Orlando, FL Retail Market Overview
Orlando has been recognized as a travel-friendly destination, boasting many accolades. Among them include the No. 1 Place to Get Married, 2021’s Best Summer Travel Destination, the No. 1 Cheapest Travel Destination, and the Best U.S. City for Recreation, according to various sources. Orlando holds a robust retail sector, with its inventory accounting for over one percent of the National Index’s total retail inventory. With a tourist-heavy market, shopping and retail spending is prominent. The market’s strong household formation also bodes well for retail, with strong population growth from in-migration to Central Florida encouraging new development. Demand is present, as indicated by 2.2 million square feet of retail space being absorbed in the last 12 months.
Vacancy & Rent Fundamentals
Strong consumer spending has enticed retail demand in Orlando. The tourism-heavy market has rebounded in 2022, and vacancies are declining to the lowest point in ten years, to 3.6 percent. The market has exposure to the leisure and hospitality sector more than other leading metros, so vacancies are expected to reach within the 3.5 to four percent range by the end of 2022. Leasing activity is accelerated with 2.2 million square feet absorbed in the last 12 months, and fitness centers and furniture stores are taking up a large portion of the activity.
Retail asking rents in Orlando are up 7.1 percent year-over-year, averaging $25.52 per square foot, well above the national average of $23.28 per square foot. All retail categories have recorded rental increases, including malls, which were hit hard due to shifting consumer preferences away from enclosed centers. As such, mall properties are increasingly converted into adaptive reuse projects, thanks to their prime location and large parking lots.
Sale Volume
Strong economic fundamentals have driven retail investment volume in Orlando. In the last 12 months, 730 retail sales have transacted, for a total of $1.8 billion. Private buyers accounted for nearly 70 percent of all retail sales in the last year. The most significant recent sale occurred in Q4 2021, involving the acquisition of a 110,000 square foot Publix-anchored shopping center in the Tourist Corridor for $28.8 million, or $263 per square foot.
Construction
Developers remain bullish on Orlando, with 890,000 square feet delivered in the last 12 months and another 2.2 million square feet under construction. The large-scale retail projects are mixed-use, one being a 35-acre WaterStar Orlando mixed-use project featuring multifamily units, a hotel, and other retail uses. Another notable project is the $1 billion development to be Everest Place resort, a 217-acre mixed-use project with a mix of retail, office, and residential space.
