Important Highlights:
Tampa Bay:
- Office vacancy rates increased in Hillsborough County and Pinellas County, both counties experienced overall growth rents of +/- 6% Year Over Year. Both Class A and Class B building’s rents grew.
- The unemployment rate in Tampa Bay increased to 4.6% in May 2021, compared to the end of 1st Quarter 2021, which was approx. 4.2%. Non-agricultural employment sector increased and Financial Activities, Professional & Business Services, and Construction were amongst the top sectors which gained jobs.
- Florida ranked in the number one spot for net migration for the fifth consecutive year. According to data from the U.S. Census; Florida saw the largest gain of residents between July 2019 and July 2020 with 252,717 new residents.
- Tampa ranked ninth in tech talent growth over a five-year span, increasing 23.5% from 2016 – 2020 in U.S. markets. Meaning Tampa acted as a job creator, supplying employment to tech workers that we’re unable to find employment in their metro of origin.
Office Market:
- Even with a significant amount of sublease space on the market, absorption trended positive for Q2.
- Office supply increased to historic levels due to the approximate 500,000 square feet of new construction delivered by SkyCenter One, Midtown West, and The Lofts at Midtown.
Let’s Talk Rent Numbers:
| Submarket | Overall Average Asking Rent-All Classes | Overall Asking Rent Class A |
| Westshore | $34.11 Sq. Ft. | $37.95 Sq. Ft. |
| Downtown Tampa | $36.24 Sq. Ft. | $37.98 Sq. Ft. |
| Northwest Tampa | $24.02 Sq. Ft. | $26.97 Sq. Ft. |
| South Tampa | $27.48 Sq. Ft. | N/A |
| I-75 Corridor | $25.26 Sq. Ft. | $28.01 Sq. Ft. |
| Downtown St. Petersburg | $30.87 Sq. Ft. | $31.73 Sq. Ft. |
Construction Highlights:
- SkyCenter One the 497,787 s.f. The building was completed this quarter at, Midtown West and The Lofts at MidtownMidtown West
- In Hillsborough County, there is new construction at 1001 Water Street in the CBD, Midtown Two in Westshore, and an office building in the University of South Florida Research Park in the Northwest submarket. These are expected to deliver by the end of the year.
2021 3rd Quarter Forecast:
- Total vacancy is expected to rise as current construction projects are slated to deliver by year’s end.
- Tenants proceed to bring their teams back to the office as flex schedules are being tested with a hybrid of working from home and in the office.
- Continuing expansion and relocation by companies from out of state moving to Tampa Bay for our business-friendly environment
What does this mean for Tenants?
- Tampa Bay is unlike other significant markets such as New York, Los Angeles and Chicago. Although Landlords are being more flexible with the economics of leases, vacancy rates do not compare with other significant markets around the US. Landlords across the country do not have the same motivation to fill vacancies in Tampa Bay as they might be in other parts of the country.
- Leverage market conditions by taking advantage of available sublease space which can provide more competitive rates, shorter-term and furniture
- Evaluate your current office space. If you realize there are inefficiencies, you and #1-sublease a portion if you there a long term remaining on the lease or #2-when your lease ends, move to a more efficient space.
What does this mean for Landlords?
- New lease demand grew 6.0 percent from the 1st quarter of 2021. More Tenants expanding in the market and relocating to Tampa Bay from out of state.
- Adjusting asking rent as a competitive advantage over Landlord’s who have to maintain their face rates
- Consider providing more flexible lease terms and concessions, such a rent abatement to accomplish deals
- Ensure Tenant’s have strong financials with low debt to income ratios when signing new leases
- Start marketing available space 6 months in advance for under 5,000 SF and 9 months + for over 5,000 SF that is coming available