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What Are Spec Suites?  

 


What Are Spec Suites?  

Speculative Suites is an office space designed to demonstrate to prospective renters what the office space may look like. While the finer specifics of what exactly makes a spec suite differ from each Landlord, at its most basic level, a spec suite is a place where the Landlord has invested construction expenditures ahead of time to have the room in move-in ready shape by creating an effective layout for the space, paint, and floors based on current market trends.

 

Who Are Spec Suites For:

Small to mid-sized Tenants with standard office space requirements are best served by spec suites. They’re especially appealing to Tenants who need to move in quickly, generally within three months or less since the office space is in a move-in ready condition.

 

Benefits of Spec Suites:

One of the main advantages of leasing a spec suite is that it reduces your out-of-pocket expenditures for building and finishing. Furniture and construction costs have been steadily rising, making new office development prohibitively expensive. Spec Suites are usually furnished and ready to move in, allowing Tenants to enjoy new, high-quality furnishings without having to pay for them out of pocket. 

For firms who need to be in their new office fast, Spec Suites might be a terrific solution. Depending on the extent of construction required, a new office build-out might take anywhere from 2 to 8 months to complete. The period between signing a lease and moving in can be greatly reduced with Spec Suites. Landlords create select “spec suites” to provide move-in ready options for Tenants who have a quick time frame to occupy quickly. Delayed permits have recently played a role in having quick occupancy options. Some companies are waiting to make a decision (due to uncertainty in their business) having an easy option can give Landlords a competitive advantage to win the deal.

 

Downfalls Of Spec Suites:

A downside of spec suites is the lack of control over the space’s appearance and feel. The Landlord has already chosen the spec suite’s design and finishing and typically may not invest additional money into the space unless the Tenant is willing to cover the cost of signing a longer lease.

 

 

A Tenant Representation Broker can walk you through if a spec suite is a right solution for you. Give Office Space Brokers a call at 813-289-3700.

 

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4th Quarter 2021 Tampa Bay Office Market Report and 2022 Forecast

Important Highlights:

Tampa Bay:

  • Office space leasing has been increasing rapidly close to what it was pre-pandemic 
  • The unemployment rate in Tampa Bay decreased to 4.9 % in December of 2021 and is expected to decrease even more in 2022
  • Average direct asking rentals are up .5 percent from last quarter, soon to be back at pre-pandemic rates
  • Rent is up 28% in the Tampa Bay Area 

Let’s Talk Rent Numbers:

Submarket Overall Average Asking Rent-All Classes Overall Asking Rent Class A
Westshore $33.43 Sq. Ft.  $28.04 Sq. Ft. 
Downtown Tampa $40.56 Sq. Ft.  $47.89 Sq. Ft. 
Northwest Tampa $24.01 Sq. Ft.  $28.92 Sq. Ft. 
South Tampa $23.33 Sq. Ft.  N/A
I-75 Corridor $ 24.88 Sq. Ft.  $28.23 Sq. Ft. 
Downtown St. Petersburg $31.45 Sq. Ft.  $32.77 Sq. Ft. 

2022 1st Quarter Forecast: 

  • Confidence in the Tampa Bay market is high, going into the last quarter of 2022 amid sustained new-to-market tenancy.
  • Tenants will proceed to bring their teams back to the office more so in 2022
  • By 2022 remaining new construction space with many buildings is expected to be over 60% leased. 

What does this mean for Tenants?

  •  Managing market expectations in key areas where office vacancies are higher than in Tampa Bay. Due to lower vacancy rates than key markets such as New York and Los Angeles, landlords in Tampa Bay are not as driven to replace vacancies as they are in other areas of the country.
  • Use available sublease space to take advantage of the market conditions we do have, which can give more reasonable rates, shorter terms, and any available furnishings.

What does this mean for Landlords?

  • To acquire a competitive advantage against Landlords who retain their face rates, evaluate concessions for tenants by changing asking rents and increasing Tenant Improvement Allowances. 
  • Make lease terms more flexible. 
  • Expect a surge of new products to hit the market. Tenants from other states are growing or migrating to Tampa. 
  • Start marketing available space 6 with a longer lead time for office space that will become available in the near future.
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3rd Quarter 2021 Office Market Indicators and Report

Important Highlights:

Tampa Bay:

  • Within the last 5 quarters, office space leasing has been increasing rapidly.
  • Tampa Bay Wave ranked #1 in Florida for the organization with the greatest number of startups receiving investments!
  • The unemployment rate in Tampa Bay increased to 5.0% in October 2021, compared to the end of 2nd Quarter 2021, which was approx. 4.6%. 
  • Average direct asking rentals are down 2.5 percent year over year, owing mostly to re-pricing in certain availabilities that have been on the market for more than a year. In contrast, several Class A buildings in Westshore raised their asking prices to $42.00 per square foot, bringing them closer to pre-pandemic values.
  • For the sixth year in a row, Florida has been rated first in net migration. According to the United States Census Bureau, Florida gained the most inhabitants between July 2019 and July 2020, with 252,717 additional residents.

Office Market:

  • Office vacancy rates increased in Hillsborough County and Pinellas County to around 12% but have remained fairly constant. 
  • Both Class A and Class B building’s rents grew more than 2%, placing Tampa in the top 15 markets in the US with average office rentals of more than $25 per square foot. 
  • Absorption trended negative for the quarter and remains negative year-to-date, but several submarkets recorded positive quarterly absorption.
  • Westshore submarket which leads in year-to-date absorption with over 140,000 s.f. Nearly all the quarter’s negative absorption took place in the Northwest Tampa submarket.

 

Let’s Talk Rent Numbers:

Submarket Overall Average Asking Rent-All Classes Overall Asking Rent Class A
Westshore $34.42 Sq. Ft.  $38.57 Sq. Ft. 
Downtown Tampa $41.26 Sq. Ft.  $45.48 Sq. Ft. 
Northwest Tampa $24.96 Sq. Ft.  $27.11 Sq. Ft. 
South Tampa $24.16 Sq. Ft.  N/A
I-75 Corridor $ 25.19 Sq. Ft.  $28.23nSq. Ft. 
Downtown St. Petersburg $30.55 Sq. Ft.  $30.88 Sq. Ft. 

Construction Highlights: 

  • The 380,000 s.f. was completed this quarter at 1001 Water Street in Tampa. Additionally, 500,000 s.f. was delivered earlier this year at SkyCenter One, Midtown West, and The Lofts at Midtown, all in the Westshore submarket.

2021 4th Quarter Forecast:

  • Confidence in the Tampa Bay market is high, going into the last quarter of 2021 and into 2022 amid sustained new-to-market tenancy.
  • Total vacancy is expected to remain the same through the rest of 2021
  • Tenants will slowly proceed to bring their teams back to the office 
  • By mid-2022 remaining new construction space with many buildings is expected to be over 50% leased.

What does this mean for Tenants?

  •  Managing market expectations of primary markets that are experiencing higher office vacancies than Tampa Bay. Landlords in Tampa Bay are not motivated in the same way that they are in other parts of the country to replace vacancies due to the lower vacancy rates than primary markets such as New York and Los Angeles. 
  • Take advantage of market circumstances we do have by making use of available sublease space, which can offer more reasonable rates, shorter terms, and any available furniture.

What does this mean for Landlords?

  • Evaluate concessions for Tenants by adjusting asking rents, higher Tenant Improvement allowances to gain a competitive edge over Landlords who maintain their face prices
  • Provide more flexible lease terms 
  • Expect an increase of new to market Tenants are expanding or relocating to Tampa from other states
  • Start marketing available space 6 with a longer advanced lead time for office space that is coming available