OFFICE:Tampa Bay Office Q2 Market Overview

Leasing and sales activity continued at a slow pace during the second quarter 2008. While the commercial real estate market continues to “tread water,” the economy is slowly attempting to stabilize. The slow pace is a frustrating one for the industry, which is accustomed to a much faster pace, especially during the past few years of growth.

The unemployment rate for the Tampa MSA increased during the second quarter, just as it increased for the state and for the US overall. The Tampa MSA rate was 5.6% for May 2008. This compares to the year-ago unemployment rate of 3.7% for May 2007. All rates reported here are non-seasonally adjusted. The Florida State rate was 5.3% for May 2008, which compares to 3.5% for May 2007. The US unemployment rate was 5.2% for May 2008, which compares to 4.3% for May 2007. The detailed employment snapshot for the Tampa MSA shows a loss of 20,300 jobs from May 2007 to May 2008.

At the beginning of the quarter, Colliers International reported a national vacancy rate of 12.8%; up just slightly from the 12.5% for the prior quarter. This national rate compares to the current Tampa Bay overall vacancy rate of 12.2%. Nationwide demand was down dramatically with negative absorption being recorded for the first time since 2003. Despite the “pullback” in demand, lease rates nationwide managed a slight increase. The current average nationwide class A suburban rate is $28.80 per sf. This compares to the Tampa Bay “bargain” average direct rate of $24.52 for class A overall, and $24.74 per sf for class A suburban only space.