Ask the Expert: What major trends are impacting the retail market in Orlando?
“Historically, there has been a natural ebb and flow in the landlord-tenant relationship based on the level of supply and demand in the market. This situation can create one-sided advantages for either party and likewise affect how retail deals get done. In the last four years, the leasing tides have turned favorable for landlords, a stark contrast from the 2009 to 2015 period. Since then, the demand from retail occupiers has outpaced the development of quality retail space. We have seen considerable retail redevelopment, but it is extremely expensive with underlying land costs and constructions costs spiraling out of control.
Because of this current market situation, landlords of top-notch retail locations are aggressively searching for better operators that will improve the quality of occupiers in their centers. They want occupiers who can pay higher rates, have stronger financial positions, and are more desirable to the market. As occupancy levels are at or near record highs, their efforts are no longer spent finding tenants for vacant space, but rather in this push to quality. Landlords are taking on more responsibility in the tenanting effort. While we are in this high occupancy level with relatively little new development, we will see leasing commissions squeezed and assignments more difficult to come by. As the market cools, as it always does, we will eventually see the pendulum shift. But for now, it’s a landlord’s market.”
Senior Director – Retail Landlord/Tenant Services