By: Yolanda Rivas
2 min read April 2020 — The strength of the commercial real estate sector relies on the major roadways that run in and around Orlando, Steven McCraney told Invest:. He also notes that the location of Orlando is a great anchor to position his business as it provides ease of access to everywhere the company needs to be, as well as how the primary growth of his company has clearly been the warehouse and distribution space.
How connected is the strength of the commercial real estate market to the major roadways in Orlando?
The strength of the commercial real estate sector relies on the major roadways that run in and around Orlando. The last 50 years in Florida were all about the I-95 corridor, from Jupiter to Coral Gables. If you were to drive that route today there is not an available parcel of land on the roadway. We believe the next 50 years for Florida are going to be primarily focused on the I-4 corridor, from Tampa Bay to Lakeland to Orlando and onto Daytona Beach. While Daytona has not started to pop yet, the thing that we know is that there are two major roadways in Daytona, I-4 and I-95, which leads us to believe that it will be a good market at some point in the near future.
Why is Orlando the most ideal location for your operations?
The Orlando economy continues to thrive. It’s attracting new residents, it’s generating new jobs and the increased interest is driving industrial users into the market because of the ability to distribute out of the state of Florida from the region on a one-day basis. We relocated to Orlando because the area places us right in the middle of the state. We operate throughout the Southeast and Orlando, which anchors us in the middle of everywhere that we need to be. It also provides the ability to move easily throughout the Southeast because of the region’s dynamic airport.
In regard to your business operations, where have you seen the most growth?
We are industrial developers. That is our mainstay and focus. This is complemented by third-party property management. As of late, the growth has clearly been the warehouse and distribution space. The total industrial space in Orlando is 123 million square feet, which breaks down into roughly 100 million square feet of warehouse distribution, 13 million square feet of manufacturing and the remainder is made up of office, flex space and distribution product. Here’s what we know: warehouse is the new retail. If a person is ordering online, whether it’s products, clothing or food, the merchandise is likely not coming from a store, it is almost certainly coming from a warehouse. This is attributed to e-commerce growth and third-party logistics. Over the next few years, we are going to see the markets continuing to change and expand. From an industry perspective, I believe we have a trajectory that is at least 15 years long. While the product may continue to change, that product is coming from somewhere and that somewhere is a warehouse. As social distancing is ever more important and various markets are now under a “shelter in place” order, it is clear that suppliers, like Amazon, are still delivering essentials through package products to each and every home.
What market trends have had an effect on your business?
We are always looking for ways to leverage technology in our business. Whether it’s roofing systems, lighting or super-flat floors, we want a logistics facility to be plug and play for a customer. The biggest challenge in recent years is rising costs. This can be broken down into the rising labor cost and the cost of materials. For example, the cost to build out a 1,500-2,000-square-foot office space within a warehouse space today can easily run around $250,000. That number exceeds $100 per square foot. At the same time, we have seen strong rent growth and because of that we have been able to keep pace. As we presently enter an economic downturn due to this pandemic, one would expect the cost of goods – both labor and material – will correct. Most of us in the industry went through the last recession and we know how debilitating it was. Moving forward, we have to be cautiously optimistic as we enter this challenging economic cycle and be mindful of our leverage, occupancy, quality of tenancy and our construction exposure.
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