ORLANDO, FL – Cushman & Wakefield’s year-end 2010 statistics for the U.S. office market that show absorption totaled negative 351,636 square feet in Orlando, compared to negative 1,468,560 square feet at the end of 2009.
Overall absorption – a measure which indicates the net change in occupied space – for U.S. central business districts (CBDs) was positive 2.2 million square feet at the end of 2010, a 106.5 percent increase in occupied space from the negative 33.5 million square feet of absorption at year-end 2009, and the first time U.S. CBDs charted positive absorption since the 11.6 million square of positive absorption at the end of 2007.
“Positive absorption is a promising sign for the U.S. office market’s recovery,” said Maria Sicola (top right photo), executive managing director and head of Americas Research for Cushman & Wakefield.
Increases in leasing activity and limited new construction contributed to the increase in absorption. Overall leasing activity for U.S. CBDs totaled 62.4 million square feet at the end of 2010, a 26.3 percent increase from the 49.4 million square leased in 2009.
During the fourth quarter, 16.9 million square feet was leased in U.S. CBDs, making it the most active period since the second quarter of 2008, when 19.9 million square feet was leased.
Annual leasing activity in Orlando totaled 2,106,098 square feet at the end of 2010, a 1.5 percent decrease from 2,137,494 square feet at the end of 2009.
Senior Managing Director, Larry Richey (middle right photo) said, “Like most every U.S market, Orlando continues to suffer from a lack of tenant demand.
“The Orlando office market has stabilized, and for all the reasons that we have historically attracted office relocations and expansions, this should continue. Office occupancy will remain a tenant’s market for the foreseeable future,” said Richey.
Meanwhile, new construction remained limited in U.S. CBDs. Just 7.5 million square feet of new office space was completed in 2010, a 40 percent decrease in construction from the 12.4 million square feet completed in 2009, and the lowest yearly total since 2005, when 5.2 million square feet was completed. Orlando added no new construction in 2010.
“Limited new construction has kept U.S. vacancy rates from reaching the historic highs of previous recessions,” said Ms. Sicola. “Looking forward to this year, restricted new development will play a major role in sustaining our recovery.”
The U.S. CBD overall vacancy rate declined to 14.4 percent at year-end 2010, down 0.3 percentage points from 14.7 percent at the end of the previous quarter.
The fourth quarter of 2010 marked the third consecutive quarter of declines for the U.S. CBD overall vacancy rate, which reached its peak at 15 percent in the first quarter of 2010.
Of the 31 CBDs tracked by Cushman & Wakefield, vacancy rates declined moderately in 19.
The overall vacancy rate for Orlando decreased to 21.5 percent at the end of 2010, down from 21.9 percent at the end of the third quarter.
Despite increases in activity and declines in vacancy, rental rates remained stagnant.
The overall rental rate for U.S. CBDs was $36.43 per square foot at the end of 2010, a $0.09 decrease from $36.52 at the end of the third quarter.
Fifteen of the 31 CBDs tracked by Cushman & Wakefield saw rental rates increase quarterly – though none more than $1.00 per square foot. Rental rates declined in 16 of the CBDs – also with none more than $1.00 per square foot quarter-over-quarter.
Rental rates for Orlando fell during the fourth quarter to $21.11 per square foot, down $0.38 from $21.49 at the end of the third quarter of 2010.
