Why Orlando’s value-add opportunities continue to attract top real estate investors.
The thriving market in Orlando continues to draw in real estate investors as developers continue to break ground on retail property projects. According to commercial real estate investment firm Marcus & Millichap, accelerating job growth has lifted retail spending in Orlando metro, supporting occupancy in shopping centers to levels not seen in nearly a decade.
Value-add opportunities within the Orlando shopping center environment have been providing the right under performing real estate assets for gathering investor interest throughout 2015. Viking Partners, LLC., a real estate investment firm, recently had taken over ownership of a 25-year-old shopping center which features an Aldi and a Bealls Outlet in southwest Orlando.
Southwest Orlando’s Southchase Village
The Cincinnati-based firm purchased the center for $21 million on September 28 from Southchase Investors LLC., an entity related to Equus Capital Partners Ltd., Orange County. The 229,410-square-foot shopping center is located at 12381 South Orange Blossom Trail.
Developers in Orlando are poised to deliver 900,000 square feet of retail space this year, compared with 480,000 square feet in 2014. The Orlando Airport, Kissimmee and South Outlier submarkets will receive nearly 600,000 square feet of the total in 2015. The Crosslands Shopping Center in Kissimmee is one of the largest regional retail projects to be completed in recent years.
Developers are in the final stages of the Crosslands in Kissimmee. The complex will consist of more than 400,000 square feet once completed. Some of the signed tenants include PetSmart and Marshalls. Another retail development in the area is the Lake Nona Town Center. The Lake Nona Town Center is part of a 7,000-acre community of Lake Nona. The center is currently under construction and is expected to include medical tenants, hospitality and office buildings.
What Is A Value-Add Real Estate Opportunity?
A value-add real estate opportunity is a type of strategy in which a real estate investor can solve problems. For example, many issues with a shopping center could be present in a value-add real estate opportunity that may demand attention to a new owner. Further renovations and placing new tenants into a shopping center center to revitalize and update it may also be required.
Value-add real estate acquisitions ultimately aim to improve their value and increase its cash flow. For those real estate investors who target these type of acquisitions, they expect to earn higher returns versus more stabilized, normal properties. Expert knowledge is required for this type of investment. The investor should be able to identify the areas of the property where value can be added. Some of these value-add components of a property deal may include repairs, renovations, subdivisions, vacancy lease ups and more. The analysis is critical.
The Orlando metro continues to remain a primary area of focus for real estate investors. Marcus & Millichap states that strong operations and relatively high first-year yields are increasing investor interest in Orlando metro, and a high portion of 1031-exchanges are occurring. There is a rich inventory in Orange County which is attractive for investors who are in search of value-add real estate opportunities and properties that offer a steady growth in cash flows.
If you are interested in executing a value-add real estate investment strategy, Retail Solutions Advisors specializes in commercial real estate leasing and management throughout Florida. With over 100 years of experience, our team is equipped with unparalleled knowledge of value-add opportunities in Orlando. If you’d like more information, feel free to call us at 863.646.4567.