2019 was a strong year and as we headed into 2020, the market was projected to be steadfast. The pandemic struck mid-first quarter. In second quarter, we came out on the other side of a full quarter in the mist of the pandemic. The market did experience an impact with new leasing demand dropping approx. 50% from the first quarter.
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 2nd quarter and Class B vacancy to over approx. 15%.
Let’s Talk Rent Numbers
| Submarket | Overall Average Asking Rent All Classes | Overall Asking Rent Class A |
| Westshore | $33.85/sq. ft. | $38.00/sq. ft. |
| Downtown Tampa | $34.62/sq. ft. | $36.39/sq. ft. |
| Northwest Tampa | $22.00/sq. ft. | $24.40/sq. ft. |
| South Tampa | $29.60/sq. ft. | N/A |
| i-75 Corridor | $22.53/sq. ft. | $25.78/sq. ft. |
| Southwest | $19.75/sq. ft. | $24.00/sq. ft. |
| Downtown St. Petersburg | $28.20/sq. ft. | $31.00/sq. ft. |
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
