Local office brokers are seeing a reversal of fortune for some submarkets. For example, Westshore, the largest office district in Tampa with over 11 million square feet, still commands the highest rents at around $25 per square foot, $28 for class A space, yet has reached 21% vacancy after being in single digits only a few years ago.
Meanwhile, the East Tampa/Interstate 75 submarket, which previously soared into the 30% vacancy range, has fallen back to around 20% as of the third quarter. Asking rents there are keeping pace with the areawide average, at roughly $22 per square foot.
Westshore remains a concern among many brokers, as landlords scramble to renew leases with tenants that are looking to either reduce their space needs or relocate to buildings with more favorable rental rates. But brokers do expect an increase in leasing activity next year, with space inquiries already picking up in the fourth quarter.
"Westshore will lead the other submarkets out of this and will regain its standing as the top market in the Tampa Bay area," Paula Buffa, senior vice president of the office group with Grubb & Ellis|Commercial Florida in Tampa, tells GlobeSt.com. She notes that local office brokers expected 2009 to be a tough year, particularly with openings of two speculative buildings over the past year, MetWest One and Corporate Center Four at International Plaza.
MetWest One, built by insurance giant MetLife Inc., signed Greystar Real Estate Partners to a 13,000-square-foot lease in September. Corporate Center Four was developed by Crescent Resources LLC, though a deal is reportedly in the works to sell the building to Orlando-based Eola Capital.
The most notable office sale in the Tampa Bay market last quarter was the purchase of 134,000-square-foot Tampa Telecom Park by Lepanto Realty Corp. for $10.9 million, or $81 per square foot, in an all-cash 1031 exchange. Institutional investors are sidelined for the remainder of this year and are now proactively focused on 2010, according to CB Richard Ellis.
Absorption in the Tampa Bay office market totaled negative 1.5 million square feet over the past year, CBRE estimates. The good news there, though, is a positive difference of about 380,000 square feet from the prior year, with direct space representing 87% of the total.
Construction activity in the market is off 79% year over year, with only 244,000 square feet under way, CBRE says. The low number bodes well for a recovery once the economy improves.
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