Dissecting Orlando’s Spike in Sublet Space Availability

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After several years of aggregate sublet space trending down in Orlando, a substantial increase may signal a reversal of the trend. More large blocks of sublease space are available than a year ago, and they compose a greater share of the sublease availabilities. In November 2015, sublease availabilities over 10,000 square feet comprised only 24.7 percent of the sublet market. In November 2016, those large sublease availabilities jumped to 60 percent of the sublease market. The substantial growth in the quantity of sizable subleases may signal a shift in economic conditions.

Orlando Sublease Space

Orlando Sublease Space

Industry Implications

Large subleases are being marketed by both traditional and non-traditional office users, such as for-profit educational institutions, defense contractors, and banks. The largest sublease on the market is the former home of Le Cordon Bleu, a for-profit educational group that recently closed, at 89,000 square feet. In addition, financial institutions such as SunTrust, Iberia and Valley National Bank and law firms including Roetzel & Andress and Alvarez, Sambol, Winthrop & Madison each have subleases over 10,000 square feet listed.

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The uptick in subleasing availability is distributed proportionally across Orlando’s submarkets.

The Downtown, Southwest, University and Maitland submarkets all have substantial shares of the sublease market, in line with the direct lease market. However, Class B tenants have a disproportionally higher share of the sublease market. Class B space makes up 38 percent of the total Orlando office market but comprises 48 percent of the current sublease availabilities. This is not surprising, as Class B space is often leased by less credit-worthy tenants with more volatile business operations. This development will require careful monitoring in the coming months.

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Marc Miller, Research Manager, Florida

Will Harding, Research Analyst, Orlando