Month: November 2019

• Unemployment rate in Tampa/Hillsborough County fell by 20 basis points (bps) over the past twelve months to 3.4%
• Tampa Bay’s economy accelerated over the past year, adding 22,140 jobs for an annual growth rate of 2.0%.
• Overall office vacancy rate in Tampa/Hillsborough County closed out the first half of 2019 at 12.8%, a 200 bps increase when compared to this time last year.
• Tampa Bay leads the nation with one of the lowest cost of living

Second Quarter

Important Highlights

• Class A rent increased approx. 2% a square foot, pushing the average rent across the market over $30.00 a square foot.

Let’s Talk Rent Numbers:

Third Quarter:

Important Highlights:

• 3^rd quarter market rent increased by 3.4% per square foot full service rent
• Central Business District and Westshore submarkets rose 3.1% to $32.77 and 10.7% to $35.99 per square foot
• The CBD submarket has the most occupancy gains, which ended the third quarter at 10.1%
• Westshore rent rose to its highest level ever rent price for submarket
• 1.6 million square feet was leased within suburban markets holding the majority of the transactions
• Westshore and some of the Suburban markets experienced large space back on the market with large Tenants such a Laser Spine and Coca-Cola moving out.

 Let’s Talk Rent Numbers:

Construction Highlights: More Cranes in the Skyline

The second quarter marked the most significant office construction in over a decade with approximately 1.4 million square feet under construction, marking the most office construction the market experienced since the second quarter of 2008.

• The Central Business District (CBD) led with 825,000 sf under construction, the highest level since the early 1990’s.
• Heights Union construction is underway with pre-leasing activity with a 75,000-sf lease to Axogen in the first building and a 50,000-sf lease by WeWork in the second building. Both buildings will be completed by mid-2020.
• The 150,000 sf office portion of the mixed-used development Sparkman Wharf is slated for completion in mid-2020.
• 1001 Water Street was underway, a 380,000-sf free-standing office building located in multi-billion dollar mixed-used project. It was the second office building under construction in the project, slated for mid-2021 completion.
• Midtown One, an office building in a larger mixed-use project broke ground in the second quarter.
• Phase One, slated to be completed before the 2021 Super Bowl in Tampa, will comprise retail, including a Whole Foods, a hotel, multi-family apartments, parking garages, and a 152,000-sf speculative office building.
• Renaissance VII, a 115,000-sf build-to-suit for Wellcare in the Northwest submarket was completed

2019 4^th Quarter Forecast:

The shortage of available space combined with business growth is expected to continue to drive vacancy down in the Class A and B space. Companies outside of Tampa Bay and around Florida and the country will continue to target Tampa Bay for as they identify cities to expand into because of Tampa Bay’s opportunity for small to large growing companies. Tenants may continue to leave Class A+ buildings as they experience sticker shock and into B buildings and other Sub-urban markets.

What does this mean for Tenants?

• Construction costs on 10,000 square feet and less often see an overage in cost.
• Parking in downtown Tampa still remains an issue with limited spots and cost is high.
• Landlord usually offers an average of one half month of free rent each year of the lease term.
• Usually, a five year lease receives an allowance for Tentant approved allowances, but does not cover the cost of the full build out. Most tenants pay to fund the rest of the cost, though owners will increase their contribution based on length of term and credit of tenant.
• Limited options of under 5,000 square feet of sublease office space. If you think a short term lease is required as you building, options such as Industrious provide great flexible alternatives as you grow
• Now is the time to have a Tenant Representative Broker advocating on your behalf. The market is dynamic, availability is 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 possible.

What does this mean for Landlords?

• Remaining in the driver seat as demand remains strong
• Influx of companies outside of Tampa Bay will continue interest leasing space. Ensure proper financials and company information is scrutinized before signing a lease.
• Due to economic growth, be cognizant of new residential, mortgage or lending companies with limited track record as they are usually impacted by market influx, ensuring low debt to income ratios when reviewing financials
• Updating interior and exterior finishes for Class B and C buildings is wise to attract and remain competitive for Tenants who are considering leaving Class A+ space due to rent hikes