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:

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

Here are three design and layout strategies which could minimize the influx of large groups of people congregating in common areas or for employees feeling uneasy to return to work.

1) Individual Offices for Employees

The past few years an open office layout was trending for companies to create collaborative workspace areas. Going back to having employees with their own individual offices will limit exposure and minimize the amount of air being shared amongst other employees. With a surplus of subleases 

2) Tenants Have Their Own Bathrooms and Kitchen

Having a space that provides the Tenants with their own kitchen in a Full Service building is something you typically see across Tampa Bay in Westshore, Downtown Tampa and Downtown St Petersburg. Larger Tenants, when negotiating their build out in a Full Service building could have a restroom added to their build out. Negotiating any real estate transaction boils down to the economics of the deal. 

Ensuring your own restrooms is usually common for single story or single Tenant buildings. If having your own restroom is important, this will restrict what buildings you will be evaluating when touring. Considering a sublease space might be a viable option for your company! 

3) Tenant has their own entrance into the building

Similar with sharing bathrooms in a Full Service building, sharing common area entrance, lobby and even Tenant lounges or conference centers is an amenity in Full Service buildings Landlords have added. To minimize the influx of people in these areas at the same time or multiple people using the same area at different times, leasing a building where each Tenant has their own entrance will minimize any shared space.  Having your own entrance into a building is achieved by leasing a single Tenant building, meaning, you are the only Tenant leasing in the building or a building which has walk-up entrances with no common area lobby is shared. 

No one has all the answers, however; the health and safety of employees should be a top priority.  By taking the necessary precautions it will satisfy the employees and avoid adding to the surplus of sublease space. Give our team at Office Space Brokers a call 813-289-3700, for a consultation to strategize your company’s office space steps.

• Unemployment rate in Tampa Bay decreased to 5.9% in November 2020, compared to the end of 2nd Quarter 2020, which was approx. 9.0%. Non-agricultural employment sector decreased and manufacturing and wholesale were amongst the top sectors which gained jobs.
• New leases were down by approx. 50% in Hillsborough and Pinellas County for 2020 compared to 2019.
• 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).
• Tampa-St. Petersburg-Clearwater combined statistical area fourth in the U.S. in terms of the biggest net inflow of new residents. Tampa Bay gained about 47,000 people last year
• Class A vacancy increased to approx. 14.2% by the end of 4th quarter and Class B vacancy to over approx. 15.9%.

Let’s Talk Rent Numbers:

Construction Highlights:

• New construction Landlord’s adjusted asking rents which impacted the direct asking rents across the Tampa Bay Market. 
• Record high since 2008 of new construction delivered to the 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 1st Quarter Forecast:

• Continued increase in sublease space hitting the market as the work from home trend continues and companies evaluate their office space footprint
• Redevelopment of shared Tenant “Touchless entry, access, and reservation systems could take off, with personal devices replacing building IDs, security cards and elevator access systems, as well as traditional ways of reserving conference and amenity space.”
• Zillow listed Tampa among the five markets it expects to be the hottest in 2021 which is an indicator of companies relocating or expanding into Tampa. 
• Transition of flexible schedules mixed with working from home and in the office, hot desks can be a solution versus dedicated offices or workstations. Hot desk, a shared workstation or office with other employees who are in the office on different days of the work, allows for a smaller office footprint.
  • Here is a recent article we wrote about how to corona virus could change the future of office space.

What does this mean for Tenants?

•  If a Tenant determines minimizing their 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 a Tenant is willing and able to sign a 5+ year lease, they are in a position of strength with increased probability to receive rent concessions
• Evaluate whether moving into a sublease versus a direct lease with a Landlord is the right solution to take advantage of discounted rental rates and favorable terms of subleases (lower rent, shorter term, furniture etc.)

What does this mean for Landlords?

• Adjusting asking rents to stay competitive in the market
• Determine solutions for long term implications of Covid with repurposing empty space in multi-Tenant buildings and update air quality and filtration systems
• 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

The supply of sublease space is down from 2019 due to large companies securing what was on the market and sublease terms expiring before a subtenant being identified.

The bulk of new construction was located in Hillsborough County, with approx. 1.4 million square feet and approx. 895,000 square feet in the Central Business District.

