Sweet by Holly, which made award-winning cupcakes and other desserts, took to social media last month to reveal it was closing in the face of what it said was an anticipated 60% rent spike.

The Waterford Lakes business is likely not the only Central Florida restaurant or retailer looking at higher bills coming from their landlords.

Shopping center rents in the region are growing faster than they typically have in the past, thanks to high occupancy and demand, said Justin Greider, a senior vice president and Florida retail lead at real estate firm JLL.

The average asking rental rate price in Orlando shopping centers for the first three months of this year was up 4.4% over six months ago, according to a report from JLL. Typically, rents will go up just 2% to 3% over an entire year, Greider said.

Average occupancy in Orlando was at 93.9% in the first quarter, a 0.3% decrease from the third quarter of 2022.

“There is a race between retailers to fill those final vacant spaces that are available,” Greider said.

Sweet by Holly was created by Hollis Wilder, a three-time winner of Food Network’s “Cupcake Wars.” On June 15, the business posted on Instagram it was closing after 15 years in Waterford Lakes.

“Thank you so much to the community for the support you have shown the past couple of days,” a sign on the door said.

Wilder could not be reached for comment.

Lynda Glinski, area general manager for Waterford Lakes Town Center and other retail centers, said in an email she was not able to discuss the details of Sweet by Holly’s closing.

“With our more than 100 national, regional and local retailers, Waterford Lakes Town Center continues to focus on providing the best possible experience for our guests with a mix of retail, dining and entertainment options,” Glinski wrote.

Waterford Lakes Town Center has brought in a wave of new businesses in recent years, including a Tiger Woods’ PopStroke attraction as well as a Nike Unite store, which replaced the Barnes & Noble which had been there for 21 years.

Greider said generally retail leases last five or 10 years with one or two five-year options.

That means businesses that opened about 15 years ago during the Great Recession could be reaching the end of their leases and facing a new deal in a different economy.

They would be entering a market where rent has been growing even faster than the historical average increase of 2% to 3% per year, particularly in the past three years, Greider said.

While high occupancy and rents can mean more options for consumers and more income for landlords, it can become a problem for small businesses that have a theoretical ceiling on how much sales they can generate, according to Greider.

In the case of a small bakery, Greider said there are only so many cupcakes it can make in a day.

“That’s where the challenges start to show up, in that it can make it more difficult to have the diversity and uniqueness, especially from smaller entrepreneurial operators because of the economics of their business,” Greider said.

San Diego-based restaurant analyst and consultant John Gordon said he advises clients that rent should not exceed 9% of sales.

“At any restaurant, be it Capital Grille or Olive Garden or any restaurant, the rent can be too high and that will throw the restaurant off and ultimately it’s a path to failure,” Gordon said.

In 2021, the National Restaurant Association reported about 90,000 restaurants or bars were still closed long-term or permanently with the coronavirus pandemic. But now demand for restaurants is returning, Gordon said, and landlords might have lost money during the pandemic when working with tenants.

“Considerable expansion” from coffee shops and quick-service restaurants is driving demand in Florida for small retail spaces, the report from JLL said.

Rent is a restaurant’s third largest expense, behind food and labor, Gordon said.

A tight labor market has already led to restaurants paying more in wages, and food costs have gone up in recent years.

“Restaurant operators are coming in with an already higher food cost and labor base than what they had in 2019 before the pandemic hit,” Gordon said. “Now they’ll have the certainty of higher rents, also, which is the third highest expense in the restaurant and a totally fixed expense that they have to pay no matter what. That will certainly make for lower margins both on the dollar and percentage of sales basis.”

The rent problem is one of supply and demand, Greider said.

“It’s migration and people coming here for vacation,” Greider said. “We’ve built almost no significant retail in Central Florida in almost 10 years.”