Orlando – Jan. 29, 2021 – Orlando offers one of the most favorable development markets for commercial construction in the U.S., according to CBRE’s U.S. Development Opportunity Index. The metro area secured the fourth overall spot on the inaugural list with sector rankings of first for multifamily development opportunities, seventh for retail, ninth for office and 10th for office.
The report, which analyzed the top 50 U.S. markets by population, scored markets based on four performance categories: construction costs, fundamental strength of existing supply, prior cycle performance and property forecast.
“The Orlando market is a vibrant and exciting metropolis that attracts millions of visitors every year,” said Erin Schultz, Director of Project Management in Orlando. “While the pandemic has impacted the Central Florida region, low building costs and burgeoning opportunities in the Orlando market have attracted stunning population growth which is anticipated to continue over the next five years. The lower building costs are not only attractive to local, but also out-of-town developers that may have been impacted by state-wide restrictions and are relocating their business to the Central Florida area.”
Orlando ranks in the top 10 markets across the country for total space under construction in multifamily, office, industrial and retail. The region has taken advantage of its existing high-level infrastructure to position itself as a professional-scientific-technical services hub, helping to diversify the economy from the entertainment business.
The metro area was one of the most cost-effective places for building multifamily product when considering site costs and overall construction costs, boosting the market score on the multifamily index. For industrial & logistics construction, Orlando ranked highly in population change from 2010-2019 and the forecasted population change from 2020-2023. Steady numbers in office and retail construction employment led to high overall rankings in those sectors.
U.S. construction activity is expected to pick up in 2021, after a slowdown in 2020 due to challenges brought by COVID-19, including temporary work stoppages and difficulty sourcing various materials from abroad. Since the start of the pandemic, momentum has varied among commercial real estate sectors – development progressed in the multifamily and industrial & logistics sectors, but activity slowed—and in some cases stalled—for retail, hotels and speculative office development.
“We expect to see a significant uptick tenant fit-out projects in 2021 as employers redesign and reconfigure spaces to accommodate new standards in health, wellness and safety,” said Jim Dobleske, CBRE Global President of Project Management. “Costs, however, aren’t likely to change much; markets with high costs of land and labor won’t get much cheaper, if at all.”
CBRE’s Development Opportunity Index ranks markets based on development conditions including property performance in each of the major commercial real estate sectors, construction costs, strength of supply, prior performance and forecast performance.
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