Here is a recent article we wrote about how the corona virus could change the future of office space. There has been an increase in retail vacancy due to the restrictions especially for small business owners of restaurants and bars. The warehouse sector has experienced explosive growth with increased demand of service type businesses. Reference our 2nd Quarter 2020 market report here for comparison.

Important Highlights:

• Unemployment rate in Tampa Bay decreased to 5.9% in September 2020, compared to the end of 2nd Quarter 2020, which was approx. 9.0%
• Tampa Bay’s jobs were impacted with nonagricultural employment decreasing by approx. 4.3%. Job growth based on year-over-year, was experienced in Construction with 1,400 jobs and Wholesale Trade sector with 500 jobs
• Class A vacancy increased to approx. 13.8% by the end of 3rd quarter and Class B vacancy to over approx. 14.9%

Let’s Talk Rent Numbers

Construction Highlights:

Despite recent events, the Water Street and Midtown projects remain underway and are slated to be complete in the coming quarters. Water Street will add over 384,000 square feet of office space and Midtown will add over 150,000 square feet to Downtown.

2020 3rd Quarter Forecast:

• Companies may provide more flexible options for employees with hybrid of work from home and the office scenarios
• New office build out may be modified to reflect social distance measures
• Companies with leases ending may adjust their office layout to deliver an environment that might minimize the use of common areas and more individual offices
• The on-going changes of Covid will continue to dictate the long-term impacts on the office sector as the year continues and the upcoming election

What does this mean for Tenants?

• Take time gage your team’s perspective and concerns of Covid scenarios such as creating a hybrid of working from home and shifts coming into the office may be a solution. Evaluate, if Covid impacts are long term, how does that impact the company culture? 
• More likely to receive rent concessions for signing a 5 year + lease term
• Class A Landlords are maintaining their asking face rates but willing to make deals more favorable with free rent and Tenant Improvement allowance

What does this mean for Landlords?

• Potential for downward pressure on rents Tenants may be willing to pay
• 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
• Landlords are going to have to manage expectations for the next 5 years and adjust for the future

2020 Presidential Election:
Historically, new administration brings new policies which impact the business sector. With the 2020 Presidential election now behind us, we play the waiting game. A new administration, new policies will be rolled out in the beginning of 2021, this could impact major decision makers as they decide what is next for their company for 2021 and the future.

A Second Lock Down:
Another hot topic that has been on everyone’s minds: “Will there be another lock down?” Since Europe has recently entered into their second lock down and now we are seeing states like California, Illinois and New York transition back into a severe lock down, is this on the horizon for Florida? Whether Florida experiences a second lock down or not, companies whose Corporate Headquarters in Illinois, New York and California, are announcing maintaining a work from home policy through 2021 or later. What does this mean for Landlord’s in Tampa Bay? The same companies who have additional offices in markets like Tampa or St Petersburg are maintaining their work from home policies across their entire company for consistent company culture, even though Tampa, has different Covid restrictions and regulations.

4th Quarter Happenings:
As we quickly approach the end of 2020 and the fourth quarter is in full swing, we are going to start seeing companies begin to strategize their future plans for office space. Typical commercial office space lease in Tampa Bay have running a minimum of 5 years. Many companies have been forced to allow their employees to work from home and satisfy the rent on their lease. However, as companies near the end of their lease some will begin to test the market by reducing the size of their office space or even taking the huge leap to go completely remote.

With so much change and uncertainty over the past year it’s hard for many to tell what 2021 could bring. Having a Tenant Representative on your side will provide an advantage only an expert with their ear to the ground on a daily basis can deliver insight and market specialization. Give our team at Office Space Brokers a call 813-289-3700, for a consultation to strategize your company’s office space steps.

Touch-Less Technology

Pre-COVID many companies had already began implementing touch-less forms of technology such as automatic doors or automatic sinks, soap and paper towel dispensers (in restrooms/break rooms). However, as offices began to reopen after quarantine, companies understood that they would need to invest touch-less technology to ensure the safety of their employees. Some companies have even gone the extra mile and invested in ultra-violet lights, which can kill both virus and bacteria. These can be used to both disinfect workspace surfaces and limit human contact by monitoring how many people are in the workplace.

