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Perspective & Considerations from Orlando Industrial Broker Justin Ruby
It didn’t take a global pandemic to recognize just how reliant we’ve become on e-commerce. Our ‘one-click, have it within hours’ mentality has condensed the amount of time between order and delivery to levels we’ve never seen before. However, the rapid spread and resulting economic impacts of COVID-19 quickly underscored the need for more industrial space. Because of the shift away from traditional brick-and-mortar, approximately 1 billion square feet of industrial space in the U.S. alone has been required to absorb the demand. At Foundry Commercial, we’ve been closely monitoring the emerging trends impacting the booming industrial real estate market in the region during the past year.
Located along Interstate 4 – the major thoroughfare connecting Tampa (population of the metro area is 2.9 million) and Orlando (population of the metro area is 2 million) – Central Florida is emerging as a true distribution hub for the state, whereas Atlanta had previously served that role for the southeast. The reasoning behind this is three-fold. First, as preferences have changed, and people want their consumables faster, the distribution hubs need to be located closer to the consumer. Second, the ever-growing population of Central Florida justifies locating a hub here. Third, with a drive toward bigger warehouse buildings and bigger users occupying space in those buildings, there is a need for more labor, and Central Florida has the pool of talent available to satisfy that need.
Specific to the Orlando industrial real estate scene, we have been watching as more product pops up on the west side of town. In the past, much of Central Florida’s industrial product and development had been located in the southside of town between the city’s demand drivers (theme parks and convention center) and the airport. The west side of town offers convenient access to still serve the city’s demand drivers and the state at large via major roadways such as the Turnpike and SR 429 while avoiding the congestion of southeast Orlando. In addition to major roadway access, west Orlando has excellent access to labor and more available land ripe for industrial development.
We’ve been hearing a lot about how important cold storage is becoming within the supply chain. From the storage of fresh food to vaccines, it seems there are more needs cropping up for this type of industrial space every week. I’ve even seen a capital agreement recently in which the owner is building cold storage speculatively. The other aspect less people seem to be talking about – but that is happening more frequently in Florida – is that of conditioned industrial space. Many landlords are realizing that it’s ultimately less expensive to insulate roof decks at the start of a project than to attempt to retrofit a building down the line. Users range from those who need to keep products cool – not necessarily cold – to those who just want to provide a more comfortable environment for employees. And in Florida – where the heat of the spring, summer, and even fall months can be oppressive – offering a cooler warehouse can serve as a competitive differentiator to attract talent.
As delivery times become increasingly compressed, it has become more important than ever for distribution facilities to operate more efficiently. While the desire of warehouse users has been to operate out of rear-load buildings, largely due to the aesthetics of the buildings, the flow can become backlogged by everyone from those transporting the product to the warehouse to those who are picking it up to continue along the supply chain. Some developers have created a solution by installing grade-level roll-up doors on the front of rear-loading warehouse buildings, allowing contractors the added utility of being able to go to the front of a building, use a forklift to get their product, then be on their way without having ever needed to pull up to the back of the building.
There has been plenty of anecdotal evidence that more and more people – as well as companies – are migrating to cities in the southeast, teeing up markets such as Orlando for even more anticipated activity in industrial real estate. If you have found yourself in need of Orlando industrial real estate expertise, the Central Florida Foundry Commercial team can help. Let’s connect so I can learn more about the type of industrial space you’re looking for.