Central Florida Commercial Real Estate Brokerage & Advisory Services
Helping some of Central Florida’s most exciting & dynamic companies & organizations manage their commercial real estate needs since 2012
ABOUT US
We deliver innovative, client-centric commercial real estate solutions designed to address current and future business needs.
WHAT WE DO
We simplify the real estate decision process and provide rock-solid advice by utilizing every available resource.
HOW WE DO IT
By studying the market, anticipating trends, leveraging key relationships and utilizing the latest technology.
CENTRAL FLORIDA COMMERCIAL REAL ESTATE INSIGHTS
NATIONWIDE ECONOMIC TRENDS UPDATE
JANUARY 2024 (YE 2023):
Headline inflation in the U.S. increased to 3.4% in December 2023 due to rising energy and shelter costs. Despite this, market predictions suggest a 70% probability of a Federal Reserve rate cut in March. Core inflation, excluding food and energy, decreased to 3.9%, indicating a general decline in consumer prices.
Housing demand remains strong, keeping shelter costs high. The affordability gap between mortgage payments and multifamily rent hit a record $1,300 in September, leading more homebuyers to opt for rentals. This demand is expected to limit apartment vacancy increases to 30 basis points in 2024, despite increased supply, with rent growth cooling to 1.5%.
Gasoline price fluctuations impact industrial space demand. While gasoline prices rose in December, a previous low of $3.24 per gallon signaled softened demand, affecting logistics and warehousing. Industrial vacancy increased by 170 basis points in 2023, but the sector remains robust. Industrial property rents are expected to grow by 3.7% in 2024.
Retail sales growth outpaces inflation. Despite concerns about higher costs for food and energy, the retail sector maintained strength. Inflation-adjusted core retail sales rose by 2.0% in 2023. Consumer resilience, even with increased personal credit, bodes well for retailers. U.S. retail vacancy is projected to increase by only 10 basis points in 2024, despite a high supply addition.
IS THE MAGIC SPORTS ENTERTAINMENT DISTRICT FINALLY HAPPENING?
The Orlando Magic has announced its collaboration with San Francisco-based JMA Ventures LLC and Houston-based Machete Group for a groundbreaking $500 million Sports & Entertainment District in downtown Orlando. According to Sports Business Journal, JMA Ventures and Machete Group have been selected to lead the design, financing, and management of the project. JMA Ventures, recognized for its sports-related developments, will be contributing their expertise, while Machete Group, described as an advisory firm specializing in venue development and organizational strategy, brings a wealth of experience with clients like NBA, MLS, and NHL entities.
The proposed 8.5-acre district, located opposite the northern entrance of the Amway Center, is set to feature a 260-room hotel tower, 200,000 square feet of Class A office space (including the Magic’s corporate headquarters), 270 residential apartments, 125,000 square feet of retail space, a 3,500-capacity live event venue, a centralized plaza, and a 1,100-space parking garage. This ambitious venture aims to generate employment opportunities and offer diverse dining, hotel, living, and entertainment choices.
The project’s construction is scheduled to commence by the end of 2024 and is expected to be completed within 2.5 years. It has drawn comparisons to similar developments like L.A. Live near the Staples Center, home to the NBA’s LA Lakers and LA Clippers, as well as “Downtown Commons,” a project initiated by the NBA’s Sacramento Kings.
FLORIDA’S COMMERCIAL REAL ESTATE SECTOR’S
INSURANCE WOES CONTINUE IN NEW YEAR
By Melea VanOstrand
ALM / Property Casualty
January 2, 2024
Florida’s property insurance landscape for commercial real estate is experiencing one of the most difficult periods in its history.
That’s according to Oscar Seikaly, CEO of NSI Insurance Group, who says there’s not enough capacity to absorb all of the business that needs to be insured.
“Insurance companies in the past, when you give them a building for $100 million to insure, they will insure it in three and a half minutes. They give you a rate and get it done,” Seikaly said. “Today, that same insurance company is saying we can only take $5 or $10 million out of the hundred million, and you have to find someone else to take the next $5 million or $10 million and then you have to find nine insurance companies to cover the rest just for one building.”
The outlook doesn’t look much better for the next six months.
“Nothing is going to change because nobody is entering the market. No insurance markets are knocking on the door saying, ‘We’re open for business in Florida.’ Nobody is doing that. Why? Because most insurance companies are at their maximum limit of insurance in Florida,” Seikaly said.
If buildings aren’t up to par quality-wise, or from a construction or age point of view, Seikaly said, it can be hard to get the $5 million in the first place, which is one of the reasons why the number of real estate transactions have gone down.
“Then they’re charging you for the $5 million almost the same as what they’d charge for the $100 million,” he said.
Some of the factors that have gotten the insurance landscape in Florida to this point are that, historically, consumers have underinsured their buildings, reinsurance costs are rising and the values of properties are changing.
“The underinsurance ace factor is the starting point, but the reinsurance is not catching up to the losses they’re incurring every year. No matter what they charge, the losses have been more than what they’re predicting, so then they have to go back and charge more,” he said.
As Seikaly sees it, insurance companies can get stuck in a cycle of raising prices, making a small profit, but having to raise them again because that profit is not enough. Insurance rates have gone up about 30%-40% a year for the past three years.
“They’re playing catch up,” he said.
What’s the solution?
Insurance reforms, which are more for homeowners, are a step in the right direction, but it’s not close to solving the crisis.
“It resolves the fraud part of the crisis … the defrauding of insurance companies and the defrauding of citizens. It cuts down on the fraudulent claims by people and lawyers that represent them,” Seikaly said.
Figuring out how to attract and open up the market to more insurance companies is the solution. However, according to Seikaly, unless there’s a way for them to make money, the problem will continue.
“We need to get our arms around global warming and the cost of that on the insurance market. We haven’t been able to predict it very well. Every year, we just increase rates,” he said. “Fires have been a surprise, flooding has been a surprise. Places that never flooded are flooding. All of these things are unpredictable, so the closer we get to predicting these events, the better we can price things and access what they should be.”
Seikaly also believes it’s important to use Citizens Insurance as the insurance company to serve Floridians rather than referring to it as the insurance company of last resort.
“It should just be permanent so that the Florida consumer, at least the homeowners, have a way of being insured at a reasonable premium,” he said. “Reinsurers are not going to insure a company like Citizens because 100% of their business is in Florida. The state would have to fund some of the deficiency in the reinsurance market for them to write more business, and for the reinsurers to allow them to write more business.”
Testimonial
I loved working with Lloyd Commercial Advisors, and specifically Scott Lloyd. Scott’s extensive knowledge of the Orlando market was instrumental in helping us find a perfect warehouse in a challenging location. His expertise and understanding of the local market was spot-on and his determination and attention to detail were impressive. He left no stone unturned in the search process and even approached owners that had not listed their property.
Skip Perkins, Avante Group, Inc.
Scott’s command of the Central Florida market and expert utilization of demographic data allowed my company to make two highly-informed site selection decisions. I could not recommend Lloyd Commercial Advisors more. Their expertise and utilization of expert demographic data made the site selection process seamless and efficient. He also negotiated excellent leases for both of our Florida locations and I am extremely grateful.