Orlando retail is in full rebound mode. After a challenging few years, the market has demonstrated incredible resilience and has not only recovered from pandemic-related lows but is now exceeding pre-Covid highs in many areas.
Demand for retail space in the Orlando market has been significantly outpacing supply, creating an extremely tight market. The market’s retail vacancy dropped below 4% for the first time in Q4-21, closing the year at 3.9%.
“Between the record-low vacancies and unrelenting demand we are currently experiencing, tenants motivated to enter or expand in the Orlando market are encouraged to act quickly on spaces that become available,” said Terrence Hart, a retail real estate expert with Franklin Street.
In addition to the strong competition, tenants looking to grow their footprint in Orlando should also expect to pay more for space, a rent growth in the market has reached new heights. Q4-21 experienced an increase in rental rates of 5.6% year over year, closing the year at an average rental rate of $24.71 per square foot. This growth demonstrates a notable recovery from the pandemic-driven dip earlier in the year.
Orlando retail sales volume and price per square foot also shattered records at the end of 2021, as investors regained confidence in the market. Total sales volume amassed $470 billion, while price per square foot reached $219.40.
“As the strong demand from consumers and retailers continues to drive rent growth, Orlando retail will remain a stable investment,” said Franklin Street’s Mike Battey, who works with retail property owners throughout the market. “While the retail landscape is constantly evolving, we can expect neighborhood and power centers with grocery and a strong mix of service-based tenants to continue performing at the top of the market.”
All signs point to continued strength for the retail market in Orlando. Going forward, the biggest concern for tenants entering the market today is lack of inventory that will keep vacancies tight and competition stiff. This ultimately means landlords will have the ability to be more selective when it comes to tenants they sign leases with, so tenants with proven pandemic- and internet-proof strategies will have an advantage. However, these factors do not seem to be deterring tenants from seeking retail space in Orlando.
“The properties we work with throughout the Central Florida market continue to see strong activity from new-to-market tenants as well as existing tenants looking to expand their footprints,” said Franklin Street’s Katy Taylor, who also works with retail landlords. “We expect many new leases and openings over the next 12 months!”
As population, employment, tourism and foot traffic all continue to pick up, the outlook for Orlando retail throughout the rest of 2022 looks very bright.