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Retail, restaurant construction will be 'super hot'

The Fresh Market is among retailers that are showing increasing interest in the Orlando area.
The Fresh Market is among retailers that are showing increasing interest in the Orlando area.

Builders should prepare for a wave of retail and restaurant construction, as Orlando's housing and commercial construction boom draws in residents who are eager for these amenities.

"We are super hot," said Jill Rose, vice president of retail services at broker BishopBeale, who said she has never been busier in her 13 years representing retail.

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"There is so much pent up demand in the retail market, and it is all coming at once," said Rose.

Rose was speaking at the Central Florida chapter of NAIOP conference at the Citrus Club Thursday in which different building industries were addressed.

Specialty grocery stores, like The Fresh Market, and casual restaurants for middle- and upper-middle income families are the most in demand, and these businesses are primed to come here or expand their presence, Rose said. "In the Orlando area you've got 1,000 fast casual restaurants looking for space."

While the retail and restaurant market is heating up, the industrial development market is maintaining existing momentum.

"We're seeing users across many different businesses wanting to expand," said Todd Watson, senior vice president at developer DCT Industrial.

The expansion drive continues an existing trend that last year saw 3.6 million square feet of industrial space leased in the Orlando area.

This year it is anticipated that 800,000 square feet of industrial space will be built, which is close to the industry comfort zone of 1.5 million to 2 million square feet, Watson said.

"But some caution needs to be applied" to avoid over supply, he added.

The one area that has missed the building boom is office space, given that essentially none has been built in the past year.

One thing holding construction back is that rents are very low, so there is little return for the landlord or property manager.

Damien Madson, principal at Taylor & Mathis, predicted continued slow going for about another year.

But, given market conditions a year out, the current average rent of $20.50 a square foot should increase by 20 percent "and that will cause building to start," Madson said.

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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