Job cuts pressure Orlando retail sector

ORANDO - More than 60,000 jobs were cut in the Orlando metro area during the 12 months ending in the first quarter, leading to a 4.1% reduction in retail spending and an increase in the retail property vacancy rate, according to a second-quarter Retail Research Report by Marcus & Millichap.

Additional increases in vacancy are forecast to push the rate to more than 10% by year end, a threshold last crossed in the early 1990s.

“Despite the metro area’s lure of projected population growth, rising population density and higher household incomes, transactions are at a standstill,” says Dan Colachicco, regional manager of the Orlando office of Marcus & Millichap. “A lack of liquidity in the credit markets that has suppressed investment activity in other markets has affected Orlando as well.”

Following are some of the most significant aspects of the Orlando Retail Research Report:

- In 2009, local employers are projected to eliminate 36,000 workers from payrolls, a 3.4% decline. Last year, 39,500 positions were cut in the market.

- Builders are expected to complete 750,000sf of space this year, down from 3.3 msf in 2008.

- The vacancy rate will continue to rise, resulting in a year-end reading of 10.4%, up 200 basis points from last year. Vacancy climbed 250 basis points in 2008, as supply growth offset a modest increase in demand.

- This year, asking rents are forecast to decrease 4.5% to $17.81 psf, following a 0.1% slide in 2008. Effective rents are projected to fall 5.8% to $15.35 psf, compared with a 2.4% decline last year.

For a copy of the complete Orlando Retail Research Report, visit www.MarcusMillichap.com.