Central Florida Retail Market Report
Market Overview
Central Florida, recognized for its many attractions and entertaining culture, is experiencing favorable growth in retail spaces. Cities such as Orlando, Vero, Melbourne, and Daytona are rising contenders for retailers looking to expand their markets.
Orlando
The retail market in Orlando has experienced considerable growth over the decades with the consistent flow of foot traffic from amusement parks and theme parks. With a rumored fifth park coming to Walt Disney World after a 17-billion-dollar development plan was approved in June 2024, retail owners can expect this trend of consistent growth to continue for years to come. Orlando ranks as one of the fastest-growing economies in the U.S., and this prosperity has translated into increased disposable income for residents who are more likely to engage in retail shopping.
By the Numbers
- Shopping centers sold in 2024: 9
- Shopping centers on market: 7
- Average cap rate: 6.25%
- Average SF: 539,044
- Average price per SF: $316.93
- Vacancy rate: 3.4%
Source: CoStar Group
Vacancy & Absorption
Orlando’s retail market is experiencing lower vacancy rates than any other industry in the current market. With the national average currently sitting at 4.1%, Orlando is exceeding this with a vacancy rate of 3.4%, close to some of the lowest levels in over a decade. With the consistent population growth of the Orlando metropolitan area, this could be an indication of future high demand in this market. General retail spaces and neighborhood centers account for the highest amount of absorption as of Q1 2024, while malls slowly recover from a negative absorption rate during COVID-19.
Sales
Orlando’s retail market is on path for a strong recovery following the pandemic. Shopping centers in the region are experiencing a rise in sales volume, with a few notable transactions, including the sale of the MarketPlace at Seminole Towne Center. The 318,623-square-foot shopping center was sold for just over $68 million. This has been the largest retail property sale in Orlando since July 2022. Other notable transactions include the Grove at Winter Park and the Shoppes at Lake Mary.
Construction
Investor confidence in the future of Orlando’s economy has been the driving force behind recent development plans. In early March 2024, Orlando unveiled its plans to expand city limits to annex the Sunbridge parcel. The city announced that plans are in place to build 7,300 units of housing, 5.5 million square feet of office space, 2.9 million square feet of industrial space, and 880,000 square feet of retail space on the 6,300 acres of land. Another notable construction project currently underway is the Sawgrass Retail Development. Expected to be delivered in mid-2025, this 7.82-acre development still has three unrented spaces for up to 136,778 square feet of retail use.
Vero
Over the past 10 years, Vero has experienced growth in every aspect of the real estate market. The emergence of new developments and diversification of the economic landscape are some of the driving forces behind this growth and stability. As more and more South Florida cities become congested with the influx of people relocating, cities along the Treasure Coast are becoming increasingly appealing, and Vero is leading this revolution.
By the Numbers
- Shopping centers sold in 2024: 2
- Shopping centers on market: 3
- Average cap rate: 6.2%
- Average SF: 76,775
- Average price per SF: $194.82
- Vacancy rate: 4.7%
Source: CoStar Group
Construction
The most notable construction project that has been in the planning stage since 2019 and is set to begin this year is the Three Corners waterfront development. With estimated budgets ranging from $144 to $500 million, the development plan calls for a mix of commercial, recreational, and hospitality facilities.
Melbourne
Melbourne’s commercial real estate market is thriving due to the strong economy driven by the aerospace industry. The growing population has resulted in increased rental prices and low vacancy rates in shopping centers, making Melbourne an attractive destination for retail investment. There is also a rising demand for high-quality retail spaces, opening the door for lots of growth potential.
By the Numbers
- Shopping centers sold in 2024: 5
- Shopping centers on market: 2
- Average cap rate: 6.45%
- Average SF: 114,916
- Average price per SF: $247.48
- Vacancy rate: 4%
Source: CoStar Group
Vacancy & Absorption
As of early 2024, Melbourne, Florida’s commercial real estate market, has been experiencing low vacancy rates and stable absorption rates. As the development rate of new retail property slows across the state, the demand for available space in the current market is experiencing an increase. Melbourne follows a similar trend as the rest of South Florida, with a vacancy rate in the 3-4% range. Absorption rates are showing promising activity in Melbourne, reflecting the overall positive trend in the broader market of the Space Coast.
Daytona
Daytona is experiencing healthy population growth and has a strong tourism industry, providing retailers with lots of retail space. Retail demand has remained healthy over the past year at 320,000 square feet, outpacing total demand recorded from 2021 and 2022. The slowdown in construction has led to improved vacancy rates and increased retail demand over the past year. This should instill confidence in investors regarding the retail market.
By the Numbers
- Shopping centers sold in 2024: 4
- Shopping centers on market: 3
- Average cap rate: 6.4%
- Average SF: 202,815
- Average price per SF: $222.02
- Vacancy rate: 3.3%
Source: CoStar Group
Vacancy & Absorption
Daytona’s vacancy rate in the retail sector decreased even further, from the 3.8% reported in Q1 2023 to 3.4% currently. This percentage represents some of the lowest levels in over a decade. As the development of new retail centers slows due to the high costs of construction, as well as high loan rates, the demand for available spaces is rising. As a result, vacancy rates are reaching all-time lows, and landlords are able to raise rent prices to match the heavy demand for these available spaces. Net absorption has more than doubled over the past year, thanks to increased demand. Businesses are beginning to commit to longer-term leases, reflecting confidence in the stability and growth of the market.
Construction
Avalon Park, a major residential and commercial development that broke ground in 2021, is set to construct more residential space, which will open the door for more investment opportunities. The first phase includes 1,609 residential units and 90,000 square feet of commercial space. A key focus of this initial phase is to enhance transportation networks, ensuring a minimal impact on the existing population. As the project progresses, each phase will incrementally add more commercial space, eventually reaching a total of 1 million square feet. Retail investors can look forward to excellent investment opportunities as Avalon Park expands through its various phases, promising substantial growth and development over the coming decades.