Open-Space Office Concepts

The trend of open space office layouts may be a thing of the past. For years, many companies found ways to get creative and fully utilize the space they had by introducing an open-space office concept. Rather than having a bunch of small offices or cubicles, long tables were introduced to create a cohesive work environment and bring employees together. Due to social distancing rules, companies may need to say good bye to the open concept plans. Many people are going to be looking for that extra space before even thinking about going back to work. Employees are going to look for the separate offices or cubicles to ensure their own safety. Cushman & Wakefield are testing a new concept called the “Six Feet Office,” which will display visual foot traffic routing in the office to keep people six feet apart. The wheels are definitely turning; however, companies are going to need to get creative!

Flex Schedules

Another way companies have strategized getting employees back into the office safely is through flex work schedules. Companies are breaking teams up into smaller groups and staggering them throughout the week. By implementing flex schedules and prioritizing whom needs to be in the office more, companies are able to start getting employees back in the building in a safe way.

No one has all the answers, however; the health and safety of employees should be a top priority.  Give our team at Office Space Brokers a call 813-289-3700, for a consultation to strategize your company’s office space steps.

Sublease supply is still down from 2019 due to large companies securing the supply and sublease terms expiring.

New construction has been hyper focused in Hillsborough County, with approx. 1.4 million square feet and approx. 895,000 square feet in the Central Business District.

Here is a recent article we wrote about how the corona virus could change the future of office space. There has been an increase in retail vacancy due to the restrictions especially for small business owners of restaurants and bars. The warehouse sector has experienced explosive growth with increased decreased of service type businesses. Reference our Quarter 4 2019 market report here for comparison.

Important Highlights:

• Unemployment rate in Tampa Bay increased to to 13.1%, compared to end of Quarter 2019 was approx. 2.7%
• Tampa Bay’s jobs were impacted with nonagricultural employment decreasing by approx. 7.4%. Job growth based on year-over-year, was experienced in Construction with 300 jobs and Government sector with 100 jobs
• Class A vacancy increased to approx. 12% by the end of 2^nd quarter and Class B vacancy to over approx. 15%.

Let’s Talk Rent Numbers

Construction Highlights:

Despite recent events, Heights Union and SkyCentre One are both projects underway in Downtown Tampa projected for 2020 occupancy and approx. 60% preleased. Midtown has new leases signed by national retailers. Sparkmarn Wharf is renovating the office portion creating 200,000 sf of office space and recently landed Industrious, coworking office space as a Tenant.

2020 3rd Quarter Forecast:

• Companies may provide more flexible options for employees with hybrid of work from home and the office scenarios.
• Build outs that were in process to be adjusted to more social distance measures
• Companies with leasing up for renewal may shift their office footprint to provide an environment where employees feel comfortable and safe in the office
• The fluidity of Covid will continue to determine the long-term impacts on the office sector as the year continues and the upcoming election

What does this mean for Tenants?

• Potential opportunity when signing new leases for rental concession such as shorter lease terms, free rent abatement and Tenant Improvement allowance
• Evaluate if Covid has and will make a lasting impact on your business with work flow layout in the office and number of people who are in the office on a regular basis. Thinking your office footprint may need to adjust in size? Use our calculator here to determine your ideal office space size
• If you lease renewal is coming up in the next 24 months and unsure about your business’ office space needs? Read this article for 3 keys when determining your next steps. 
• Now is the time to have a Tenant Representative Broker advocating on your behalf. Having an advisor on your side who has their finger on the market pulse and long-standing relationships with Landlord Agents will deliver the best terms possible.

What does this mean for Landlords?

• Potential for downward pressure on rents Tenants may be willing to pay
• 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

Every lease is written differently but there could be a few clauses that may be arguable in your favor. We are not attorneys and can’t provide legal counsel, however, we have identified and selected attorneys who are experts in Force Majeure and Impossibility Clause. Below are 3 action steps you can take to minimize any financial overhead you have with your Landlord.

PPP Loan.
The PPP Loan can be used towards office space rent, utilities and interest on a mortgage. If you have not already and missed the first round of funding, take advantage of the second round. You will want to apply directly through your bank. It is recommended you apply through your existing bank.

Make an Appeal to Landlord.
Ask your Landlord if you can forgo rent for the next ninety days. Not all Landlords would be accepting to this but it does not hurt to ask. A way this could be presented is the next ninety days is waved and then owed in addition to your next rent payment. For example, rent for May, June and July could be waved and on August 1st rent May-August will be due. Another scenario, you could tack it on to the end of the lease or spread the rent over the next several months. There are several ways this could be accomplished depending on the Landlord’s appetite and the Tenant’s ability to pay.

