Why Orlando - CW 2023 Q2-RFS

ORLANDO Why

DYNAMIC TRENDS DRIVING GROWTH Q2 2023

Orlando Snapshot

The Orlando – Kissimmee – Sanford (MSA) in Central Florida is comprised of the following counties: Seminole

ORLANDO

About Orlando

SEMINOLE

Orange Osceola

ORANGE

OSCEOLA

Ranked 40th Best City in the World. #1 in Florida and #10 in the U.S.

Resonance "Best Cities"

WITH NEARLY 2.8 Million People, the Orlando Region is the 4 th Largest MSA in the Southeast

Cushman & Wakefield | Why Orlando

Contents

MAR K E T B E AT Office Q2 2023 ORLANDO

14.4% Vacancy Rate -330K YTD Net Absorption, SF $26.46 Asking Rent, PSF (Overall, All PropertyClasses)

YoY

Chg

12-Mo. Forecast

ECONOMY Orlando had an unemployment rate of 2.6% in Q2 2023, 10 basis points (bps) lower than the rate one year ago and well below the national rate. Job growth held in Orlando despite the current economic slowdown, as nonagricultural employment grew by 50,300 jobs, or 3.6% year-over- year (YOY). The region had the highest annual job growth in leisure and hospitality out of Florida’s maj or markets, with 28,800 jobs added. Office-using employment gained 5,200 new jobs YOY, a 1.3% rise. DEMAND Orlando recorded 714,000 square feet (sf) of leasing activity in the second quarter, bringing the year-to-date (YTD) total to 1.2 million square feet (msf). Quarterly activity was up slightly YOY by 1.3% and up 54.8% from the previous quarter. Suburban submarkets significantly outperformed downtown with 86.3% of leasing activity in Orlando occurring outside of the urban core for Q2. This was bolstered by the Lake Mary/Heathrow submarket, which recorded Orlando’s first transaction above 150,000 sf in 13 quarters. Leasing activity in Class A assets accounted for 59.6% of the YTD total as tenants continued to target premium and amenity rich space to motivate return-to-office initiatives. SUPPLY Overall vacancy increased 120 bps YOY to 14.4%, up 20 bps from the previous quarter after remaining stable for much of 2022. The Orlando market recorded a single delivery in Q2 for the University/ Research Park submarket. The 68,700-sf building at 12700 Ingenuity Drive was occupied by Astronics Test Systems, resulting in 17,900 sf of positive absorption as the tenant relocated from a smaller space in the same submarket. The next largest occupancy of the quarter was Federal Emergency Management Agency’s (FEMA) move into a 60,000-sf Lake Mary building at 701 International Parkway. Meanwhile, Lake Mary also housed the largest new vacancy of Q2 as BNY Mellon vacated its space at 100 Colonial Center Parkway. The company is relocating in the same market, with a deal signed in June for nearly 200,000 sf at 600 Colonial Center Parkway, estimated to be fully moved in by fourth quarter. PRICING Asking rate averages rose 2.9% YOY to $26.46 per square foot (psf) full service gross (FSG). Rents in Class A assets closed out the quarter at $28.60 psf FSG overall, up 1.6% YOY. Continued leasing of premium Class A space flattened YOY growth, as higher valued asking rents came off the market. Landlords appeared to hold firm or even push asking rates upward to combat increasing operating costs.

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ECONOMIC INDICATORS Q2 2023

1.4M Orlando Employment

YoY

Chg

12-Mo. Forecast

2.6%

Orlando Unemployment Rate

3.6% Related Insights Cushman & Wakefield Research reports analyze economic and commercial real estate activity including supply, demand and pricing trends at the statewide, market and submarket levels. U.S. Unemployment Rate -1,500 -1,000 Thousands -500 0 500 1,000 2019 2020 2021 2022 2023 YTD Net Absorption, SF Construction Completions, SF $20 $21 $22 $23 $24 $25 $26 $27 2019 SPACE DEMAND / DELIVERIES Source: BLS, FL Dept. Economic OPP

