Chelsea Drinkard No Comments

Why Did Common Area Expenses (CAM) Invoice Increase?

What are Common Area Expenses?

If you are looking for office space to rent in Tampa, this information will be most helpful to you. Common Area Maintenance (CAM) refers to the shared upkeep and maintenance costs for the common areas of a property. Several examples of common CAM include:

  • Utilities
  • Lawn care and landscaping
  • Bathrooms
  • Sidewalks
  • Elevators
  • Unique property needs such as administrative costs, building repairs, property management fees, property taxes and insurance

Commercial real estate throughout the state of Florida has experienced record highs in two main categories which are causing increases in CAM. Whether you’re looking for a small office space for rent in Tampa or a large office space lease near downtown Tampa, an increase in CAM can impact you. Both categories that have increased are what we in the commercial real estate world refer to as uncontrollable, which are Real Estate Taxes and Building Insurance.

Real Estate Taxes:

Especially, if you are renting space within city limits in Tampa or St. Petersburg, the real estate taxes are higher than those within Hillsborough county and surrounding Pinellas, Pasco and other counties. The specific location of your office space in the greater Bay area can be a factor into your increased CAM.

Insurance:

At the time this blog is being published, there are approximately less than twelve insurance companies that are writing insurance policies for commercial buildings in Florida. The increased hurricane activity over the past three years has caused insurance pricing to increase to the point where insurance companies are removing Florida from their coverage list.

What can you do as a Landlord?

It pays to do due diligence when it comes to selecting who insures you. Shop around to get pricing from several companies and if you own more than one property, bundling insurance can often give a discount. Happy tenants lead to happier Landlords. As such, it is in your favor as a Landlord to keep the CAM invoice from increasing when possible. 

What can you do as a Tenant?

When looking for commercial space, having a Landlord who owns multiple commercial properties might not a better deal on insurance premiums. Especially the larger Landlords in Florida and those who may own buildings across the country can actually lead to a higher CAM for you. Keep this in mind as you search for your best fit for an office space to rent. 

Chelsea Drinkard No Comments

First Quarter 2024 Tampa Bay Office Market Report and Q2 Forecast

Q1 2024 Important Highlights:

Tampa Bay:

Office Market:

  • Leasing activity and demand has been focused on Class A buildings in Westshore and Central Business District (CBD) in Downtown Tampa, with over 60% of the leasing activity.
  • Westshore and Downtown Tampa asking rents are +/- $7.00 PSF above the average of the surrounding areas, proving the demand for these particular submarkets for their location, amenities and quality buildings
  • Leasing activity is +/- 11% down Year-over-year
  • Vacancy rate in Tampa CBD is 12.8% and Westshore in 19%.

Let’s Talk Rent Numbers:

Submarket Overall Ave.  Asking Rent-All Classes Overall Ave. Asking Rent Class A
Westshore $34.00 Sq. Ft. $39.25 Sq. Ft.
Downtown Tampa $41.45 Sq. Ft. $43.81 Sq. Ft.
Northwest Tampa $27.05 Sq. Ft. $28.38 Sq. Ft.
South Tampa $36.70 Sq. Ft. N/A
I-75 Corridor $26.37 Sq. Ft. $27.10 Sq. Ft.
Downtown St. Petersburg $33.64 Sq. Ft. $35.50 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 2nd Quarter Forecast:

  • Labor Market and Economic Indicators: The tight labor market is expected to remain steady with Tampa Bay being with the unemployment rate likely to be around 3.2%, similar to the previous quarter.
  • Job Creation: Tampa Bay is anticipated to continue as a front-runner in job creation across the state and career growth in the US.
  • Supply:  Increased supply of office space in Suburban areas could and with relocation on larger Tenants between submarkets could lead to increased vacancy if the large footprints are not filled with new to market Tenants.
  • Demand: Demand for buildings in Westshore and Downtown Tampa and St Petersburg, especially Class A buildings will remain consistent and where majority of leasing will occur.

