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4th Quarter 2024 Tampa Bay Office Market Report and Forecast

Economic Factors:

  • Although Tampa Bay’s unemployment rate increased to 3.8% in Q4, it still falls below the national rate of 4.0%.
  • “The area’s private sector employment increased by 17,500 jobs (+1.2 %) over the year in December 2024. In December 2024, the Tampa metro area also led the metro areas in job gains over the year in education and health services, adding 7,900 jobs; and information, adding 1,500 jobs” says the Florida Commerce.
  • Inflation Rate was up 1.6% as of Nov. 2024 in past 12 months via the US Bureau Labor Statistics. 
  • Per the Regional Competitiveness Report, “Tampa Bay is once again first in net migration and in the top five for in-migration ages 25-34 and business startup rates.”

Key Metrics in the Office Market:

  • 2024 ended with +/- 11% quarter-over-over increase in leasing activity.
  • Tampa Bay’s overall asking rates amongst all  building classes continued to increase reaching an all time high up +/- 3% Year-over-year and +/- 2.5% in Class A buildings. Class A buildings were predominantly driving the asking rate increase and quality Class B buildings experienced +/- 5% rent increase.
  • Majority of leasing activity occurred in Westshore Business District.
  • Overall vacancy ended at +/- 20% with Class A buildings at +/- 15%

Let’s Talk Rent Numbers:

Submarket Overall Average Asking Rent-All Classes Overall Asking Rent Class A
Westshore $36.00 Sq. Ft. $41.25 Sq. Ft.
Downtown Tampa $42.80 Sq. Ft. $45.00 Sq. Ft.
Northwest Tampa $28.25 Sq. Ft. $32.65 Sq. Ft.
South Tampa $37.25 Sq. Ft. N/A
I-75 Corridor $26.00 Sq. Ft. $27.20 Sq. Ft.
Downtown St. Petersburg $38.75 Sq. Ft. $39.50 Sq. Ft.

Building Highlights:

  • Midtown East: The Primary new office construction of 85,000 SF is the second phase of Midtown Tampa, mixed use project located in the heart of Tampa. 50,000 SF has already been preleased.

2025 1st Quarter Forecast:

What does this mean for Tenants?

Advantages:

  • Companies who desire to be in suburban areas such as Northwest Tampa in near Hillsborough Avenue/ Veterans Expressway and Carrollwood and I-75 Corridor,  have more negotiating leverage on rental rate and lease concessions due to the higher vacancy rates in buildings.
  • Tenants in the 10,000 + Square Foot range have a stronger position across all Submarkets when negotiating with Landlords.

Challenges:

  • Flexible work schedules with a mix of in office and work from home, continues to be a work in progress as companies evaluate what is best for their team. Every industry is different and everyone company is different.
  • Class A may continue to trend higher with limited new construction forecasted in the future and the flight to quality and work where you live trend.
  • The continued shift of focusing on strategic office location with surrounding amenities and environment that compel employees to want to come into the office can drive companies to the same Submarkets and buildings, creating vacancies in less desirable buildings and competition in others.

Considerations:

  • Allowing plenty of lead time before a lease ends is vital when evaluating Westshore and Downtown Tampa Core for a relocation or expansion.
  • If Tenants are finding themselves in place of uncertainty for their office space, Coworking solutions have become very common in Tampa Bay, providing a mix of individual offices and conference rooms to be used for monthly and quarterly meetings.
  • Companies footprints and office schedules are shifting, under 5,000 Square Feet office spaces may have more competition that pre-pandemic.
  • Tenants who 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 will provide an advantage among other spaces.

What does this mean for Landlords?