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OVERALL VACANCY & ASKING RENT

20%

16%

12%

2020

8%

2021

Asking Rent, $ PSF

4%

2022

0%

2023

Vacancy Rate

Migration Hot Spot

Historic Population

#2 Population Growth by Percentage

7.9M

2.1M

3.0 %

8M

7.3M

2.05M

2.5 %

6.2M

6M

5.0M

2.0 %

2.00M

1.5 %

4M

3.3M

2.8M

2.8M

2.7M

2.4M

1.95M

2.3M

1.0 %

2M

0.5 %

1.90M

1.9M

0.0 %

0

Austin, TX

Orlando, FL

Dallas, TX

San Antonio,

Tampa, FL

Charlotte, NC

Houston, TX

Phoenix, AZ

Atlanta, GA

Las Vergas,

2018

2019

2020

2021

2022

2023

#7 IN THE NATION FOR NET MIGRATION FROM 2017 – 2022

600k

486k

400k

276k

271k

269k

267k

229k

224k

175k

166k

200k

149k

130k

127k

123k

112k

86k

62k

San Francisco, CA

Los Angeles, CA

Chicago, IL

New York, NY

0

Dallas, TX

Phoenix, AZ

Tampa, FL

Austin, TX

Houston, TX

Atlanta, GA

Orlando, FL

Charlotte, NC

San Antonio, TX

Jacksonville, FL

North Port, FL

Raleigh, NC

Nashville, TN

Lakeland, FL

South Florida, FL

Seattle, WA

−200k

−158k

−343k

−400k

−600k

−556k

−594k

Cushman & Wakefield | Why Orlando

Net Migration (2017 – 2022)

Projected Net Migration (2023 – 2026)

Industry Diversity

340k + Total Businesses

63.1% White Collar

18.7% Blue Collar

18.1% Services

Business Summary BY NAICS (%) Orlando U.S.

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0.0 %

5.0 %

10.0 %

15.0 %

20.0 %

25.0 %

Leisure & Hospitality

#1 #2 #3 #4 #5

Professional & Business Services

Education & Health Services

Government

Financial Activities

Construction

Trade, Transportation, and Utilities

Manufacturing

Other Services

Information

Cushman & Wakefield | Why Orlando

Skilled & Growing Workforce

Unemployment Rate

Labor Force

1.45k

1.4k

10.0 %

1.4k

ORLANDO IS AMONG The Top Ten Metro Areas With the Lowest Unemployment Rates in the United States. U.S. Bureau of Labor Statistics

8.0 %

1.35k

7.3 %

1.3k

6.0 %

1.25k

4.0 %

2.9 %

1.2k

1.2k

2.0 %

1.15k

1.1k

IN 2022, Florida Ranked #1 For Talent Attraction

0.0 %

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

*Values are Annual Averages

*Values are Annual Averages. Peaked in May 2020 at 22.1%

Nearly 41% OF THE TOTAL POPULATION IS 25–54 YEARS OLD. ESRI

1.4M Employed Workers

+14.5% Education Attainment

+4.3% Job Growth

+12.2% Skilled Job Growth

20 Skilled Job Openings

2017–2021

Per 1,000

ESRI

Cushman & Wakefield | Why Orlando

Tourism

ORLANDO NAMED

50.2M Orlando International Airport Volume

1.4M Orlando County Convention Center

129.5k

THEME PARK CAPITAL OF THE WORLD Disney, Universal and SeaWorld's theme parks combined for 73M+ attendance in 2022 UP 25% YOY

The Largest U.S. Travel & Tourism City Destination for 2022 USA TODAY

Hotel Rooms

2022 YEAR END

2022 YEAR END

ORLANDO'S MASSIVE TOURISM PRESENCE BRINGS BUSINESS INTEREST, WITH NEW-TO-MARKET COMPANIES BOTH NATIONALLY AND INTERNATIONALLY IN THE LAST 12 MONTHS

