August 6, 2019
By David Cohen
The population of Central Florida has grown rapidly over the past several years, coinciding with the current period of economic expansion. As a result, the commercial real estate industry has gone through an evolution of sorts in that time.
Connect Media asked Danny Rice, Managing Director & Market Leader in Colliers’ Central Florida office, to share insights about Central Florida’s CRE market. Check out his responses in our latest CRE Q&A:
Q: What can you say about the recent growth in the Central Florida market overall? Do you think this rapid growth will continue?
A: We’ve been very fortunate over the past 10 years to be the beneficiary of consistently strong inbound population growth. Many factors play into this, but the primary ones in Florida tend to be business friendly tax structures, no personal income tax, relatively low regulatory hurdles and favorable weather year-round. Running parallel to population growth, the tourism industry has been on fire and we continue to see that growing.
Investor appetite remains high in the Central Florida markets across most all real estate asset classes. Readily available capital and low interest rates have continued to fuel favorable conditions that enable investors to acquire property. Although not as abundant, value-add opportunities still exist and are highly sought after when they hit the market – and in some cases, before they ever hit the market.
Lastly, retail continues to be extremely active among the Colliers Central Florida (and statewide) business. The headlines and news stories may paint a different picture, but in Florida, retail is simply evolving, not dying. E-commerce is fueling new retail sales channels which often include brick and mortar stores. Today’s new way of thinking, which focuses more on experiential and social connectivity, has allowed smart retailers a great ability to be successful in today’s economic climate. The millennial generation is starting to enter their prime years of spending, and their expectation of their retail experience is different than that of the baby-boomer era. Looking ahead, I’m optimistic that Florida and Central Florida are well-positioned to continue growing. We’ve been blessed to be the recipient of 10 years of strong economic growth that has diversified our local economy and set the foundation for the activity we see today.
Q: Are there any specific deals your team has worked on recently in Central Florida that really highlights this growth trend?
A: E-commerce has forced change to nearly ever retailer’s multi-channel approach to business, and this has been changing over the past 10 years. Disruptive companies like Amazon have put pressure on retailers to think multi-channel marketing approaches, refine their supply chain strategies and ultimately evolve the way they do business to survive. This impact has caused new partnerships and opportunities to transpire. One of those examples was a recent transaction last year in Polk County where global logistics giant DHL acquired a building that is leased to IKEA, where DHL handles all logistics for IKEA’s distribution center.
As the “need-it-now” trend continues to grow, these types of partnerships will continue to grow where 3PL (third-party logistics) companies like DHL will become strategic partners with retailers to create an efficient supply chain to deliver their goods to consumers.
Q: What about the general Florida market? What is the most noteworthy trend you have seen recently?
A: Everything we are experiencing locally in Central Florida is consistent with what we see in other Florida markets, but one of the exciting pieces for us at Colliers is our own recent growth. Last year, Colliers strategically acquired Continental Real Estate Companies (CREC) based in South Florida, giving us a market-leading position in the retail segment not only in South Florida, but also statewide. Within 30 days of that acquisition, we also acquired one of the dominant industrial and office brokerage firms in West Palm Beach, Michael Falk and Company, which expands our presence in the industrial, flex and office sector statewide. These two examples fall in perfect alignment with the with the uptick in activity at the intersection of retail and industrial sectors.
Q: What property sector or sectors in Central Florida do you think will continue to see the most growth over the next several years?
A: There’s no doubt industrial will continue to lead the way in Central Florida, but nearly all asset types will continue to thrive as Florida is well-positioned in the years to come. Central Florida is at the epicenter of industrial growth with its great access to every major metro in Florida, close proximity to major ports and one of the highest population growth areas in the country. The I-4 Corridor has dramatically increased in size with more than 20 million square feet being added to the market over the past seven years, and another six million square feet in the pipeline either under construction or proposed. That equates to more than 20% of the industrial market alone.
As our local population continues to grow, that only puts more pressure on retail, which puts more pressure on the logistical demand to deliver goods to the local population. Investors are astutely aware of this demand in Florida, and these investors are recognizing there has been a noticeable shift by residents and business owners from major metro areas across the country to Central Florida, or Florida in general.
For comments, questions or concerns, please contact David Cohen