What Does This Mean for Tenants?

Advantages:

  • Increased rent concessions from Landlords: Higher Tenant Improvement allowance towards build outs and providing free rent to decrease overall lease value.
  • Favorable Economic Indicators: Low unemployment rate and steady job growth in Tampa Bay suggest a thriving economy. These indicators can lead to a growing customer base and a higher percentage of identifying qualified employees in the area.

Challenges:

  • Supply: Existing high-quality buildings will leave tenants with few options regarding new space.
  • Construction Costs: Construction costs remain high which increases rental rates for space that require Tenant Improvements.
  • Lead Time: Having timelines with buffer built in will give margin for continued slow construction timelines, for architectural drawings, permit approvals and supply chain issues. Tenants with shorter lead time are subject to focus on move-in ready office spaces.

What Does This Mean for Landlords?

Opportunities:

  • Low Vacancy Rates For Smaller Suites: Move-in ready Suites under 2,500 SF and are being leased quickly in the Urban Core.
  • Turn Key and Spec Suites: Turn key Suites under 3,500 SF for Tenants to quickly move into will provide a competitive advantage over other vacant competing Suites for Tenants who do not have enough lead time for long construction timelines.
  • Urban Core: The urban core continues to attract persistent demand. Tenants may be competing for the same Suites which positions Landlord’s to be more selective when evaluating Tenants.

Considerations:

  • Tenant Selection: Ensuring that potential Tenants have a strong financial standing and can alleviate risks associated with Tenant turnover or payment issues.
  • Tenant Retention: Historically, it is more cost effective to maintain a Tenant then marketing, leasing and Tenant Improvement costs to acquire a new Tenant. Maintaining positive Landlord-Tenant relationships and providing excellent customer service can help ensure Tenants choose to renew their leases, reducing turnover and associated costs.
  • Building Location: Buildings located in Suburban areas outside of Urban Core and Westshore will have to be more aggressive with giving free rent, adjusting asking rents and consider adding value ad common areas for Tenants such as shared conference room and etc.
Chelsea Drinkard No Comments

Florida Sales Tax on Commercial Leases Starting December 1, 2023

Surprise to companies who expand or relocate to Florida, Florida is the only state that charges sales tax on commercial leases. Each year this number can fluctuate based on the decisions in Tallahassee and typically is in effect first quarter of the following year. A great surprise for our state, Christmas and Hannukah came early this year with a 1.5% discount from the state effective December 1, 2023. For example, in Hillsborough County, sales tax on commercial leases has been 7% through out 2023.

As you see in the below graphic, each county has their own additional taxes that are included in this number. Historically, Hillsborough County is one of the highest.

Always consult your CPA for tax advice especially for in municipalities that collect other taxes such as nuances in Oldsmar, Tarpon Springs, Wesley Chapel and Zephryhills.

Chelsea Drinkard No Comments

How Work Has Transformed From A Place To An Action: The Purpose of Office Space

PreCovid you would hear “I’m going to work” it was always a place to go.

Post Covid + technology you can work from anywhere, you now hear more “I need to work” or “I am working”.

Here’s the question I believe every company has to consider:

💡If work can (for the most part) be done anywhere, what’s the purpose of your office space for your people and company ?

—-> Funnel your office space discussions through this answer.

—> This will help you determine:

• Location
• Price point
• How much space you need
• The type of layout

All are used to fulfill the purpose.

The “we‘ve always done it this way”, doesn’t cut it any more. You have to dig deeper into the WHY behind having an office.

My counter parts would not want me to say this: Is having a full time office space obsolete for some companies? (keyword “some”) Definitely.

Does that apply to everyone, not at all.

We are in a unique situation being presented with the opportunity to redefine and revitalize purpose of office space and how to effectively use it as a tool for your company. Most importantly when attracting and keeping the right talent for your company.

What have you found in your company culture is the purpose of your office space?