A German energy conglomerate is swapping out its office hubs in Orlando, Florida, as part of a relocation plan that marks one of the region's largest leases on record.
Siemens Energy finalized a deal for about 242,760 square feet in the Lake Nona Town Center, a decision that's set to uproot its longtime hub near the University of Central Florida once the company officially takes over its new space sometime in 2027. The deal, finalized earlier this month, is the largest new lease to be signed across the Orlando office market since early 2015, when Northrop Grumman took 275,000 square feet in nearby Melbourne, Florida, according to CoStar data.
Once realized, the Siemens division will occupy seven of the eight floors at the 6876 Marwick Lane building, which totals just shy of 279,350 square feet.
“Our technologies and services are in high demand throughout North America, and this new campus will help facilitate our growth," a company spokesperson said in a statement to CoStar News. They added that about 3,000 of Siemens Energy's 13,000-person workforce is based around its Orlando hub, a ratio the company is planning to boost as it prepares to hire hundreds more in the region throughout the next few years.
The relocation will be the end of an era for Siemens' soon-to-be-former office at 4400 Alafaya Trail, where it has been for the past couple of decades. The company occupies the entirety of the 255,677-square-foot building, and while the move to the Lake Nona campus will be slightly smaller, it provides a more "modern workplace environment, including flexible workspaces, improved collaboration zones and meeting rooms, enhanced technology and better amenities in a more sustainable and energy-efficient building," the spokesperson said.
The deal marks a success for landlord Tavistock Development Co., which broke ground on the project in the earlier years of the pandemic and finished construction in 2023.
While leasing across the United States is still just a fraction of what it was prior to the pandemic, tenants shopping around for space are prioritizing properties with a full roster of attractive amenities and landlords in stable financial positions.
Widespread demand for top-tier space means that vacancy rates for premier office properties are substantially lower than rates reported across older, less desirable counterparts. And with new office construction at historic lows, that top-shelf demand is often landing at renovated or soon-to-be-repositioned buildings that most closely resemble recently completed ones in the best locations.
Best in class
Buildings at the highest end of the office-quality spectrum are landing the largest leases and exceed 90% of pre-pandemic use on peak days, according to a midyear report from building security firm Kastle Systems.
Yet with office construction levels at historic lows, coupled with a shriveling pool of available space, many tenants on the fence about making changes to their real estate portfolio are kicking into gear in order to plant a stake in the properties they want rather than settle for a subpar option.
That frenzy among tenants has been building since the beginning of the year, triggering a wave of relocations similar to Siemens Energy and fueling a level of competition landlords haven't seen since the years leading up to the pandemic.
While that has especially been the case for premium office properties in markets such as New York City, San Francisco and Atlanta, Orlando is a bit of a different — and some may say sleepier — arena.
The region's office space has long been overshadowed by flashier real estate sectors such as hospitality and retail, and tenants have often opted for flashier Florida cities such as Miami or Tampa.
On the whole, Orlando's office market had been uniquely resilient to the impacts of the pandemic, yet a slowdown in leasing and influx of recently completed developments collided in 2024 to create the market's weakest year for demand in about 25 years, according to CoStar analysis.
The office vacancy rate has climbed to nearly 10%, and while that's considerably lower than the national average of 14%, it still underscores the challenges the Orlando area faces as both the number of leases and total leasing volume have sunk compared to their pre-pandemic annual averages.