Walt Disney Co. halted plans to build a $1 billion office campus in Orlando, Florida, an economic setback to the city that's home to the company's largest theme park operations and the latest sign of an increasingly fraying relationship between the entertainment giant and the state.
Disney revealed it nixed its plans to build the campus and relocate roughly 2,000 jobs to Lake Nona, a master-planned community in southeast Orlando. The decision comes as Disney and the state of Florida have been publicly fighting following state lawmakers passing a law in 2022 to restrict school teaching on gender and sexuality that Disney opposed.
The decision also arrives after millions of dollars had been spent on residential and commercial real estate speculation around Lake Nona in anticipation of the completion of Disney's project. In September 2021, Disney spent roughly $46 million on 60 acres for the future Lake Nona campus after announcing plans in July of that year to relocate to Lake Nona over the following 18 months.
A source with knowledge of Disney's Lake Nona property told CoStar News that the company is considering its next steps for the real estate. A representative for Tavistock, Lake Nona's developer, directed all questions to Disney.
"Given the considerable changes that have occurred since the announcement of this project, including new leadership and changing business conditions, we have decided not to move forward with construction of the campus," Josh D’Amaro, chairman of Disney’s parks, experiences and products division, said in an internal memo the company provided to CoStar News. "This was not an easy decision to make, but I believe it is the right one. As a result, we will no longer be asking our employees to relocate. For those who have already moved, we will talk to you individually about your situation, including the possibility of moving you back."
He added that "I remain optimistic about the direction of our Walt Disney World business. We have plans to invest $17 billion and create 13,000 jobs over the next 10 years. I hope we’re able to do so. "
Construction, Investment
A surge of construction and real estate investment commenced after it was revealed Disney intended to relocate jobs to Lake Nona, a 17-square-mile project near Orlando International Airport.
For example, more than 2,600 apartment units kicked off construction in the Lake Nona multifamily market between 2021-2022, which is 32% of Lake Nona's current inventory, according to CoStar data.
With all the construction, Lake Nona's apartment vacancy has swelled to 16.5%, nearly double the Orlando-area average, according to CoStar data.
Lisa McNatt, director of market analytics for CoStar Group in Orlando, said Disney's campus would have been transformational for Lake Nona and would have resulted in a strong uptick in high-income jobs that may have benefited Orlando in general.
Even so, Lake Nona is still home to large companies that have made investments in the area. In 2020, auditing giant KPMG opened a $450 million training center in Lake Nona on 55 acres. The community also is known for its health care and wellness operations.
"Regardless of whether this was a cost-cutting measure or motivated by recent events, it's going to leave a void in the market," McNatt said. "It won't diminish Lake Nona in any way, but it means that the area's primary developer will lose some degree of control over a prime parcel very close to its carefully curated town center."