It’s safe to say that the Tampa Bay office market hit a new record with the longest vacancy rate since 2008. The uphill climb of the market has continued as Tenants take a big gulp at climbing rate increases and Landlords are in control as vacancy decreases.
Tenants who have been locked into a lease for the past five years are experiencing sticker shock when reviewing available office option on the market. As rates increased in Class A offices in Westshore and Downtown Tampa, Tenants have moved into Class B options and outside of the core Westshore and Downtown Tampa area for financial refuge. The supply and demand curve has continued to be skewed towards the Landlord, therefore minimizing options for Tenants – especially under 3,000 square feet footprint.
A lot of chatter has been happening since the Midtown Office/Retail project was announced on the corner of North Dale Mabry and Gray Street, just north of Kennedy Boulevard. Sparkman’s Wharf in Channelside with updated retail and restaurants, mixed office and retail Water Street project in Downtown Tampa broke ground. Developers and Landlords are responding to the demand for more office space and those are just three of the largest projects that are on their way.
The Tampa market has experienced an approximately 3% increase in suburban areas and approximately 4% rate increase in City core Year To Date for Class A office space since Third Quarter 2017.
Below is the average asking rent for Class A full service office space:
- Westshore: $33.20/sq. ft.
- Downtown Tampa: $30.09/sq. ft.
- I-75 Corridor: $25.89/sq. ft.
- Downtown St. Petersburg: $29.06/sq. ft.
What does this mean for Tenants?
- Ensure enough lead time to view options on the market. If you have 5-20 employees and typically waited three to four months prior to relocation for a new office space, six months would now be a better margin. For larger Tenants, allow for 12 months or more.
- Your Broker can’t control what the market is baring as average rates. This could mean moving into a different quality of office space, relocating to a less dynamic submarket or minimizing your foot print to meet your budget requirements.
- Have one or two backup options when pursuing your new office space. This is one of the most dynamic markets we have experienced, so strategize accordingly.
Now is the time to have a Tenant Broker advocating on your behalf. The market is dynamic, availabilities are quickly shifting and having a Broker who has their finger on the market pulse and long standing relationships with Brokers will get you the best terms as possible.