Area set for business paradigm shift this year
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The days of business dominating growth in downtown Orlando and Central Florida retailers building empires by selling merchandise aren’t dead — completely. But the driving forces behind commercial real estate in greater Orlando have shifted so much that those days seem numbered.
Central Florida’s commercial real estate brokers have geared up for a year that promises more new apartments in downtown Orlando, more offices in the suburbs and more retailers selling “experiences.”
Throughout the region, multi-family developments are the project du jour. “I think the downtown market is going to continue to do really well. A number of projects are coming on line so leasing will be competitive,” said Shelton Granade, vice chairman of CBRE's Investment Properties Group. “It really feels to us like downtown Orlando is just maturing as a kind of 24-7 city where people do want to live and there’s a deeper rental pool and part of that draw is just the amenities.” rates for Class A space hover at 10 percent.
The market still has some large available office chunks to meet the needs of new and expanding companies, he added. And downtown's growing entertainment and residential options continue to make it attractive.
"The bad news is that construction costs continue to escalate," Garrity said, citing estimates of those costs growing by as much as 1 percent a month.
Even if developers launched a new tower in 2017, he added, it would take two years to make it a reality.
Central Florida’s longtime wheelhouse of consumer spending — shopping malls — are expected to further give way this year to the rise of “lifestyle centers,” which have a greater share of eateries, fitness centers, health care and services than traditional malls.
“Call these lifestyle centers what you wish. They are the obvious response to the troubled mall model which focuses on the department stores as the anchor to draw traffic,” said Owen Beitsch, senior director for Community Solutions Group. “In effect, these new properties fulfill the purpose of the traditional town center and the architecture often invokes the feel of small urban space.”
At one of the region's fastestgrowing developments, Lake Nona, the 2017 calendar calls for completion of hotels, retail centers, and apartments. Developers say the projects follow a trend of opening in phases rather than all at once.
“Trying to build a smaller bite and do it well is better than the construction savings you get by doing it all at once,” said Jim Zboril, president of Tavistock Development Company, developer of Lake Nona.
In 2017, Tavistock plans to lease and construct the next phase of Lake Nona Landing, which is off Narcoossee Road on the eastern side of Lake Nona and home to a Sam's Club and Wal-Mart Supercenter that both open this month.
On the western edge of Lake Nona, the developer expects to start work during the next month on a Publix-anchored center with a moderately priced hotel near Boggy Creek Road and Lake Nona Boulevard.
Lake Nona's retail centerpiece, an open-air town center developed in partnership with Steiner + Associates, moves forward this year with plans for another hotel, cinema, bowling, restaurants, a brewery, fitness center and possibly home-goods stores. A four-story office building in the town center is also expected to get underway there this year and add 150,000 square feet to the mix.
A third hotel/resort is emerging at Lake Nona next to the USTA’s new national campus. And the Ariel Apartments are being built with 348 units at the community.