Downtown Orlando Prepares For $2B+ In New Skyscraper Projects

Feb 17, 2019 No Comments by

At least 10 new towers are proposed for Orlando’s 1,000-acre central business district, mostly in the past year, as developers scoop up available land to build more apartments, offices, shops and restaurants.

These projects total more than $2 billion in estimated construction costs, which potentially will generate thousands of construction jobs, add hundreds of new residents and likely will generate more businesses for downtown.

The skyscraper proposals also reflect the changing fortunes of the region’s economy. Developers had many of these projects planned before the Great Recession wiped out or stalled them.

For example, Raleigh, N.C.-based Highwoods Properties Inc. in recent years resurrected plans to build its 14-story Capital Plaza Three office tower at the corner of Church Street and Rosalind Avenue.

 

“With limited quality Class A office space available in downtown, we are marketing Capital Plaza Three with the goal of securing anchor tenants, which will help kick off the project,” Vice President Steve Garrity said.

But office space isn’t leading the charge — it’s apartments.

Roughly one-third of Central Florida’s apartment projects are in downtown, making up a majority of the more than $3 billion wave of multifamily planning and construction in metro Orlando, which is one of the nation’s top-performing markets.

To be sure, there’s plenty of demand for new product. Take Naples-based Summa Development Group LLC, which has fully leased its 25-story, $42.6 million CitiTower that was just completed in 2017. That demonstrates the demand for new residential units in downtown.

However, developers haven’t been as lucky with office projects. Rather, they’ve struggled to secure pre-leases for a large percentage of the space, something typically required by entities that provide construction financing.

That said, office rental rates rose a “dramatic” 6.5 percent in the central business district, which may make it more feasible to build new in the near future, said Jeff Sweeney, senior director of commercial real estate agency Cushman & Wakefield Inc. in Orlando. That’s pushed Class A rental rates up to an average of $27.13 per square foot in the central business district in fourth-quarter 2018, Cushman & Wakefield reported.

At least one developer began moving forward with a downtown project before it secured an anchor tenant. Dallas-based Lincoln Property Co. secured leases with monthly office rents north of $30 per square foot at the rising 28-story SunTrust Plaza at Church Street Station. Roughly 90 percent of the office space in the new building — which is supposed to open in August — was pre-leased in the building.

 

“Now if you say $35 a [square] foot to someone, they wouldn’t be surprised,” Sweeney said.

Of course, not all proposed office projects will come to fruition. But that’s not necessarily a negative for Orlando’s growing skyline, as developers may not be able to lease up more than two office projects at a time right now, Sweeney said.

However, the future looks positive. So far, downtown’s number of high-rise buildings has more than doubled since 2003. Central Florida’s growing population also will create more demand for new space, Chatmon said.

 

“Our market is strong, and that’s why you’ll see investors continue to invest in downtown for additional projects.”

For a look at the 10 proposed downtown towers, click here.

 

Source:  OBJ

 

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Industry News, Multi-Family, NA, Office
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