Is Class A office in Orlando a buy at 6.0–7.0% cap rates?
The answer is yes with a carefully bounded thesis. Class A office in Maitland Center and Lake Mary/Heathrow at 6.0–6.5% cap rates is defensible for investors with a 5–10 year hold horizon and a return requirement that accepts income return over appreciation. The tenant base in these nodes — financial services, insurance, legal, and regional headquarters — has demonstrated flight-to-quality behavior throughout the downcycle, actively vacating Class B space and absorbing Class A at asking rents. The structural demand floor is Orlando's population growth — 1,500 new residents per week implies approximately 400–500 new professional-services workers per week entering the metro, which is consistent demand for Class A space that Maitland and Lake Mary specifically capture. The risk: Class A cap rates at 6.0–6.5% are still 150–250 bps wide of pre-pandemic peaks, meaning no near-term compression play. The return is an income return of 6.0–6.5% plus 3–4% annual NOI growth from escalations — roughly 9–10% unlevered total return. On 65% leverage at current rates, the levered return is 10–13%. That is acceptable but not exceptional. The thesis requires patience, not a value-creation sprint.