The good news is that the quality of life East Orlando offers its residents will form the foundation for the recovery of the commercial real estate market. With the development of UCF’s medical school in Lake Nona and their neighbor the Burnham Research Institute, highly employable workers will continue to move into this region. The basic concepts of supply and demand will work their magic as these medical facilities and other support services become available to residents. Then demand for residential properties and retail vendors will increase as will available supplies provided by the commercial real estate market. Only then will the state of commercial real estate in this community begin to improve.
Traditionally, the commercial real estate market lags behind the residential real estate market in terms of acquisition and development. So, if the residential market is nearing its bottom, then commercial real estate sales will continue to decline after the former starts to rebound. If you consider the dynamics of these two real-estate industries, you’ll see their cycles are interdependent.
Today consumer confidence regarding the improvement of the economy remains low. “Until consumer confidence gets high enough to generate spending in retail stores, commercial real estate sales and leases will continue to decline,” explains Jim Spaeth, CFO for Sonata Health Care and president of the real estate group Remora Partners. The decline in leases of retail space indicates there are few tenants for new storefronts. The current statistics for commercial real estate in the East Orlando region, therefore, do not encourage lenders to support new retail businesses. Hence the vicious cycle seems to be endless.
“East Orlando is a fantastic long-term market place for commercial real estate. Demographically East Orlando residents are highly employable, therefore retailers want to be located in this community,” explains Spaeth. High employability of residents means the need for more office space to house the businesses they serve. In turn retailers, who serve the needs of those workers, find the demand required to keep their stores in business.
According to Deron K. Lacy, Senior Vice President Commercial Lending, Riverside Bank of Central Florida, “Most commercial properties in East Orlando are performing. As a lender, I try to be proactive in working with my clients to keep them solvent during this tough economy.” Now is the time for property owners to seek alternatives to their current business loan structures. “Unlike some lenders, I prefer to help my clients before they become delinquent on their loans. I may be able to offer a commercial property owner a short-term interest-only loan, giving him or her lower monthly payments for now,” Lacy adds.
Companies who have more diversified assets in real estate are more likely to weather the current economical storm and rise again. Jim Spaeth explains, “There are four major ‘food groups’ in real estate: residential, retail, industrial, and multi-family. Of these four, the most stable is industrial real estate. This is because industrial businesses are concerned with the movement of goods which is tied to manufacturing.” Manufactured goods are more likely to be solid investments as they are distributed to a wider market and not dependent strictly on local purchases.
Nonetheless, East Orlando residents will continue to enjoy the quality of life offered here. In addition the residents who relocate here to work for industries slated for Innovation Way will find affordable suitable homes for their families, decent education for their children, and easy access to the many recreation venues available in Central Florida. Once the development of the Innovation Way corridor is complete and the critical Beachline access road is in place, East Orlando will be prepared to lead the state in economic recovery.
Article by Evelyn Cichanowski