How many shopping plazas do you drive by on an average day? And how many of those plazas have empty storefronts? Odds are the answer is “most.” It’s no secret that the commercial real estate market has seen a decline over the past 18 months or so in Central Florida, but are we past the worst of it?
“The commercial real estate market is a lot like a lot of industries in the United States today in that the industry has experienced a significant decline in revenue recently,” says Jeff Sweeney, SIOR, president and managing principal at Grubb & Ellis|Commercial Florida. “But this industry is experiencing positive signs – there is more activity, more interest on both buyers and tenants, and the banks and lending institutions have started to dispose of some of their distressed assets which has created opportunities for viable companies to acquire facilities at historically low prices.”
Translation: things are looking up for the industry, but they are not completely out of the woodwork just yet. With so many available properties and storefronts, there will be a measurable lag between recovery and expansion. With that said, however, Sweeney notes that interest is on the rise again in commercial property due, in large part, to increased overall consumer confidence and spending.
“The difference between today and a year ago is that business owners are again saying, ‘You know what? Business will go on,’ and, ‘We’ve passed the worst of the recession – we will slowly climb out of this,’” Sweeney says.
As business owners have been able to search for, and successfully identify, the proverbial light at the end of the tunnel, so to have consumers. Florida was especially affected by the recession because of its large reliance on consumer spending, tourism and new construction. Because of this, political and business leaders have begun to aggressively shift and diversify the economy to encompass new industries, such as medical modeling and simulation, to supplement the leading money makers in Florida.
In fact, much of the immediate growth in the East Orlando region will come from companies within these industries seeking more commercial space. “Orlando is ideally suited to provide [commercial medical training] of simulation technologies,” says Waymon Armstrong, president of Engineering & Computer Simulations (ECS), whose office is based just outside of the University of Central Florida. “We see this market growing steadily for us, with anticipated hires occurring in 2010 as a result.”
The continued growth and expansion of the medical city in Lake Nona will also play an increased role moving forward. With so many healthcare powerhouses locating there, the commercial industry around the Southeast Orlando area has improved significantly. “Obviously there is a lot of interest in being in close proximity to all of those exceptional medical entities,” says Sweeney.
Avalon Park is also planned to expand with an 80,000 square foot assisted living facility scheduled to begin construction this year and open in late 2011. Total development costs are estimated at more than $15 million.
Still, in the immediate future, Central Florida is primarily a service-based economy that relies on consumer spending. “Anytime the confidence level improves and people are spending money, it’s good for the economy,” says Sweeney. “It’s a domino effect but consumer confidence rising is a great bellweather that we’re going to see improved sales throughout the entire system.”
“I know for my family and I personally, we have started to go out to dinner more,” says Richard Dillon of Lee Vista. “And it seems like my wife has started to go to Target a lot more,” he jokes.
For the Dillon family, it has been business as usual as they pass empty storefronts. “Honestly, I don’t really notice them anymore, I used to but not anymore,” he says.
Dillon offers a unique perspective about the new businesses that will move in as well. “They will have a leg-up on those that they’re replacing because they don’t have to weather the same storm, or maybe they already did so they’ll be apt to provide better products and services to us,” he says. “I look forward to seeing what changes new stores will make, if any, once they move in.”
Speaking of moving in, Sweeney believes that for those companies or individuals looking to invest in commercial real estate, there may not be a better time than right now. “Commerical real estate is again becoming a viable investment, there’s no question,” he says. “The oldest saying in the book is, ‘buy low, sell high,’ and we’re at historic lows right now; in fact, it’s probably one of the best times to purchase in the last 50 years.”
Article by Corey Gehrold