MIAMI—Andrew Wright, CEO and managing partner at Franklin Street, pointed out the bright spots and sore spots in Orlando’s commercial real estate market in part one of our exclusive interview. But what needs to happen to correct those sore spots? And what should we expect over the next few quarters?
GlobeSt.com caught up with Wright, who is speaking at the Central Florida RealShare Oct. 30., about these topics. Do you agree with his take? Sound off in the comment box below and be sure to say hello to him at the big event next week.
GlobeSt.com: What needs to happen to correct or heal those sore spots?
Wright: Meaningful job growth, particularly in the middle-income range, is the most important factor to a continued recovery in commercial real estate. It’s important to Central Florida that the global economy remains strong because tourism is one of our economic drivers. If people can’t travel or afford vacations, our state will be hit harder than most.
GlobeSt.com: What do you expect over the next few quarters in Central Florida commercial real estate? What will drive the area’s future?
Wright: The next few quarters will be very strong for commercial real estate in every product type. It is currently hard to buy a home in Florida and will remain that way, as financing for first-time homebuyers isn’t expected to become easier to obtain, forcing many young potential homebuyers to rent. Multifamily fundamentals should remain strong but I have a close eye on absorption of the new supply that will be delivered in the coming months.
Office will remain the worst performing of the product types although it has seen substantial improvement over last year. There’s still a lot of office vacancy in many markets throughout Central Florida. Rents aren’t high enough to justify new construction costs. The only new office development that’s taking place are owner operator-driven. In terms of transactions, however, good buildings are trading at strong numbers.
Retail spaces are converting more to things you can’t do online, so we anticipate continued growth of restaurants, entertainment, specialty and medical retailers. We expect retail rents will continue to rise as construction likely won’t catch up. However, there could be some new construction of anchored strip centers provided there’s an anchor already in place. We anticipate strong fundamentals throughout Central Florida in the retail sector. View PDF