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2nd Quarter 2021 Office Market Indicators and Report

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
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Tampa Bay Submarkets

Tambay Bay Submarkets

Tampa Bay includes six counties. Below is a snapshot highlighting three, Hillsborough, Pasco and Pinellas County.  These highlighted Submarkets within the counties are a good reference point when the evaluating the area since each have their own characteristics and demographics.

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1st Quarter 2021 Office Market Indicators and Report

Important Highlights:

Tampa Bay:

  • Unemployment rate in Tampa Bay decreased to 4.2% in February 2021, compared to the end of 4th Quarter 2020, which was approx. 5.9%. Non-agricultural employment sector decreased and Financial Activities, Professional & Business Services and Construction were amongst the top sectors which gained jobs.
  • “The annual Cost of Living Index reported the Tampa metro area as one of the most affordable metros in the US. With a cost of living lower than the national average, Tampa Bay remains to be an attractive place for new residents and companies looking to relocate.”
  • Zillow listed Tampa amongst five markets it expects to be the hottest in 2021.
  • Class A vacancy increased to approx. 14% by the end of 1st quarter and Class B vacancy fell to 15%.

Office Market:

  • New lease demand was up by approx. 120% in Hillsborough and Pinellas County.
  • Office supply increased due to large sublease blocks on the market and over 570,000 square feet of new construction deliveries by Heights Union West (Tampa Heights), Sparkman Wharf (Channelside) and Renaissance Center VII (Northwest Tampa). 

Let’s Talk Rent Numbers:

Submarket Overall Average Asking Rent All Classes Overall Asking Rent Class A
Westshore $33.24/sq. ft.  $37.12/sq. ft.
Downtown Tampa $36.33/sq. ft. $37.95/sq. ft.
Northwest Tampa $24.20/sq. ft. $26.90/sq. ft.
South Tampa $27.64/sq. ft. N/A
I-75 Corridor $25.08/sq. ft. $27.14/sq. ft.
Downtown St. Petersburg $31.11/sq. ft. $27.06/sq. ft.

Construction Highlights:

  • New construction Landlord’s adjusted asking rents which impacted the direct asking rents across the Tampa Bay Market.
  • SkyCenter One, 270,000 square feet of new office space building under construction at the Tampa International Airport, 384,000 square feet Water Street project in Downtown Tampa and the 384,000 square feet Midtown project, just North of the Westshore submarket, continue to announce national Tenants and are slated to be completed by end of 2021.

2021 2nd Quarter Forecast:

  • Total vacancy is expected to rise as current construction projects are slated to deliver in either Q2 or Q3 of this year
  • Continued relocation and expansion of companies into Tampa Bay do to our more cost-effective real estate options, Florida’s favorable regulations for business and as always, the great weather .
  • Continued increase in sublease space, especially larger block 20,000 RSF and up hitting the market as the work from home trend continues and companies evaluate their office space footprint.
  • < 5,000 RSF subleases will be subleased by companies who want to leverage the market and thus will move quicker than larger spaces.
  • Companies will be rolling out transition plans back into the office fulltime or a flex schedule. Privately held companies may transition faster than publicly traded due to the amount of decision makers involved and size of the company.

What does this mean for Tenants?

  • Evaluate your current office space floor plan and if employees wish to work remotely or in the office with what’s best for the company. Potentially moving to a flex schedule of part-time working from home and in the office can provide an alternative solution to maintain office culture while maintaining the benefits of working from home.
  • If minimizing your office footprint is the right decision there are two solutions: sublease the entire or a portion of their suite. Both scenarios will minimize the monthly financial burden
  • If evaluating relocating your office, take advantage of the short term and lower monthly rent of sublease office space on the market

What does this mean for Landlords?

  • Adjusting asking rents to stay competitive in the market
  • Consider providing more flexibility in lease term and concessions to accomplish deals
  • Ensure Tenant’s have strong financials with low debt to income ratios when signing new leases
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Featured Listing: 701 S Harbour Island Blvd. Tampa, FL

 

View Full Listing Here: 

HIGHLIGHTS:

  • Water Views
  • Class A+ Office with windowed offices, upgraded finishes and 11ft ceilings 
  • 16 FREE onsite, reserved, garage parking spaces
  • NO common area factor compared to multistory buildings
  • Double door entry into suite

AVAILABLE SPACE:

SPACE SIZE TERM RATE SPACE USE CONDITION AVAILABLE
1st Floor 4,210 SF Negotiable $33.00 / SF / YR Office Full Build-Out July 2021

 

PROPERTY OVERVIEW:

  • Located in prestigious Harbour Island with immediate water views across from Tampa Marriott, brand new JW Marriott, Amelia Arena and Water Street in Downtown Tampa.
  • NO common area factor. 4,210 Usable Square Feet. Approx. 10-15% more space in your suite than a full service multistory building.
  • Walking distance to several restaurants and Tampa Convention Center 
  • Avoid the parking nightmare in Downtown Tampa and Channelside.