The Orlando metro area unemployment rate hit 3.2% falling 330 basis points (bps) year-over-year (YOY), on the addition of 83,130 jobs, for an impressive job growth rate of 8.6%. In addition, retail landlords benefited from steady employment gains in sectors that positively impacted demand. As a result,
there was a 7.1% YOY increase in retail trade. However, despite these increases, there is still a shortfall of employees to meet the areas growing demand. Leisure and hospitality grew 26.1% YOY as Orlando tourism rebounded quickly from the pandemic with increased hotel revenue and occupancy. The
thriving economy continued to vitalize the metro area’s retail market, as absorption remained positive for the third consecutive quarter, decreasing the overall vacancy rate to 5.4%, dropping 70 basis points from Q1 2021, despite 43% of shoppers transitioning to retail purchases online. Single-tenant retail
has undergone a significant shift in operations, design, and delivery. The tight labor market continued to squeeze the food and beverage industry, causing many restaurants to either restructure their business models to adapt to these new demands or delay openings due to lack of labor available to service the store opening. As consumer shopping behavior has adapted due to the pandemic, retailers have also adjusted their strategies to enable easier consumer purchasing by increasing the number of drive-through lanes/or adding dedicated pick-up areas. These adaptations resulted in investors adjusting their strategies and return expectations as strong tenants equated to safer investments. Cap rates rose slightly, up 50 bps over last year to 6.2%-6.5%. The demand for essential assets is anticipated to remain robust in 2022 while capital is still attractive and financing is still available.