Central Florida Commercial Brokers News Blog

"Class A Office Building" - Not always

2008-07-24T07:14:00.000-07:00

This is a term that is liberaly used when describing the class of an office building. Most of the time owners and or their agents just don't understand how office buildings are rated. They also want to portray their properties in the best light possible. However, many of the properties that are described as Class A or really more like B or C.

The class of an office building refers to its ranking in the market, reflected in the level of rental or sales price per square foot it can command. The four classes of office space are:

Class A - This class of office building has excellent location and access. It attracts high-quality tenants. It is of superior construction, materials, and finish, and is relatively new or is competitive with new buildings. It provides onsite amenities and offers professional on-site management
Class B - This class of office spce has good location and access. It attracts better tenants. It is of good quality construction and may compete with buildings at the lower end of the Class A category.
Class C -This class of office space is usually older and lacks some of the features that newer buildings offer. It may also have been affected by economic obsolescence, i.e. - the surrounding area no longer commands top rents). It might also suffer from some physical deterioration.
Class D - This class of office space is older, suffering from functional obsolesence and physical deterioration, probably in need of renovation, and likely to be suffering economic obsolesence as well.

Office buildings go through a lifecycle where they devolve over years from Class A to Class B to Class C buildings. If their neighborhood sustains commercial viability, a building may be maintained or renovated and retenanted to sustain Class B or Class C status for many years. If not, they tend to become Class D buildings and might eventually sit vacant or be demolished for re-development.

"Fundamentals still respectable"

2008-07-18T08:12:00.000-07:00

Commercial real estate market fundamentals are fairly stable, although investment has decreased following a record year in 2007, according to the latest COMMERCIAL REAL ESTATE OUTLOOK of the National Association of Realtors®.

NAR Chief Economist Lawrence Yun said the commercial real estate market is holding essentially even. “We’re seeing no significant changes in vacancy rates or rent growth, so the fundamentals in commercial real estate still seem to be respectable,” he said. “Under normal circumstances, near-full occupancy coupled with positive rent growth would be of strong interest to investors, but we’re not seeing that. The credit crunch has filtered into the commercial real estate market.”

ORHC signs 90,000sf industrial lease

2008-07-14T13:01:00.000-07:00

Central Florida healthcare giant Orlando Regional Health Care leased nearly 90,000 square feet of warehouse space in Crownpointe Commerce Center in Southwest Orlando. The new lease at Crownpoint Center IV results in a full-facility occupancy for the newly constructed building.

Maitland office building sells for $53M

2008-07-10T08:37:00.000-07:00

The Maitland Promenade building in Maitland was recently purchased by Flagler Development Group for $52.9 million or $230/sf. The property is a 5-story, 230,000sf office building with a 3-story attached parking garage. The property was acquired by its former owner in 2005 at a purchase price of $44 million.

CFCB hired to lease office buildings in Hunters Creek

2008-07-05T08:12:00.000-07:00

Central Florida Commercial Brokers was recently hired to lease three new medical office buildings in the Hunters Creek Professional Park located across from the Loop Shopping Center in Osceola county. The buildings total 9,000sf of fully built medical/professional office space with plumbing available in every office. The landlords for the properties include TDM Resorts and Sorrell Insurance Group.

ORHC purchases medical office building

2008-07-01T13:09:00.000-07:00

Orlando Regional Health Care purchased a 33,000sf medical office building located near its main campus in the south downtown Orlando area off of Columbia Street and Orange Ave. Columbia Street Partners LLC was the seller in the transaction. The property, which was built in 1994, sold for for $7.9M or approximately $242.

CFCB hired to market office/retail investment property

2008-06-17T08:21:00.000-07:00

Central Florida Commercial Brokers was recently hired to market a fully leased office/retail building in Kissimmee, FL. The four year old property consists of 9,000 sf of total space. It is located near the intersection of Osceola Parkway and the Florida Turnpike in a fast growing area of Osceola County. Offering price is $1.97M which represents a 7.2% cap rate and a sales price per square foot of $219.

Financing for smaller properties still readily available

2008-05-15T07:33:00.000-07:00

While larger properties and portfolios remain difficult to finance, there is no shortage of financing for the smaller commercial properties priced under $10M. The reason behind this is that the credit freeze on Wall street has really only affected the larger loans that are sold to the secondary market through commercial mortgage backed securities (CMBS).

For the smaller loans, however, many second and third tier lenders such as local community banks, often hold onto the loans they originate rather than securitizing them through CMBS offerings. Buyers who intend to use property for their business are getting very favorable rates and usually get loan guarantees through the Small Business Administration (SBA).

This being said, there is still plenty of capital available through REITs, pension funds and foreign investors for the larger properties that are well positioned.

