Tampa's Office Availability Rates Decrease for First Time in 2 Years

In what is a mixed report for Tampa’s office market, Avison Young has found that availability rates for the third quarter slipped to 23.5 percent.

That’s down 20 basis points from the previous three months and the first quarterly drop since the last three months of 2022.

But Tampa is still struggling to lure workers back into the office, relative to the rest of the country. Currently, the region is only sitting at 54.1 percent occupancy of its 2019 levels. In comparison, the national average is 60.4 percent.

To no surprise, lower-quality spaces aren’t seeing as much demand. For example, Class A and B buildings are running return rates of 54.4 percent and 47.9 percent, respectively. But trophy buildings are at 69.5 percent of pre-pandemic levels. Also, rent growth for those properties has jumped 13 percent year-over-year in the third quarter to $51.31 FS.

Leasing overall was only 175.7 million square feet in the third quarter, a 29.4 percent plunge from the pre-COVID average and down 17.4 percent from the same period in 2023.

Smaller spaces continue to be favored by tenants in this environment.

Year-to-date, 85 percent of the leases signed were less than 10,000 square feet. Just six percent of tenants took spaces that exceeded 20,000 square feet.

“In 2024, 72% of all leases exceeding 10,000 square feet have been signed in Trophy and Class A buildings, with only 28% occurring in Class B properties,” Avison wrote.

“The market is experiencing a continued flight to quality, as tenants increasingly favor top-tier buildings to attract talent, support hybrid work models, and encourage a return to the office.”

Bristol Myers Squibb struck the biggest lease in the third quarter thanks to its 47,000 square foot-plus space at 4200 W Cypress St. That was followed by the Department of Family & Children Services and CliftonLarsonAllen, signing 20,579 and 16,441 square foot leases respectively. Saxum Real Estate made the largest acquisition of the quarter with its $45 million office purchase at 701 E Hillsborough Ave from Bluett Capital Realty.

Within the next couple of years, at least 7.2 million office leases are set to expire in Tampa. Of that, 53 percent is for spaces that exceed 20,000 square feet. That could cause some issues for landlords, considering less space is needed in the post-pandemic world.

“With demand for large spaces decreasing, this will prompt many landlords to consider offering discounted rents and increased concessions to attract tenant demand,” Avison said.

However, the CRE firm did note that the smaller preference trend could flip if more companies like Amazon require workers to be in the office at least four days a week.