Orange County the firm paid about $17.6 million for the property.
Stephen Good, a director at TerraCap, said the investment deviates from its typical strategy, which usually involves buying value-add commercial properties that the company can quickly turn around for a profit.
“This is a little different. It’s a longer-term investment” Good said. “The idea behind it is the growth story behind the airport.”
Market reports used by brokers are predicting OIA to be the number one busiest airport in the next 10 years, taking over Atlanta’s Hartsfield–Jackson Atlanta International Airport, he said.
“Even if its finishes third or fourth, that’s pretty significant.”
There are clear reasons for commercial real estate investors to be excited about the airport, commercial broker Ron Rogg of CBRE said.
For one, it’s undergoing a hefty $3 billion expansion plan that at its peak will have a workforce of about 2,500 with the addition of its newest terminal.
As reported by the Orlando Sentinel, Terminal C at the new complex is slated to open in 2021 with 19 gates out of an eventual projected 60 gates. The airport’s planning through 2031, includes Terminal D and another 60 gates.
“The long-term build out is what’s going to create ancillary jobs, like those in the construction industry, for years to come," Rogg said. “Leverage will continue to be on the landlords’ side and will be for a very long time.... The owners will have a captive audience, as in tenants will have to pay a higher rent or locate further away and that becomes inefficient.”
He adds the area is also benefiting from Tavistock Development Company’s nearby Lake Nona master-planned community that’s growing fast just southwest of the airport.
As for new commercial construction, Cushman & Wakefield’s Jared Bonshire said there are still plenty of projects in the pipeline stemming from developers slowly building out industrial parks in the submarket.
“If you’re going to consider [the Whitley Capital purchase] the last big development opportunity, I think that statement falls a little bit short,” Bonshire said. “Now if you consider it the last infill opportunity, then absolutely, but there’s still available land to develop.”
Foundry Commercial, for instance, expects to deliver phase two of its Crews Commerce Center on the northeast corner of Orange Blossom Trail and West Taft Vineland Road by first quarter of 2020. The second phase will consist of 430,000 square feet of industrial space across three buildings. Once complete, the entire project will span a little more than 768,000 square feet.
Liberty Property Trust’s Jody Johnston handles leasing at Liberty at AIPO, a large industrial park west of Boggy Creek Road. He said of the 1,350 acres that make up the AIPO industrial park, about 250 acres remain undeveloped.
“There’s quite a bit of land we have,” Johnston said. “We tend to start a building every year... Just anecdotally, I can say every time we build a new building, it doesn’t last very long until we have them leased up.”
He said the developer plans to break ground on a 260,000-square-foot building within the park by the end of this year. Companies with a presence at the business park include Chrysler, Goya, Caterpillar, Lockheed Martin and Staples.
But as more players build out their parks and look for long-term holds on commercial real estate assets, the amount of available developable land is indeed thinning out, pushing some development opportunities farther away from the airport.
International Corporate Park is an example. The 57-acre industrial land lies far east of Orlando International Airport and south of the BeachLine Expressway.
In February, Graham Commercial Properties picked up a pair of warehouses by the park, as part of a $194 million multi-state portfolio deal in addition to properties in Tampa, South Carolina and North Carolina.
The deal, reflects what Bonshire said he’s been seeing often in the market: Investors, fueled by capital from big equity firms, are snapping up properties as part of larger national portfolio deals.
“Not so much specific Orlando investment, making it difficult to understand how much we’ve ascended in value," Bonshire said. A smart investor, he adds, will wait until year end to see how the airport submarket conducts itself. “If by the end of the year [available product is] absorbed, then it’s going to create this additional fever in the Orlando area.”