Review Your Lease.
As we stated in the beginning, every lease is different. Dig up your lease and you will want to review for two clauses, Force Majeure and Impossibility clause. Both of these clauses could provide means to bring to your Landlord but that would be for a Real Estate Attorney to advise. Force Majeure is defined as “unforeseeable circumstances that prevent someone from fulfilling a contract”. Impossibility is defined as “is an excuse for the nonperformance of duties under a contract, based on a change in circumstances (or the discovery of preexisting circumstances), the nonoccurence of which was an underlying assumption of the contract, that makes performance of the contract literally impossible.”

Additionally, the State of Florida is a very Tenant friendly state in regards to laws between Landlords and Tenants compared to other states. Having a Tenant Representative provides a competitive advantage to understand the pulse of the market and insider only, knowledge. Give our team at Office Space Brokers a call 813-289-3700 or email at cd@officespacebrokers.com to evaluate your company’s office space solution and walk you through this process to minimize your financial risk while you business is at a standstill.

Cleanliness and Air Quality.

Good air quality has already been correlated with productive work environments and minimizes the number of sick days. Air quality improves the over all sense of well-being, focus and productivity. Buildings who have high standards for air quality and circulation will be favored over others. If a technology is created to minimize this impact of virus spread, this could also be a consideration when companies are reviewing which office buildings can provide the safest environment.

Landlords could increase cleaning standards by their janitorial companies in common areas such as fitness centers, bathrooms and elevators. The recent addition of Tenant lounges in office buildings with shared kitchens, meeting spaces and activities will have be evaluated with new cleanliness standards or reconfigured. Tenants who hire their own janitorial services, might have to comply per their lease, cleaning standards within their office suites.

Office Layout.

We have seen the trend of more open work environment shift over the years, some with smaller work areas and bringing people closer together. For example, think of two long tables with employees on each side, creating a community work area that several companies have adopted. Work stations moved into shorter “walls” to create a collaborative and open environment.

The immediate use of small and large conference rooms could be avoided. The changes of the 6 feet in between individuals which has been mandated could translate into the layout and space needed to fit the same 20 people may increase thus, requiring more space allotted per person. Individual offices could return as a solution or larger work stations with taller walls and dividers could make an appearance. Click here to read the average work stations and office sizes and what is your company’s ideal size.

Working From Home.

I have heard some say companies transitioning to working from home could reach a point where production is consistent and the habit of working from home has created a new culture which the staff prefers. I do not believe this 100% work transition will occur, it depends on the industry, company and the culture of the company.

I believe the 100% transition to remote work may be less common, a hybrid of minimizing the number of people in the office and frequency may be more common. The opposite could also be true, realizing the need for in person communication and collaboration is required for productivity.

Making  the protection of health and safety of employees a top priority, will reduce risk and position companies to be a top employer of choice in a competitive environment. Having a Tenant Representative on your side will provide an advantage only an expert with their ear to the ground on a daily basis can deliver insight and market specialization. Give our team at Office Space Brokers a call 813-289-3700, for a consultation to strategize your company’s office space steps.

Downtown Tampa and Westshore often teeter totter back and forth of for the top spot of highest rent in all submarkets with approx. 10% separating from the next submarket in the lineup.

Below is the average asking rent for Class A Full Service office space:

• Westshore: $34.00/sq. ft.
• Downtown Tampa: $32.50/sq. ft.
• Northwest Tampa: $24.20/sq. ft.
• Downtown St. Petersburg: $30.25/sq. ft.

As the year drew to an end, it should be noted that Class A space led the market with over 100,000 sq. ft. absorbed. Office space in the suburban market held the greatest ranking with almost 2.0 of the 2.4 million sq. ft. available leased. These statistics help us to see how the leasing aspect of the Tampa Bay market was robust and points to a healthy 2019 rate of leasing activity as well.

Forecast:

The market is estimated to continue the rent growth in the 2019 and starting 2020 level out and potentially increase as more available space comes is delivered to the market.

What does this mean for Tenants?

• The market should continue to absorb positively in this next quarter.
• With vacancies decreasing while the Tenant demand remains steady, Landlords have the upper hand to increase rents as we move into 2019.
• Now is the time to have a Tenant Broker advocating on your behalf.The market is dynamic, availability of space is quickly shifting and having a Broker who has their finger on the market pulse and long standing relationships with Brokers will get you the best terms as possible.