Orlando, FL Retail Market Report

Market Overview

The retail market in Orlando has been exceptionally active due to high consumer spending and a steadily increasing population, despite recent economic headwinds. Since the pandemic, Central Florida’s tourism industry has witnessed substantial employment growth, thereby strengthening the hospitality sector. As the most frequently visited city in the State of Florida, Orlando’s retail market has exhibited significant expansion and is poised to remain one of the nation’s strongest markets as tourist areas continue to develop. Notably, Orlando recorded a record high in rent growth, surpassing 8.5 percent in Q4 2022, with a slight moderation to 8.3 percent in Q1 2023.

Highlights

• Downtown Winter Garden, Clermont, and a neighborhood known as the Milk District west of the Orlando Executive Airport are fast-growing areas with low vacancy rates, making them hot spots for new retail and restaurant concepts.
• In Orlando, food halls are becoming increasingly popular. Bumby Arcade is a food hall concept that will have 18 food vendors and is set to finish construction in 2024.
• The fastest pace of rent growth has occurred throughout Orange, Osceola, and Lake County areas. The average 12-month rent growth is 8.3 percent.
• The market’s retail inventory has grown by about 8 percent over the last decade and there are several key projects underway that will further expand it.
• Winter Park had over 12 retail projects under construction at the end of 2022 totaling over 600,000 square feet, with more development proposed in core areas.

Rents | Vacancy | Construction

Orlando retail rent growth picked up at a quick pace over the past 12 months due to strong consumer spending. Asking retail rents are up 8.3 percent over the trailing 12 month period, which is well above the National Index increase of 3.7. The current average asking rent in Orlando is $27.58 per square foot compared to the National Index rate of $23.97 per square foot. Vacancy rates remain low due to the strong economic fundamentals of Orlando at 3.7 percent.

Orlando currently ranks sixth in the United States for total space delivered in the trailing 12-month period ending with Q4 2022. Looking at new deliveries of total inventory, Orlando ranks fourth in the nation. There are 105 properties under construction that make up a total of approximately 2.4 million square feet. The increase in population in the metro has resulted in additional demand for construction.

Upcoming Developments

• The Learning Experience, one of the nation’s largest early education franchises, has a heavy expansion focus on the Orlando market in the next two years. The Deerfield Beach-based company has seven existing centers in the Orlando market and plans to open an additional nine locations by the end of 2024. With 22 percent of the prime age workforce (ages 25-54) having a child six years old or younger, Orlando has become a hot spot for early education centers. With the New York-based company, Doodle Bugs! Early Learning, recently opening its first Orlando location in Oviedo. Orlando is a primary expansion market for more than just traditional retailers.
• The infamous Seminole Towne Centre movie theater is the next Sanford redevelopment project on the horizon. With the property previously being one of the region’s largest economic drivers, the city hopes it can be reinvigorated by transitioning the site into an “immersive tactical experience,” combining laser technology to simulate combat. The redevelopment would join a growing wave of “eatertainment” concepts– combining food and dining with exciting activities, that are in increasing demand for developers and retailers.
• Banyan Development is currently developing a massive $500 million-plus mixed-use project, the Floridian Towne Center, in the Orange County suburb of Apopka. The project will feature 90,000 square feet of retail space, including a grocery store anchor tenant with a mix of national and local retailers available for occupancy as early as the fourth quarter of 2024. The retail market of Apopka continues to skyrocket with a population growth expected to exceed 14% over the next five years.

Sales

Retail investment in Orlando is exceptionally strong due to the continued investor confidence in the Central Florida market. Over the trailing 12-month period, 560 retail sales were completed, with a total transaction volume of $1.8 billion. Despite the decline in the number of sales transactions during this period, the total sales volume in 2022 rose by more than 25 percent compared to 2021. Over the past year, 70 percent of these sales were acquired by private investors.

Highlighted Sales

• Equinox Development Properties Inc., the developer for WaterStar Orlando, recently sold their remaining parcels in separate transactions on March 10th and April 7th for a combined total of $36.75 million. This mixed-use development is strategically located near U.S. 192, in direct proximity to Disney World and Margaritaville. The project is anchored by popular national brands such as Marshalls, Burlington, Popshelf, and Keke’s Breakfast Cafe. In addition, several significant outparcels will be bringing market expansions for brands like Portillo’s and Lazy Dog. As Orlando continues to gain popularity, momentum is expected to persist in the region’s top tier submarkets, such as the West 192 corridor.
• Unicorp National Developments Inc. sold the retail components of their Griffin Farm Mixed-Use project in Lake Mary to Equity Management Partners on January 1st for $46 million. The retail components totaled 150,000 square feet of space exceeding 10 acres, including national tenants such as Winn-Dixie, 24 Hour Fitness, First Watch, and Crumbl Cookies. This was an off-market transaction that Chuck Whitall and Unicorp capitalized on to free up dry powder for upcoming projects, given the current interest rate environment. The Griffin Farm project is expected to generate significant economic benefits in an already bullish submarket of Orlando, which currently holds the sixth-highest average asking rent.