Increases in both economic and job growth in the Orlando MSA provided an avenue for companies to remain active in the market despite concerns about the Covid-19 coronavirus’ delta variant. Many companies experienced organic growth and expanded their footprint, positively affecting Class B and Class C space absorption for the third consecutive quarter. Leasing activity slowed, especially for Class A space which declined by 6.9% year-over-year and was 67.5% lower than the third quarter before the pandemic. However, the 1.9M SF of sublease space added to the market was more than three times higher than in 2018, putting potential pressure on overall vacancy in the quarters to come.
As the market started a readjustment period, investment activity was slow to gain traction. Appetite for office product remained low, although many investors were in a position to seize opportunities, especially for value-add properties, while other investors continued to take a wait-and-see approach based on market and economic performance. The lingering effects of the pandemic caused investment sales to decline 16.7%, year-over-year, approximately 25 transactions during the quarter, compared to the drop-in sales activity of over 52% since 2017. However, despite the decrease in deal completions, the average price per square foot increased by more than 7.5% over a four-year period.