Getting ready for the next wave

2007-12-28T13:29:00.000-08:00

The Central Florida commercial real estate market may have cooled a bit but developers such as Consolidated-Tomoka Land Co. are getting ready for the next boom. The Daytona Beach development firm is mapping out a plan for its 12,000 acres on the western boundary of the city. The company expects to begin installing roads, water and sewer infrastructure in the near future.

Retail Developer plans to develop east Orlando site

2007-10-18T07:26:00.000-07:00

Weingarten Realty Investors Inc. bought a 4.5-acre east Orlando site for $3 million, the company announced Thursday. Houston-based Weingarten bought the property at the southwest corner of Curry Ford and Dean roads. It is unclear what plans are for the site. Weingarten Realty Investors (NYSE: WRI) is a real estate investment trust that develops, acquires and manages properties in 22 states. The company's portfolio of 414 properties includes 336 neighborhood and community shopping centers and 78 industrial properties

Orlando Economy Ranks Among Fastest Growing in The Nation

2007-10-12T07:29:00.000-07:00

According to new data from the US Bureau of Economic Analysis, Orlando had one of the fastest-growing economies among large metropolitan areas in 2005 despite the downturn in the housing market. Orlando's $81 billion economy ranks as the 19th fastest-growing metropolitain statistical area in the country, with its 8.1 percent increase in gross domestic product from January 2005 to January 2006.
The fundamental driving elements of the local economy still exist, such as its industrial diversity, which means Orlando is still a thriving market -- unlike other areas overly dependent on construction. Bill Seyfried, economics professor at Rollins College's Crummer Graduate School of Business, agrees, saying he anticipates Orlando's future economic growth rate to moderate from a "very strong" 8.1 percent to between 4-5 percent, "which most people would love to be able to have."

Maryland based developer planning 375,000sf of new office space near Orlando International Airport

2007-09-20T07:35:00.000-07:00

Bavar Properties Group bought 34 acres near Orlando International Airport where it intends to build 375,000 square feet of office space. The Maryland based developer purchased the land for $8.1 million earlier this year. The property is on Goldenrod Road, just north of Lee Vista Boulevard. President David Bavar says the company will build a $75 million campus of seven single-story buildings on the property within the next 12 months. "We see a real demand for back-office type space in Orlando," says David Bavar. "There are plenty of professional services that want good quality offices but don't need a high-profile address."

Massive retail center coming to West Sand Lake Rd

2007-08-14T06:46:00.000-07:00

Developer Thomas Enterprises Inc. plans to build at least 850,000 square feet of retail space on West Sand Lake Road. The shopping center, named The Pavillion at Sand Lake, will be designed as an outdoor power center with two or three major anchors of about 120,000 square feet each. Potential tenants would include large retailers, restaurants and small retail/service shops. The project will be located just east of the Kirkman Road/Sand Lake Road Intersection across from the Tangelo Park neighborhood.

Orlando commercial real estate investment firm adds to its portfolio

2007-07-06T07:49:00.000-07:00

Eola Capital won the bid for the St. Joe Co.'s southeastern U.S. office holdings and closed on the properties in July. Eola is paying $225 million for the 1.8 million-square-foot St. Joe portfolio, which includes 15 office buildings in Orlando, Jacksonville, Tallahassee, Panama City, Atlanta, and Richmond and Norfolk, Va. As part of the deal Eola Capital gains such notable local holdings as Millenia Park One, Southhall Center in Maitland and One Orlando Centre. This brings the firm's local holdings to 670,000 square feet. Eola's portfolio now will total $1.5 billion in assets composed of 9.5 million square feet. In addition, they will continue to look for more properties in other markets, such as Maryland, Texas, Arizona, Colorado and Washington, D.C

Medical Supplier Consolidates into Orlando

2007-06-08T13:48:00.000-07:00

PSS World Medical Inc. is consolidating two of its three Florida distribution facilities for its physician division into a new 61,129-square-foot warehouse space in Orlando at Duke Realty Corp.'s Crossroads VII, says Walt Batansky, managing partner of PointLine Inc. and broker for PSS World Medical.

Oklahoma Based Distributor Adds Orlando Location

2007-06-01T08:13:00.000-07:00

Fred Jones Enterprises LLC leased 41,800 square feet on Brokerage Drive in Orlando Central Park for six years. The company is a family-owned business headquartered in Oklahoma City and distributes Ford remanufactured powertrain assemblies and Motorcraft powertrain assemblies.

Raleigh North Carolina Real Estate Investment Trust adds Orlando Office Building

2007-05-22T08:15:00.000-07:00

Highwoods Properties has acquired a class A office building, Eolo Park Center in downtown Orlando, for about $40 million. The transaction gives Highwoods (NYSE: HIW) ownership of or an interest in 1.4 million square feet of office properties in downtown Orlando. The investment trust also purchased 0.8 acres of land next to Eola Park Centre for $2 million in a separate transaction. The land can hold as much 224,000 square feet of office space.

Orlando industrial properties acquired.

