The Central Florida economies have been experiencing sustained growth in both population and employment for the last several years. In early 2014, the region became the first in the state to regain all jobs lost during the recession.
Between Orlando and Tampa, the population in each metropolitan has grown by approximately 300,000 people over the last 5 years. Each area’s growth is forecasted to continue to increase between 300,000-400,000 over the next 5 years according to the Bureau of Labor Statistics.
Orlando has led the country with job growth from 2015 – 2018 at 4.8% as compared to the average in the U.S. of only 1.9%. Employment growth is expected to average at 2.0% well through 2023 according to Moody’s Analytics. Tampa has had the second highest job growth in the State at 2.7%.
The current unemployment rate for both metros continues to outpace the State at between 2.7% and 3.3%.
The labor force in both metros continues to diversify. For Orlando, technology is now the second largest industry. For Tampa, the second largest industry is financial services.
There are many infrastructure improvements underway, including the $2.3 billion I-4 Ultimate Improvement Project and Orlando International Airport’s recently-increased $4.27 billion capital improvement project.
Construction on theairport’s Intermodal Terminal Facility project which includes an Automated People Mover, the south terminal, and an additional 16 gatesis well underway. This project is anticipated to be completed in 2020.
Additionally, Central Florida Expressway Authority recently announced the largest plan in its history, which is expected to create over 11,000 jobs by 2022. The $1.6 billion work plan will widen existing roads, resurface and improve highway lighting and complete portions of the I-4 Ultimate.
In total, there are $7.2 billion of infrastructure projects currently underway.
Orlando continues to lead the nation with job growth.
Orlando has outpaced the National average in the United States for job growth every year since the middle of 2011.
THE OFFICE MARKET
The continued expansion of the Orlando population and a healthy job market have continued to drive office occupancies.
Demand has greatly outstripped supply over recent years contributing to the very strong market fundamentals.
The metro’s significant population growth, which surpassed 2.5 million residents last year, has led to a flurry of medical office and healthcare construction. In contrast to many areas of the U.S. that are closing hospitals or searching for adaptive reuse, Central Florida’s medical growth and competition has continued to fuel medical tenant activity and job growth throughout the entire metro.
Orlando has also made strides as a burgeoning tech market and is one of the nation’s top STEM job growth metros. Thus far, the primary barrier for tech firms has been lack of space as compared to most major tech markets.
Vacancy has fallen over the last several years. With new Class-A projects under way, the vacancy is forecasted to increase for this category and remain low for Class-B properties.
Market rents have continued their appreciation since 2013. The overall vacancy is projected to rise, resulting mainly from the construction of Class-A projects. These projects will need to have rents above $30.00 per square foot for the project to economically feasible.
Orlando has and is forecasted to continue to have very affordable office rents as compared to the National averages.
A healthy sales volume has continued to drive the acquisition price of the assets. They are forecasted to plateau on average in the $180.00 per square foot range up from $160.00 per square foot in 2016.
Cap rates are forecasted to rise with a continuing improving economy.
THE MULTI-FAMILY HOUSING MARKET
The with the increasing population and a robust job market, the demand for housing has continued to be robust.
This is perhaps most notable given Orlando remains in the midst of the largest supply wave in its history. With thousands of units underway across the metro, further upward pressure on the fundamentals is possible, though the metro has shown little difficulty thus far absorbing the increased supply.
The job growth is spread across several industries. Central Florida Research Park drives the bulk of this with over 10,000 jobs and nearly 125 companies. A close second is Tourism along the I-4 corridor, South of the Downtown metro.
The University of Central Florida (UCF) provides a steady stream of renters, particularly the Eastside, East, and South submarkets. As the second-largest university in the country by enrollment (more than 65,000), it houses only about 20% of its students, leaving plenty of renters looking for additional housing. The school’s growth outlook is also solid—UCF projects an annual increase of more than 2% in student enrollment through 2019, including an additional 8,000 students expected to enroll in the new downtown campus at UCF’s Creative Village.