Tampa Bay Office Market in Low Gear

TAMPA, FL-Although local brokers and analysts maintain the 30-million-sf Tampa Bay office market is in a recovery mode, the numbers aren’t showing that yet, according to a new Colliers Arnold analysis. For example, first-quarter overall vacancies stood at 17.1%, up from 16.7% at year-end 2003. Net absorption was a negative 194,254 sf. Total production showed 233 leasing deals were closed for 744,000 sf, down from Q1 2003 when 241 transactions translated to 1.3 million sf of leased space.”The trend so far this year seems to be tenants making decisions slowly, four to six months or more, even for small leases,” says Kimberly Kaiser, research director in Colliers Arnold’s Tampa office. “Decisions made at the end of 2003 will likely be realized the end of the second quarter. While slow, it’s an improvement from late 2002-early 2003 when tenants put the brakes on any expansion plans.”On the vacancy rise, Kaiser says “this slight uptick is not a result of one or two large tenants leaving the market, but comes from multiple, smaller tenants across all submarkets downsizing or leaving leased space to buy their own buildings.”But in the Northeast Tampa submarket, the return of MCI Worldcom’s 824,000-sf headquarters to the market brings the vacancy level to 50.2%. The overall vacancy in this 4.8-million-sf market is 32.5%. “The recent trend in Northeast Tampa is the development and sale of small office buildings in the 2,500-sf to 7,500-sf range to doctors and other professionals,” Kaiser says. Although the overall Northeast submarket showed a negative first-quarter absorption of 3,400 sf, the class A segment posted a positive 22,000 sf, “making it the third straight quarter of increased occupancy,” the Colliers Arnold researcher notes. Overall rents average $15.51 per sf; class A average $18.59 per sf.The 11.4-million-sf Westshore submarket, the largest in the Tampa Bay area, continues to draw tenants from other markets because of its proximity to Tampa International Airport, Pinellas County, competitive rents and free parking, Kaiser says. But major tenants such as AT&T continue to downsize. The company has 65,000 sf available for sublease in Tampa Bay Park.Overall vacancies at Westshore are 17.4% with class A vacancies at 16.8%. Overall average asking base rent is $19.8 per sf; class A average $21.2 per sf.The 2.4 million-sf St. Petersburg submarket ended the first quarter with a 9% overall vacancy level with class A space at 12.4%. Nearby Clearwater, with an 824,436-sf office market, has overall vacancies of 19.7% and class A vacancy of 22%.