2007-05-17T13:57:00.000-07:00

Boston-based investment firm Eaton Vance Corp has purchased two large Orlando industrial properties totaling about $64 million. The first purchase was the 493,000-square-foot Daimler Chrysler parts distribution building adjacent to the Orlando International Airport. Also included was a 225,000-square-foot manufacturing facility currently on a long-term lease with Sealy Corp which the bedding manufacturer recently had built.

Orlando commercial real estate investment company sets new record high for office space purchase

2007-05-11T08:30:00.000-07:00

Orlando based Eola Capital bought a 19-story, Class A office building from of Orlando for $90.6 million. The property, One Orlando Center, contains a total square footage of 356,000, the sales price equates to $255 per square foot, a record in the Orlando market. Built in 1987 One Orlando Centre is one of the premier office buildings in downtown Orlando. The building includes an adjacent, eight-story parking facility.

Boston, MA based commercial real estate investment firm adds Orlando industrial properties to it's portfolio

2007-05-10T08:37:00.000-07:00

Eaton Vance Corp, a Boston-based investment firm has purchased two large Orlando industrial properties totaling about $64 million. The first purchase was the 493,000-square-foot Daimler Chrysler parts distribution building adjacent to the Orlando International Airport for $44.2 million. The transaction includes land capable of expanding the existing facility by an additional 120,000 square feet.

Also included was a 225,000-square-foot manufacturing facility that was purchased for $11.2 million. The facility has a long-term lease with Sealy Corp., a leading bedding manufacturer which recently had the structure built. "The Orlando industrial market has been very strong, and we are delighted to invest in this dynamic area," says K.C. Swartzel, director of acquisitions and dispositions for Eaton Vance's real estate investment group.

Orlando commercial real estate one of the top investment opportunities in the nation

2007-03-30T08:57:00.000-07:00

According to survey but the National Association of Real Estate Investment Trusts, Orlando is one of the top ten metropolitan areas for commercial real estate investment. Other top cities included New York City, Washington, D.C., Los Angeles, Seattle, Austin, San Francisco, Honolulu, San Jose and San Diego.

Medical Office Complex in Celebration, FL

2007-03-29T11:19:00.000-07:00

New York based developer Sherman Group LLC has bought 7 acres of land in Celebration where it plans to build a 90,000sf medical office complex. The property is the last available parcel in Celebration zoned for medical office space use that is not controlled by the Florida Hospital group.

According to Osceola County public records the land was purchased for $486,000 per acre. The project is expected to cost $20MM and lease rates will be approximately $25/sf with office sizes ranging from 1,650sf to 23,500sf.

Central Florida to Withstand Economic Downturn

2007-03-29T11:07:00.000-07:00

As other markets around Florida begin to feel the heat of a crumbling real estate market, the greater Orlando commercial real estate market in Orange and Seminole counties should be able to weather the worst of the storm. This is according to Palm City Economist William Furth.

According to Furth, areas such as Orlando, Jacksonville and the Tampa-St. Petersburg areas will do much better than South Florida which he believes is headed for an "economic meltdown". In Central Florida, Orange and Seminole counties will be more resistant to the economic decline because they are more diversified and have a balanced industry make-up compared to Osceola and Lake counties whose economies rely heavily on real estate.

A seperate forecast from the Director of the Institute for Economic Competiveness at the University of Central Florida, Sean Snaith, indicates a slow first half for 2007 but overall employment growth of 2.5 percent between now and 2009. According to Snaith, Orlando will be the strongest region in the state in the coming years.

Orlando condo conversion casualties

2007-03-26T08:50:00.000-07:00

Yet another condo conversion project has failed in its effort to cash in on the condo craze that fizzled out in late 2005, early 2006. La Palazza at MetroWest (formerly The Alexan Club Apartments) failed in its effort to pre-sell the minimum number of units by the required deadline in order to secure financing for the project. As a result the lender on the project, Lehman Brothers Holdings, Inc. has foreclosed on the property and will be auctioning it off in its original form as a mult-family/apartment property.

As more failed condo conversion projects return to the rental market, vacancies in the mult-family market are expected to rise to more balanced levels over the coming year.

Hotel/Motel Market Outlook

2007-03-24T08:10:00.000-07:00

Hotel occupancies are expected to average 68.1 percent in 2007, up from 67.8 percent last year. Revenue per available room (RevPAR) is seen at $82.30 this year, up from $78.40 in 2006. A record 45,500 hotel rooms are scheduled to be added to the inventory in 52 markets tracked this year, compared with 22,000 in 2006.

Markets with the highest RevPAR include West Palm Beach; New York City; Honolulu; Miami; Fort Lauderdale, Fla.; and Phoenix, all with RevPAR of $125 or more. For properties valued at $5 million or more, transaction activity during 2006 totaled 1,166 hotels with a combined value of $35.3 billion, nearly 20 percent higher than 2005.

This information was provided by the National Association of Realtors.