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What is the Average Cost of Office Space in Tampa?

In today’s economy it’s important to know the financial responsibilities you’ll have as you begin your Tampa Bay office space rental search. There are typically three different types of lease structures in commercial real estate. Knowing the characteristics ensure you know what to financially expect and budget for with your monthly office rent. 

The three typical types of leases that can be negotiated between a Tenant and a Landlord are Full Service Gross (FSG), Modified Gross (MG) and Triple Net (NNN). In some cities, one type of lease may be more prevalent than the others. In general, full service usually applies to a multiple-story office building, MG single-story office space or warehouse and NNN applies to retail space. Usually, the differences between the three lease types relates to how, and by whom, the “triple net” costs (taxes, insurance and common area maintenance (CAM)) are dealt with.

In Tampa Bay, a particular type of lease structure parallels a different type of space and location. For example, if you are leasing office space in Tampa in a large building on Westshore or Downtown Tampa, nine times out of ten you have a Full Service office lease. Compared to if you are leasing office space in Carrollwood you would come across more Modified Gross or Full Services leases.

For this year we have seen East Tampa as the most financially accessible office space rent at $26/SF with Northwest Tampa coming in at $27/SF. South Tampa rents averaged $37/SF and Westshore’s average rent cost went down from 2023 to just $34/SF. Office rent for Downtown Tampa increased slightly from last year at $41/SF to 2024 at $42/SF.

The type of building can also play a role but there are exceptions. If you relocate your office to a different type of building (from a multi-story office building to a single-story building) the kind of lease structure can vary.

Looking for customized estimate of what office space to rent in Tampa Bay would be for your company? Give Office Space Brokers a call at 813-289-3700.

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Third Quarter 2024 Tampa Bay Office Market Report and Forecast

3rd Quarter Tampa Bay Highlights:

Tampa Bay:

  • Although Tampa Bay’s unemployment rate increased to 3.4% in Q3, it still falls below the national rate of 4.1%
  • Inflation Rate is up is 3.1% as of Sep. 2024 and up 1.2% in past 12 months via the US Bureau Labor Statistics
  • A low cost of living and a strong job market helped to secure the 4th place ranking on the Wall Street Journal’s hottest job markets in the U.S. Another important aspect of Tampa Bay’s incredible economy that has led to new business relocation is the agreeable tax environment. 

Office Market:

  • Tampa Bay’s overall asking rates continued to increase with rising over 5%. Class A office space in Westshore and Downtown Tampa had the most significant upturn to +/- $41.00 PSF in Westshore and +/-$43.50 PSF in Downtown Tampa.
  • Vacancy rate in Downtown Tampa was +/- 13% and +/-19% in Westshore Business District. Vacancy rate in the Northwest and I-75 corridor in Tampa are significantly higher between +/-29% – +/-31%. Downtown St Petersburg was +/-9% with higher vacancy rates in Greater Pinellas County ranging from +/-13%-38%.

Let’s Talk Rent Numbers:

Submarket Overall Average Asking Rent-All Classes Overall Asking Rent Class A
Westshore $35.00 Sq. Ft.  $41.00 Sq. Ft. 
Downtown Tampa $42.09 Sq. Ft.  $43.50 Sq. Ft. 
Northwest Tampa $28.34 Sq. Ft.  $31.11 Sq. Ft. 
South Tampa $30.00 Sq. Ft.  N/A
I-75 Corridor $26.20 Sq. Ft.  $26.67 Sq. Ft. 
Downtown St. Petersburg $35.90 Sq. Ft.  $37.16 Sq. Ft. 

Building Highlights: 

  • Tampa International Airport: With Phase 1 of the renovations complete, Tampa International Airport sets its sights on Phase 2 of the expansion plan, which features a new pedestrian bridge, curbside express lanes and more.
  • Historic Gas Plant District: Construction on the largest development project in Tampa Bay history is slated to begin in early 2025. The phase one vertical development is promised to bring new housing, office space, meeting space and more to benefit all.

2024 3rd Quarter Forecast:

    • Labor Market: The influx of new jobs from Fortune 500 company relocation to the Tampa Bay area are a huge benefit to the economy.
    • Job Creation: Nonfarm employment grew by 25,900 jobs, or 1.7%, over the past year.
    • Supply: This marks the steepest quarterly improvement of vacancy rates since Q4 2017 and puts Tampa Bay in a great spot to continue to see the vacancy rates decrease into Q4.
    • Demand: This brought the year-to-date (YTD) total to 2.0 msf, a 14.1% decline compared to the same period in 2023. Thanks to influential accounting firms of PricewaterhouseCoopers and Clifton Larson Allen renewing their leases, the future looks promising.
    • Economic Indicators: The Tampa Bay MSA’s unemployment rate is likely to remain at 3.4%, which is significantly lower than the national rate of 4.1%. Employment is anticipated to continue growing in the region.

