Challenges Persist, But Signs of Stabilization on the Horizon
The Downtown Orlando office market continues to face mounting headwinds as we enter the second half of 2025. With negative net absorption, softening rent growth, and rising availability, the submarket is still navigating its post-pandemic reset. However, upcoming tenant move-ins and healthy leasing activity signal potential for a more stabilized path ahead.
Key Trends at a Glance:
- Net Absorption (12-Month): -180,000 SF
- Vacancy Rate: 12.2%
- Total Available Space: 13.7% (including shadow space)
- Rent Growth (YOY): -0.3%
- New Deliveries: 0 SF
- Under Construction: 0 SF
Leasing and Demand
Downtown Orlando posted a 12-month net absorption of -180,000 square feet, ranking it as the lowest-performing office submarket in Florida and one of the weakest urban cores nationally for absorption. Despite this, the market still outperformed urban cores in Charlotte, Austin, and Atlanta — a reminder that challenges in central business districts are widespread.
Encouragingly, leasing activity is up over 7% year-over-year and accounts for approximately 15% of all leasing volume in the Orlando metro. This signals that while tenants may be cautious, there is still strong interest in the market.
One key boost expected in Q4 2025: Travel & Leisure’s scheduled move-in at 501 W Church Street, where it leased 182,000 SF in April 2024.
Availability and Sublease Trends
- Overall Vacancy Rate: 12.2%
- Availability Rate (Including Shadow Space): 13.7%
- 4 & 5 Star Office Space Availability: 17.8%
- Sublease Space Growth (YOY): +45%
Sublease availability continues to rise sharply and now makes up more than 10% of all available sublease space in the Orlando market. As space lingers longer, development activity has paused entirely — no new deliveries or projects under construction were recorded in the past year.
Rent Performance
Market rent growth remains slightly negative at -0.3%, marking the weakest rate since Q1 2021 and well below the 10-year average of 3.5%. The rent performance by building class varies:
- 4 & 5 Star Properties: -1.1% YOY
- 3 Star Properties: +0.7% YOY
- 1 & 2 Star Properties: +0.9% YOY
Rents are expected to continue softening through mid-2025, with a forecasted rebound into the low- to mid-1% range by the end of this year.
Outlook
While Downtown Orlando’s office market remains under pressure, the fundamentals are showing early signs of leveling out. Leasing activity is steady, high-profile tenants are on the move, and although rent growth is weak, the decline is beginning to slow.
Investors, tenants, and developers should monitor how the market responds post–Travel & Leisure’s move-in and whether leasing momentum continues into Q4.
For personalized insights on navigating Orlando’s evolving office market, connect with our team at www.SuncoastSVN.com.
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