Fewer retail vacancies spurring new construction

A tight market for retail real estate is spurring a Central Florida construction boom, according to real estate firm CBRE.

Orlando-area retail vacancy rates dropped to 5.7 percent in the third quarter, the lowest since at least 2011, CBRE reported.

Overall, lease rates dropped in the region by 4.2 percent to $14.52 a square foot. That was driven in part by lower prices per square foot negotiated by several new big-box stores.

“There are a lot of corners of the market, and we are finally seeing a lot of construction and growth,” CBRE Orlando vice president Bobby Palta said. “Lease rates are going up across the board.”

Retail real estate growth comes from an improving economy, decreasing unemployment and more residents moving to Central Florida.

Among the biggest new retail projects are a new Academy Sports and Outdoors and a new Hobby Lobby store near the Mall at Millenia.

Overall, the region added about 1.3 million square feet of retail space so far this year, with another 591,000 square feet under construction.

Regional “power centers,” such as Waterford Lakes Town Center, have the lowest vacancy rate at 2.7 percent.

With retail spaces harder to find at premium shopping centers, some older properties are being flipped and refurbished, such as Consolidated Tomoka’s The Grove at Winter Park.

The shopping center is getting a remake with a new 24 Hour Fitness and a Wawa. The center at Aloma and Howell Branch near Winter Park has been in decline since Publix moved out a few years ago for a bigger store down the road.

But residential growth and demand for space is renewing interest, Palta said.