What does this mean for Tenants?

Advantages:

  • Companies who desire to be in auburn areas outside of the Downtown Core in Tampa and St. Petersburg and Westshore Business District, may have more negotiating leverage on rental rate and lease concessions due to the higher vacancy rates in buildings. 

Challenges:

  • Class A may continue to trend higher with limited new construction forecasted in the future and current trend of companies focusing on location of their office and surrounding amenities. 
  • There is over 300,000 RSF is for sublease in Westshore, giving Tenants who are in the market for sublease space the ability to shop around for the deal with the most favorable terms.

Considerations:

  • Allotting plenty of lead time before a lease ends is vital when evaluating Westshore and Downtown Core for a relocation or expansion. Vacancy rates are low and which creates competition for desirable available space.  
  • Tenants are considering subleasing their space, positioning the space below market rent and if there is a long remaining lease term, considering offering shorter lease terms for companies are looking for shorter lease terms Landlords typically do not agree to. 

What does this mean for Landlords?

Opportunities:

  • Landlords with buildings located in Downtown Core or Westshore Business District, with onsite and nearby amenities should experience the most leasing activity and ability to be more selective when evaluating Tenants.  

Challenges:

  • Buildings located in suburban corridors like the Northwest and i-75 are experiencing the highest vacancy rates with companies minimizing their office footprints and focusing on prime locations.

Considerations:

  • Offer additional incentives for Tenants with shorter lease terms, higher Tenant Improvement allowance and rent abatement to incentivize companies to consider a building and location they typically would not. 
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How Much Office Space Do You Need Per Person?

Similar to the drinks-per-person ratio needed for an upscale gala or black-tie event, we’re here to provide you with a simple, can’t-fail approach to figuring out just how much space you actually need for each employee in your office.

The answer is: 50 square feet (4.6 sqm) per desk plus an additional 50 square feet (4.6 sqm) per personal for communal areas. 

We are firm believers that innovation comes from in-person communication, and allowing your company to have the adequate square footage will give your employees the opportunity to do just that – innovate, strategize, create. 

While today’s current work-from-home trend continues to suggest the positive incentives it offers to company owners and their employees, there are three major downsides to working virtually:

Difficulty in Building Genuine Relationships with Colleagues

Collaboration, creative problem-solving, mentorship, and team morale is more challenging when each requires a Microsoft Teams or Zoom invite to do so. According to a study done by Stanford 67% of workers are distracted during virtual meetings. 47% of people prefer in-person meetings.

Frequent Interruptions and Unsupervised Performance 

Self-regulation and focus can be difficult for most without having the accountability of your team around you like in an office. 55% of workers admit to checking their email during virtual meetings according to a study done by Stanford. 

Lack of Motivation When There’s No Comradery

When you are surrounded by people who share the same vision and purpose it is the comradery that keeps each of us motivated and feeling supported when you are having an off day or dealing with a difficult project/situation.

Whether you have a company of five or fifty, getting the right amount of square feet per person will best help set you up for success for now and in the future. Evaluating your current office space or ready to find  your ideal office space to rent in Tampa Bay with Office Space Brokers, give us a call at 813-289-3700.

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Second Quarter 2024 Tampa Bay Office Market Report and Forecast

2nd Quarter Tampa Bay Highlights:

Office Market:

  • Westshore and Downtown Tampa asking rents are +/- $6.75 PSF above the average of the surrounding areas, proving the demand for these particular submarkets for their location, amenities and quality buildings.
  • Vacancy rate in Tampa CBD is 15.5% and Westshore in 14% is substantially lower than the major metropolitan cities around the country including New York and Chicago.
  • Companies are continuing to come back to the office more on a regular basis as flexible work schedules continue to be tested. Mondays and Friday seem to be the day remote is most commonly occurring.

Let’s Talk Rent Numbers:

Submarket Overall Ave.  Asking Rent-All Classes Overall Ave. Asking Rent Class A
Westshore $32.50 Sq. Ft. $40.10 Sq. Ft.
Downtown Tampa $41.50 Sq. Ft. $43.36 Sq. Ft.
Northwest Tampa $24.50 Sq. Ft. $26.59 Sq. Ft.
South Tampa $25.25 Sq. Ft. $30.54 Sq. Ft.
I-75 Corridor $25.75 Sq. Ft. $28.57 Sq. Ft.
Downtown St. Petersburg $32.25 Sq. Ft. $37.52 Sq. Ft.

