While the coronavirus pandemic is disrupting Orlando’s economy, the industrial sector appears relatively insulated and has seen minimal impact since March. In fact, the market’s average vacancy rate has compressed by nearly 100 basis points since the pandemic began. Orlando has seen few signs of slowing across nearly all indicators and could maintain recent momentum during the final months of 2020. Leasing activity in both the second and third quarters was in-line with prior five-year averages.
Available industrial space on the market has decreased over the past two quarters with only a mild uptick in sublet space. The total amount of available space on the market in the fourth quarter is less than half of that seen during peak levels in the prior recession.
Industrial supply could be one area of concern, as the market expects to see roughly 4.6 million SF of new space deliver in 2020. This would mark the highest level of new industrial supply to come online over the past 15 years.
One area that has seen some pandemic impact is asking rents. Annual rent growth declined after March and has fallen roughly 150 basis points. Despite the compression, Orlando is still outperforming the national index and is well above its 20-year average.
The pandemic has little effect on the Orlando Industrial Market, yet Sublet space is at the highest level in more than 5 years. National firms are in need of storage & warehousing which is driving the demand in submarkets.
Overall, Orlando industrial appears as insulated as any sector from the pandemic at this time.
(This information is sourced from the CoStar Group.)