Opportunities:

  • Carving up larger office Suites for < 5,000 Square Feet Tenant’s to lease, although a high initial investment, can pay off long term with diversification of leases rolling and smaller vacancies.
  • Landlords with buildings located in Downtown Tampa 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:

  • Landlord’s in high vacancy areas, can 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.
  • Frequency of office space use and operational layouts are being reimagined and repurposed, consider providing conference room space for Tenants who only need use of a conference room on a monthly or quarterly basis.
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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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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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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.
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3rd Quarter 2023 Tampa Bay Office Market Report and Q4 Forecast

Important Highlights:

Tampa Bay:

Office Market:

  • Majority of activity and demand has been focused on Westshore and Central Business District (CBD) vs the suburbs which is consistent with the flight to quality trend by Tenants.
  • Class A buildings made up of over 60% plus of leasing activity in Q3 over the suburban areas.
  • Asking rents in Class A Buildings have increased by +/-6%
  • Direct asking rents are up 1% and Class A and B building in the Westshore and CBD areas for the third quarter in a row.
  • Vacancy rate in Tampa CBD is 13% and Westshore in 18%.

Let’s Talk Rent Numbers:

Submarket Overall Average Asking Rent-All Classes Overall Asking Rent Class A
Westshore $33.50 Sq. Ft. $37.01 Sq. Ft.
Downtown Tampa $40.00 Sq. Ft. $41.80 Sq. Ft.
Northwest Tampa $26.75 Sq. Ft. $27.90 Sq. Ft.
South Tampa $34.50 Sq. Ft. N/A
I-75 Corridor $26.50 Sq. Ft. $27.50 Sq. Ft.
Downtown St. Petersburg $33.40 Sq. Ft. $36.00 Sq. Ft.

Building 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. The first phase, including 317 apartments and retail space, began construction in October and is set to open in spring 2024. A second apartment community with 370 apartments and retail will begin construction later in 2023. At full build-out, Gas Worx is planned to have nearly 5,000 residences, 140,000 square feet of retail, and 500,000 square feet of office space.
  • Ybor Harbor: Adjacent to Gas Worx, Darryl Shaw has unveiled plans for Ybor Harbor, a 33-acre mixed-use waterfront development on Ybor Channel south of Adamo Drive. The project aims to connect Ybor to the Channel District and downtown and will include up to six million square feet of residential, office, hotel, and retail space. Plans also include the development of a public area with piers, boat slips, green space, and a boardwalk lined with restaurants and shops.
  • Tampa’s Riverfront: The development boom along downtown Tampa’s riverfront continues, with projects like the 31-story luxury apartment tower Arts and Entertainment Residences and the Pendry Residences Tampa luxury riverfront hotel and condominium tower. The Tampa Convention Center is also undergoing a $38 million expansion, adding new waterfront meeting and event rooms.

2023 4th Quarter Forecast:

  • Labor Market and Economic Indicators: The tight labor market is expected to remain steady, 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, contributing to further employment growth.
  • Supply: Overall vacancy rates are projected to remain low
  • Demand: Leasing is expected to be steady into fourth quarter with majority in focused in CBD and Westshore in Class A and Trophy buildings.

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: The low unemployment rate and steady job growth in Tampa Bay suggest a thriving economy. For Tenants, this means a potentially larger customer base and a higher likelihood of finding qualified employees in the area.
  • Sublease Options: Sublease options can provide favorable for Tenants who prefer a shorter lease term and below market rent especially for those looking for 10,000 RSF and up.

Challenges:

  • Turn Key Options: Construction costs are still record high and the lack of turn key “Spec Spaces” Landlords have available for Tenant’s who require immediate move can require Tenant’s to lease Suites do not provide the desired layout for Tenants.
  • 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.

What does this mean for Landlords?

Opportunities:

  • Low Vacancy Rates For Smaller Suites: Suites under 5,000 SF and under spaces are being leased quickly.
  • Turn Key and Spec Suites: Having turn key Suites under 5,000 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.

Considerations:

  • Tenant Selection: Ensuring that potential Tenants have a strong financial standing and align with the property’s intended use can help minimize risks associated with tenant turnover or payment issues.
  • Tenant Retention: Attracting new Tenants is essential and Landlords should also prioritize 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: If buildings are located in Suburban areas outside of CBD and Westshore will have to be more aggressive with Concessions and adjusting asking rent.