New Development Highlights:

  • Gas Worx: Ybor City real estate investor Darryl Shaw’s Gas Worx is a mixed-use development remaking older industrial and vacant properties between Ybor and the Channel District into a walkable area planned to have over 140,00 square feet of retail and 500,000 square feet of office space is 50% preleased before ground breaking. Grow Financial and Masonite, are the two current anchor Tenants in preleasing.
  • Midtown East: Second phase of Midtown with 177,000 Square Feet of mixed use space is under construction with expected completed in 2024.

2024 3rd Quarter Forecast:

  • More sublease space with longer, 3+ year remaining lease terms will come to the market while Tenants are restructuring their office needs and might have taken on more space during an expansion in a building they no longer need.
  • Asking face rates will remain of the same and decrease slightly in the Westshore, Central Business Districts

What Does This Mean for Tenants?

Advantages:

  • Landlords are more willing to give Tenant concessions of free rent and Tenant Improvement allowance. Depending on the Landlord, some are more flexible than others on the asking face rate, depending on the deal terms.
  • Leveraging sublease space can be a great solution for some Tenants who are targeting shorter lease terms and/or often lower rates. Increase in subleases with longer lease terms remaining 3+ years, can still provide a good solution with Improvements already completed in the Suite, lower asking rent or free rent.

Challenges:

  • Asking rates increased in first quarter and have maintain steady in the second quarter. Not as many tenants have vacated their spaces when their lease expires, although asking rental rates have gone up over the last five years.
  • Although many employees have returned to the office, identifying the right balance of in office and working remotely is a normal conversation for deciphering what best for the company culture. Important to note, each company is different and not one solution is best. Reimaging the purpose of your office space and what role do you want it to play within the company is a great start for this conversation.
  • If a Tenant has a Base Year prior 2022, they are experiencing significant pass thrus from Landlords due to surge in Real Estate Taxes and Property Insurance.

What Does This Mean for Landlords?

Opportunities:

  • Class A and amenity-focused buildings in areas like Westshore, South Tampa and the Central Business Districts are performing better due to the focus on the office experience by Tenants. Tenants are adjusting their office footprint, tend to prefer amenity focused buildings where common areas like conferencing centers and be utilized for meetings vs leasing larger space.
  • Having spec suites ready for Tenant’s to lease a turn key office, positions Landlord to provide an immediate solution for Tenants who have quick deadlines to relocate their office vs the continued delay in permitting process and unexpected cost of Tenant Improvements.

Considerations:

  • Maintain asking face rates or be willing to adjust face rates depending on the feedback from Tenants.
  • Providing 3 year lease options for as-is Suites can be solution for smaller Tenants under 2,500 RSF, who are unsure about future growth.
  • Consider adding Tenant amenities such as conferencing center to a building for Tenants is a great competitive advantage. Based on the research, employees are coming into the office for team, department and company-wide meetings.
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Why You Need A Commercial Real Estate Broker To Represent You, Even When You Know The Landlord

Venturing into a new office space lease can feel intimidating. There are so many questions you may have, concerns about things unknown. That’s why having a Commercial Real Estate Broker working on your side is crucial to a successful journey in finding your next office space for rent in Tampa.

Landlords will always have their best interest in mind as the owner and investor of the building. Brokers, on the other hand, are working with your best interest in mind. Even when you have a good working relationship with the Landlord, they are still focused on protecting themselves and their property first and foremost at the end of the day. You could be in a position of thinking you are getting a pretty good deal on your lease and your commercial property for rent in Tampa but are you really? Here are a few things to consider:

Are you aware of current marketing conditions, concessions by Landlords and standard business terms? 

Do you have comparisons to a deal on the table with other possible small office space for rent in Tampa?

When you have concerns about a potential space, who is going to give you honest feedback and real insight about what will work best to meet your real estate needs?

When you don’t have the full overview of the Tampa Bay real estate market, it’s nearly impossible to really get the best possible lease. That’s why having the right Broker can educate you on the market as a whole and advise on business points they are experiencing and seeing at competing properties. Understanding what is a market norm is very important in negotiating a commercial lease and choosing which Landlord to have a long-term business relationship. 

Commercial Real Estate Brokers are also skilled in negotiating terms. They will seek to get you the office space of your dreams with a lease and terms that are not full of deal breaking concessions. Your Broker will help ensure that you are not paying exorbitant Common Area Expenses, hidden fees and other thumbs-down terms but instead that you are treated to a fair lease with all the amenities, parking spaces and square footage you need.

When you need an office space, you need Office Space Brokers.