Orlando office market reports

Development interest has picked up significantly in Orlando with over 700,000 square feet (sf) currently under construction—the largest wave of speculative office construction since the beginning of Covid.

The second quarter finished with slightly negative -46,097 sf of absorption. However, year-to-date, the net absorption continues to be positive at 127,008 sf. As buildouts continue to wrap up, more positive absorption is expected later in the year.

Orlando’s overall asking rents increased by 3% year-over-year to $26.05 per square foot (psf). Landlords with high-quality class A office assets continue to push rates amid tenant demand for premium office space.

Companies continue to realign their real estate strategies, which have increased the amount of sublease space on the market to at an all-time high of just under 2.2 million square feet (msf). Approximately 46% of this is concentrated in class A office space in the Southwest Orlando and University/Research submarkets.

Orlando’s vacancy rate began to stabilize during the second quarter at 12.4%—down just 10 basis points from one year ago. As companies readjust their real estate positions, vacancies may increase toward the end of the year.

Orlando’s year-to-date office sales volume is up by 3% over the same time in 2021; however, the average price declined by 19% year-over-year to $148 psf. Office investment sales across Florida have begun to cool in the wake of increasing borrowing costs due to rapidly rising interest rates.