7 of the Nation's Top 10 THEME PARKS BY ANNUAL ATTENDANCE

74M VISITORS IN 2022

#1

#10

#3

#7

#4

#6

#5

25% YOY GROWTH

Brightline's Imminent Opening Offers Additional Access from Florida's Southern Markets

Cushman & Wakefield | Why Orlando

Work Life Balance

Vibrant Night Life

DOWNTOWN ORLANDO

DISNEY SPRINGS

Ranked 40th Best City in the World & 10th in the U.S. Resonance "Best Cities"

THEME PARKS 7 MAJOR PARKS

UNIVERSAL CITYWALK

Five Professional Sports Teams

82°- 64° average annual temperature

OUTDOOR ACTIVITIES

Orlando City SC

Orlando Solar Bears

Orlando Guardians

Orlando Pride

Orlando Magic

SOCCER

HOCKEY

FOOTBALL

SOCCER

BASKETBALL

golfing

fishing

boating

Cushman & Wakefield | Why Orlando

Education

#1 Best College City in America for

Top Colleges BY ENROLLMENT 2022

Mid-Size Cities & 3 rd Overall Nationally 2023 WalletHub Best College Town & City ranking

University of Central Florida 70,310 Valencia College 43,599 Full Sail University 25,622 Seminole State College 15,315 Florida Institute of Technology 7,830 Lake Sumpter State College 4,342 Rollins College 3,057 AdventHealth University 1,667 Florida Polytechnic Institute 1,563

25+ Educational Attainment 2022

UNIVERSITY OF CENTRAL FLORIDA 8th Most Innovative University in the Nation – U.S. News & World Report

11.8%

College of Business Named Among the Princeton Reviews List of "Best Business Schools for 2023" (list was not ranked)

22.8%

12.7%

>170k students attend one of the numerous, distinguished educational institutions in the Orlando area.

17.6%

ROLLINS COLLEGE Princeton Review recognized the Winter Park School as one of the nation's 50 "Best Valued" private colleges and universities.

21.5%

4.2%

6.1%

3.2%

Graduate/Professional Degree

High School Graduate

Bachelor's Degree

GED/Alternative Credit

35+ local colleges and higher education institutions preparing graduates with market-demand skills

Associate Degree

9th-12th Grade, No Diploma

Some College, No Degree

Less than 9th Grade

Cushman & Wakefield | Why Orlando

Logistics & Transportation

Map Layer Options

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Rail & Intermodal

Ports

Highways

Metropolitan Areas

Major Airports

Map Legend

Rail Brightline's Orlando opening is imminent, with ticket sales currently available for September 2023. The high speed train will connect Orlando to Florida's southern markets. Orlando's SunRail is a commuter rail service with 16 stations across greater Orlando. Sky 2 International Airports - Orlando International Airport (MCO) and Orlando Sanford International Airport (SFB). MCO recorded nearly 50.2 million travelers throughout 2022, a 24% increase annually. MCO's Terminal C expansion was finished in 2022, greatly improving the airport's ability to handle the surge of traffic post travel shutdown.

Sea 60 minutes to Port Canaveral.

Close access to deep water container port and cruise ship access.

Land Orlando's central location supports logistical distribution advantages to service the entire state. I-4's Ultimate Improvement Project nears completion, with I-4 Express now open.

