Orlando's Thriving Suburban Office Market

When Amy Calandrino , founded Beyond Commercial in 2010, she noticed that the most successful small business owners owned their commercial real estate. Yet, while looking for her own space, the tenant reps rarely mentioned the purchase of a property. She also noticed most small businesses were unaware of how to go about owning their business property.

After identifying the gap in the market, Calandrino decided to focus on serving local companies that were often overlooked. As a result, over 80% of Beyond Commercial's business is focused on owner-occupier office and industrial space in the Orlando MSA. Calandrino jumped full-time into the brokerage world in 2014, and for the next four years, she ran the business on her own. Since then, the Beyond Commercial team has grown to a team of six and closed over 40 transactions last year.

Suburban Office Market

Downtown Orlando's office market has had the most significant struggles post-pandemic, posting 12% vacancy as of Q1 and a negative total absorption of 60k square feet. On the other hand, Winter Park, located just outside of Orlando CBD, has less than 3% vacancy. Winter Park has attracted small financial firms, law offices, and marketing agencies. According to Calandrino, these firms want to be close to their clientele and maintain a work-life balance for employees. As a result, the average rent in Winter Park is nearing $40/PSF. Winter Garden, Lake Mary, and Doctor Phillips are other sub-markets that have also gained more attention in the previous years.

Overall, the Orlando market has faired well compared to primary markets and continues to see rent increases. The average market rent is $27.90 per square foot, and the majority of leasing occurs in Class A space. As of Q1, there is 650,000 SF of Class A space under construction and zero Class B. Total market vacancy is around 14%, which has remained relatively stable post-pandemic.

Orlando's up-and-coming districts

Calandrino believes the future of office relies on a growing and active community. Employees want to be close to home and have an enjoyable atmosphere close to their workplace. The suburban office is performing so well in Orlando due to its multiple thriving districts, each with its unique personality. For example, Calandrino's buildings are in the Mills 50 district, an urban and active area with green eateries and an artsy, eclectic vibe. Winter Park, another vibrant district, has a walkable upscale passage running through Central Park, with retail, restaurants, and museums. This isn't a localized trend, as we have seen the increasing rise of mixed-use developments increases nationally. In order to maintain a positive and inviting office experience, firms are willing to move to where their employees want to work.

Amy's Advice to Small Business CRE Owners

As a property owner and listing agent, the most important thing is to be an "Organized Owner." Maintaining a detailed maintenance record, tracking improvements, and keeping money aside for proactive upkeep are among the most beneficial actions a property owner can take. Then, when it comes time to sell, the prospective buyer knows the history of the building and has a great sense of overall cost. Calandrino points out that most owners do not know when the AC was last maintained or the age of their electrical systems. A detailed record of the property speeds up the transaction process as it increases the number of people interested in the property.

Re:Cap Key Takeaway

The office market has taken a swing in the past three years, but not all markets are reflecting "doom and gloom." Orlando, like other Florida markets, has remained resilient with a strong return to the office and an increase in new business. But employers still have to incentive a return to the office. Downsizing and moving out of the CBD into thrifty and thriving neighborhoods has been a very popular trend. As Orlando continues to grow, more districts are emerging to offer the live-work-play lifestyle, which will continue to support the urban office markets.