Expanding retailers are canvassing for space but are finding few available boxes to lease. Demand has now outstripped the new supply added to the market for four straight years, creating a significant headwind to absorption. Moving forward, annual completions are not expected to surpass one million square feet on average for the next several years. In the interim, strong leasing to fitness, home goods and discount department store tenants in the past few years has left quality anchor boxes in prime locations very few and far between, even with the opportunities created at former Bed Bath & Beyond stores.

The dearth of speculative construction is contributing to the lack of availability in the market. A mere 810,000 square feet of new retail space has been completed in the last year, and much of the one million square feet of new retail space under construction has already been leased. A majority of new retail projects are currently delivering in Osceola County, where rapid population expansion is fueling an increased need for retail. With that said, the future pace of retail development in that area is less certain following the adoption of restrictive mobility fees that will be implemented by mid-2025. Developers already having difficulty getting projects to pencil due to higher land, labor and construction costs will experience more pressure when factoring in the significantly higher fees.

Looking forward, a very limited speculative development pipeline is expected to stifle retail availability this year, leaving little room for demand growth. Oxford Economics also predicts that Orlando’s lower share of high-earning households relative to the nation’s larger markets is also expected to see slightly lower spending growth in 2025, although the degree to which future demand could be impacted is unclear.