Cushman & Wakefield | Why Orlando

New-to-Market Tenant Demand

Astronics

Checkr

Boston

New York

Chicago

CMG Cleantech

Maryland

San Francisco

Paris

Denver

Dnata

Irvine

Dubai

Optivor

Spartan

Orlando Continues to Draw a Wide Array of New-To-Market Companies Both Nationally and Internationally

VillageMD

Cushman & Wakefield | Why Orlando

New Development

S O C I E T Y O R L A N D O

TOWN CENTER

Over $2 Billion IN NEW DEVELOPMENT

$70 Million INVESTMENT (PHASE 1 COMPLETED IN 2016)

$85 Million INVESTMENT

900 KSF OFFICE / CREATIVE

41 KSF COMMERCIAL

68 AC MIXED-USE

28 STORY TOWER ONE + 17 STORY TOWER TWO

4 MSF COMMERCIAL RETAIL HOSPITALITY

+5 KSF MEETING & EVENT SPACE

436KSF 4 OFFICE BUILDINGS 120k SF PROPOSED

800 KSF HIGHER EDUCATION

867 RESIDENTIAL UNITS

166 KSF ORLANDO STUDIO + 2k Game Developers PROFESSIONALS AND STUDENTS

200–Room DUAL-BRANDED COURTYARD BY MARRIOTT & RESIDENCE INN

Q3 23 DELIVERY

100 KSF RETAIL / COMMERCIAL

828 SPACE PARK GARAGE

2,000+ RESIDENTIAL UNITS

153 KSF CLASS A MEDICAL OFFICE

279 KSF OFFICE DELIVERING Q3 23

Three Phase MULTIFAMILY DEVELOPMENT IN THE HEART OF CBD

Cushman & Wakefield | Why Orlando

Office Market Snapshot Q2 2023 36.0 MSF Orlando Inventory

CLASS A 21.4 MSF

CLASS B 14.6 MSF

Class A Spotlight

SUPPLY & DEMAND

ORLANDO CBD

3.0M

7.2 MSF Inventory

15.0% Overall Vacancy

$29.38 Overall Rent (FS/SF)

2.0M

1.0M

AIRPORT / LAKE NONA

0.0M

1.3 MSF Inventory

12.7% Overall Vacancy

$33.27 Overall Rent (FS/SF)

−1.0M

2018

2019

2020

2021

2022

2023 YTD

LAKE MARY / HEATHROW

Leasing Activity

Construction Completions

Overall Absorption

4.5 MSF Inventory

19.9% Overall Vacancy

$27.06 Overall Rent (FS/SF)

OVERALL RENTAL & VACANCY RATES

MAITLAND 18.8% Overall Vacancy

5.6 MSF Inventory

$27.80 Overall Rent (FS/SF)

$ 25

14 %

12 %

$ 20

10 %

$ 15

TOURIST CORRIDOR / CELEBRATION 6.2 MSF Inventory 12.8% Overall Vacancy $30.19 Overall Rent (FS/SF) UNIVERSITY / RESEARCH PARK 4.1 MSF Inventory 12.1% Direct Vacancy $27.68 Overall Rent (FS/SF)

8 %

6 %

$ 10

4 %

$ 5

2 %

$ 0

0 %

2018

2019

2020

2021

2022

2023 YTD

Overall Rental Rate

Overall Vacancy

Cushman & Wakefield | Why Orlando

Industrial Market Snapshot Q2 2023

Submarket Spotlight 13.2 MSF Manufacturing 12.2 MSF Office Services/Flex 89.1 MSF Warehouse/Distribution

SUPPLY & DEMAND

12.0M

10.0M

8.0M

6.0M

4.0M

2.0M

AIRPORT / LAKE NONA

0.0M

2018

2019

2020

2021

2022

2023 YTD

22.0 MSF Inventory

1.9% Overall Vacancy

$8.63 W/D Rent (NNN/SF)

Leasing Activity

Construction Completions

Overall Absorption

LAKE MARY / SANFORD

8.3 MSF Inventory

3.1% Overall Vacancy

$9.06 W/D Rent (NNN/SF)

OVERALL RENTAL & VACANCY RATES

ORLANDO CENTRAL PARK

$ 12

8 %

$ 10

22.0 MSF Inventory

3.2% Overall Vacancy

$9.20 W/D Rent (NNN/SF)

6 %

$ 8

$ 6

4 %

REGENCY / TURNPIKE

$ 4

2 %

16.9 MSF Inventory

1.7% Overall Vacancy

$8.88 W/D Rent (NNN/SF)

