Important Highlights:

Tampa Bay:

• Unemployment rate in Tampa Bay decreased to 4.2% in February 2021, compared to the end of 4th Quarter 2020, which was approx. 5.9%. Non-agricultural employment sector decreased and Financial Activities, Professional & Business Services and Construction were amongst the top sectors which gained jobs.
• “The annual Cost of Living Index reported the Tampa metro area as one of the most affordable metros in the US. With a cost of living lower than the national average, Tampa Bay remains to be an attractive place for new residents and companies looking to relocate.”
• Zillow listed Tampa amongst five markets it expects to be the hottest in 2021.
• Class A vacancy increased to approx. 14% by the end of 1st quarter and Class B vacancy fell to 15%.

Office Market:

• New lease demand was up by approx. 120% in Hillsborough and Pinellas County.
• Office supply increased due to large sublease blocks on the market and over 570,000 square feet of new construction deliveries by Heights Union West (Tampa Heights), Sparkman Wharf (Channelside) and Renaissance Center VII (Northwest Tampa). 

Let’s Talk Rent Numbers:

Construction Highlights:

• New construction Landlord’s adjusted asking rents which impacted the direct asking rents across the Tampa Bay Market.
• SkyCenter One, 270,000 square feet of new office space building under construction at the Tampa International Airport, 384,000 square feet Water Street project in Downtown Tampa and the 384,000 square feet Midtown project, just North of the Westshore submarket, continue to announce national Tenants and are slated to be completed by end of 2021.

2021 2nd Quarter Forecast:

• Total vacancy is expected to rise as current construction projects are slated to deliver in either Q2 or Q3 of this year
• Continued relocation and expansion of companies into Tampa Bay do to our more cost-effective real estate options, Florida’s favorable regulations for business and as always, the great weather .
• Continued increase in sublease space, especially larger block 20,000 RSF and up hitting the market as the work from home trend continues and companies evaluate their office space footprint.
• < 5,000 RSF subleases will be subleased by companies who want to leverage the market and thus will move quicker than larger spaces.
• Companies will be rolling out transition plans back into the office fulltime or a flex schedule. Privately held companies may transition faster than publicly traded due to the amount of decision makers involved and size of the company.

What does this mean for Tenants?

• Evaluate your current office space floor plan and if employees wish to work remotely or in the office with what’s best for the company. Potentially moving to a flex schedule of part-time working from home and in the office can provide an alternative solution to maintain office culture while maintaining the benefits of working from home.
• If minimizing your office footprint is the right decision there are two solutions: sublease the entire or a portion of their suite. Both scenarios will minimize the monthly financial burden
• If evaluating relocating your office, take advantage of the short term and lower monthly rent of sublease office space on the market

What does this mean for Landlords?

• Adjusting asking rents to stay competitive in the market
• Consider providing more flexibility in lease term and concessions to accomplish deals
• Ensure Tenant’s have strong financials with low debt to income ratios when signing new leases