Logistics Triangle: Supply Landscape

As we define the types of occupiers in the Central Florida market, our bulk occupier is defined as a Tenant between 250,000 SF and 650,000 SF and our mega-bulk occupier focuses on 700,000 SF & greater. Albeit the sentiment is generally positive, there is a consensus that activity in the bulk and mega-bulk size range has slowed down dramatically in the last twelve months and the active deals in the market are taking longer to come to fruition levels, and the banks overexposure to the office asset class.

“Big-box demand has slowed as occupiers evaluate their decisions in further detail. Most companies than can take down a 1MSF facility can also afford to wait 12-18 months, whereas the smaller users don’t plan that far ahead.”

Market Trends

The “expandable” model worked when you could build a shell within 6-7 months. Now, with a delayed construction timeline, it’s tough to expect the occupiers to wait.

Tenants are willing to spend their own capital outside of the Tenant Improvement Allowance provided which ultimately provides them with additional skin in the game.

Tenant seeking 250,000 SF and greater will have a more competitive landscape of options to chose from, however doubledigit rent growth is still projected for 2023 with respect to smaller leases.

“It’s a TI Game”

When evaluating the scope of work to complete beyond the cold dark shell, developers are forced to understand what the competition are proactively including.

Transitioning into our third panel, the concluding comment on this panel - made by Exeter’s Jeff Grabowski

– left a lasting impact with the audience. Landlords need to be conscious in how aggressive they push rents because Tenants do have an option – to close their operation.