$ 2

$ 0

0 %

2018

2019

2020

2021

2022

2023 YTD

SILVER STAR / APOPKA

Overall Rental Rate

Overall Vacancy

16.7 MSF Inventory

5.4% Overall Vacancy

$9.33 W/D Rent (NNN/SF)

Cushman & Wakefield | Why Orlando

EFFECTIVE RENT VS STABILIZED OCCUPANCY RATE Multifamily Market Snapshot Q2 2023 195,000 UNITS Orlando Inventory

ABSORPTION VS COMPLETIONS

90.9% STABILIZED OCCUPANCY RATE Excludes Properties Still In Their Initial Lease-Up Period

$ 2.0k

15.0k

94 %

$ 1.5k

92 %

10.0k

$ 1.0k

Effective Rents Increased 39% Over the Past Five Years ENDING Q2 2023 AT $1,806 PER UNIT

90 %

5.0k

$ 0.5k

88 %

0.0k

Over 24,300 Units Under Construction AT MIDYEAR 2023

2018

2019

2020

2021

2022

2023 YTD

$ 0.0k

2018

2019

2020

2021

2022

2023 YTD

Effective Rent Per Unit

Stabilized Occupancy Rate

Construction Completions

Overall Net Absorption

43,106 Units Delivered SINCE Q2 2018

Over $22.7 Billion In Sales Over The Past 5 Years WITH 2021 ACCOUNTING FOR $7.2 BILLION

Cushman & Wakefield | Why Orlando

CoStar Data Depicted

Retail Market Snapshot 154.0 MSF Total Retail

Q2 2023

SUPPLY & DEMAND

Product Type Spotlight

2M

4

1.5M

MALLS

1M

13.8 MSF Inventory

7.6% Overall Vacancy

$38.07 Overall Rent (NNN)

LAKE

SEMINOLE

500k

POWER CENTERS

0

2018

2019

2020

2021

2022

2023 YTD

10.5 MSF Inventory

3.9% Overall Vacancy

$28.23 Overall Rent (NNN)

ORANGE

Construction Completions

Direct Absorption

NEIGHBORHOOD CENTERS

47.1 MSF Inventory

5.7% Overall Vacancy

$26.53 Overall Rent (NNN)

OVERALL RENTAL & VACANCY RATES

4

OSCEOLA

STRIP CENTERS

$ 30

5 %

$ 25

9.3 MSF Inventory

2.8% Overall Vacancy

$26.17 Overall Rent (NNN)

4 %

$ 20

3 %

$ 15

GENERAL RETAIL

2 %

$ 10

1 %

69.9 MSF Inventory

2.0% Overall Vacancy

$34.96 Overall Rent (NNN)

$ 5

$ 0

0 %

2018

2019

2020

2021

2022

2023 YTD

OTHER

Overall Rental Rate

Overall Vacancy

3.4 MSF Inventory

1.6% Overall Vacancy

$27.80 Overall Rent (NNN)

Cushman & Wakefield | Why Orlando

CoStar Data Depicted

Market Leads

SOURCES

TownCharts univstats.com U.S. Census Bureau U.S. Bureau of Labor Statistics Visit Orlando Wallet Hub WorldsBestCities.com WUSF News

Florida Review Lightcast.io MacroTrends.net Moody's Analytics Niche 2020 OrlandoAirports.net Orlando Business Journal Tax Foundation, 2021

aaroads.com Business.Orlando.org Chief Executive Magazine,

2022 Biz2Credit CollegeEvaluator CoStar Enterprise Florida ESRI flgov.com

Authors

©2023 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources believed to be reliable. The information may contain errors or omissions and is presented without any warranty or representation as to its accuracy. Cushman & Wakefield does not claim any ownership rights to the corporate logos featured in Why Orlando and their usage in this research report is strictly for illustrative and informative purposes. Why Orlando is intended for limited distribution.