Tampa Bay continues to see a slowdown, as retail leasing volume came in at about 1.25 million square feet for the first half of 2024, representing a tumble of roughly 35 percent year-over-year, the latest market report from Bounat shows.
Also, the under 600,000 square feet recorded in the three months through June marked the fourth consecutive quarter of declines.
Bounat noted grocers, fitness centers, and discount stores have continued to dominate the share of leases for the asset class.
“Tenants like Sprouts Farmers Market, Five Below, and DollarTree have committed to several 10,000-SF+ leases over the past year. Food and beverage, as well as beauty-related tenants, have dominated the demand landscape for smaller, inline retail spaces,” the CRE firm said.
The biggest sale recorded in Tampa for the second quarter was 177,696 square foot Lake Brandon Plaza, for $38 million. That was followed by Shoppes at New Tampa at $35 million, and Bass Pro Shops at $33.44 million.
While leasing continued to be underwhelming, there were plenty of positive signs in Tampa. For example, the area owns the lowest availability in all of Florida, with a 3.4 percent average rate, as of the third quarter. The only segments in retail that haven’t seen availability drop in the past 12 months are malls, strip centers, and general retail stores.
“The construction pipeline is down to a near-decade low, with 420,000 SF under development. The lack of available space, coupled with little to no pipeline, has impacted the market’s leasing activity and subsequent absorption,” Bounat said. Those levels represent a 60 percent dip from the same period a year ago.
Also, Bounat has recognized Tampa as one of the top 10 national markets for rent growth after average prices shot up by 5.9 percent year-over-year in the second quarter. Over the past five years, rents have grown by 40 percent, although it has slowed down recently.
“Tampa has been a leader in the country in terms of rent growth over both the past five and ten years,” Bounat said.
Some other key highlights of the second quarter include average cap rates at 6.4 percent, net absorption at positive 889,000 square feet, and vacancy at three percent.