FloridaFuture
January 22nd, 2008, 11:02 PM
Fairest in Florida: Tampa office market outshines others
Tampa Bay Business Journal - by Janet Leiser Staff Writer
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Kathleen Cabble
Highwoods Properties will build its second tower at Highwoods Bay Center after leases are signed.
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TAMPA -- For the first time in five years, Florida experienced a decline in demand for office space as job growth slowed and companies downsized. But the good news is the Tampa Bay market outperformed others statewide.
"It wasn't a great year," said Larry Richey, senior managing director of Cushman & Wakefield of Florida Inc. "But compared to the rest of the state of Florida we did very well. We remained positive, and we did create jobs. It remained a positive market from the landlord's perspective."
The landlord's market might end this year, though, if vacancy rates continue to creep upward. Tampa Bay's year-end vacancy rate was 13.6 percent, up from 11.5 percent in 2006, according to Cushman & Wakefield.
Statewide demand for office space decreased by 391,521 square feet in 2007, which is about 89.2 percent less than the 3,623,473-square-foot increase the previous year, according to a year-end market analysis by Cushman & Wakefield.
The Tampa Bay market, however, saw an absorption increase of 322,764 square feet, about 53.8 percent less than the 699,098 square feet absorbed the previous year.
That correlates to slow job growth. Tampa Bay added just 7,100 jobs in 2007, compared to the 41,000 new jobs added annually on average each of the previous five years, Richey said.
"The detonation of the residential market has had an effect on the commercial markets in Tampa Bay," said Russ Sampson, executive VP at Colliers Arnold. "We were probably six months behind them."
Miami market ranks No. 3
In second place behind Tampa Bay was Orlando with an absorption increase of 74,540 square feet, according to Cushman & Wakefield. Miami came in third with 50,487 square feet.
Palm Beach and Broward counties were the biggest losers, according to the report. Palm Beach County lost 542,430 square feet, and Broward saw a 296,882-square-foot dip.
Overall absorption, defined as the change in occupied space, fell only once in Florida between 1996 and 2006. In 2002, the year following the terrorist attacks on the United States, absorption decreased by 113,007 square feet. Sampson of Colliers Arnold, a Clearwater-based commercial real estate firm, said he has only seen negative office absorption two or three times in his 20-plus years in the Bay area.
"I don't think you're going to see a whole lot going on in 2008," said Sampson. "It's going to be an interesting year."
As for Tampa Bay submarkets, downtown Clearwater's year-end vacancy rate was the highest at 23.8 percent, followed by north Pinellas at 18.6 percent. Others were Gateway, 18.1 percent; Tampa's central business district, 17.2 percent; Interstate 75 corridor, 16.9 percent; Ybor City, 14.9 percent; Bayside, 14 percent; downtown St. Petersburg, 13.2 percent; Countryside, 12.6 percent; south St. Petersburg, 11.3 percent; Westshore, 9.3 percent; Northwest, 7.9 percent; Southwest, 6.8 percent; and Hyde Park, 6.3 percent.
As companies continue to downsize, more subleases will become available and often at a reduced rate. In turn, businesses in search of new offices are likely to find more concessions in today's market.
Nearly 100,000 square feet of office space will become available in the Interstate 75 corridor when Home Depot closes its call center at 100 Legacy Park on U.S. 301 in Riverview later this month.
And about 69,000 square feet at the Carillon Center in St. Petersburg remain available for sublease since Xerox closed its call center.
In addition, roughly 22,000 square feet of Class A space is available for sublease at Harborview Plaza on North Rocky Point Drive since E*Trade Financial Corp. closed its Tampa office. CB Richard Ellis is handling the subleases for all three companies.
Rental rates on watch
It remains to be seen whether landlords will lower rental rates, Richey said. More concessions, such as free rent and extra money for tenant build-out, are expected.
Despite the slowdown, asking rents increased in 2007 to $22.35, up $1.79 from a year earlier, Cushman & Wakefield reported.
Sampson doesn't expect the market to soften as much as it did in the early '90s when the federal government bailed out the savings and loan industry.
"This is nothing compared to that," he said. "The dynamics are just totally different."
Tampa Bay sublease space is approaching a million square feet, Sampson said. But in the early '90s economic recession, there were several million square feet available for sublease.
"We will have to work a whole harder and smarter, and we won't have the revenues we had in the past," Sampson said. "We can't make a market."
Richey calls 2007 a "pause" year.
"When you have double-digit increases in rental rates and office demand, you can't sustain that," Richey said. "The only thing we can be certain about in this industry is there will be cycles and there will be fluctuations."
jleiser@bizjournals.com | 813.342.2468
http://tampabay.bizjournals.com/tampabay/stories/2008/01/21/story7.html?b=1200891600^1577617&page=2
Tampa Bay Business Journal - by Janet Leiser Staff Writer
Print Article Email Article Reprints RSS Feeds Add to Del.icio.us Digg This
http://cll.bizjournals.com/story_image/107968-400-0.jpg?rev=2
Kathleen Cabble
Highwoods Properties will build its second tower at Highwoods Bay Center after leases are signed.
View Larger Related News
TAMPA -- For the first time in five years, Florida experienced a decline in demand for office space as job growth slowed and companies downsized. But the good news is the Tampa Bay market outperformed others statewide.
"It wasn't a great year," said Larry Richey, senior managing director of Cushman & Wakefield of Florida Inc. "But compared to the rest of the state of Florida we did very well. We remained positive, and we did create jobs. It remained a positive market from the landlord's perspective."
The landlord's market might end this year, though, if vacancy rates continue to creep upward. Tampa Bay's year-end vacancy rate was 13.6 percent, up from 11.5 percent in 2006, according to Cushman & Wakefield.
Statewide demand for office space decreased by 391,521 square feet in 2007, which is about 89.2 percent less than the 3,623,473-square-foot increase the previous year, according to a year-end market analysis by Cushman & Wakefield.
The Tampa Bay market, however, saw an absorption increase of 322,764 square feet, about 53.8 percent less than the 699,098 square feet absorbed the previous year.
That correlates to slow job growth. Tampa Bay added just 7,100 jobs in 2007, compared to the 41,000 new jobs added annually on average each of the previous five years, Richey said.
"The detonation of the residential market has had an effect on the commercial markets in Tampa Bay," said Russ Sampson, executive VP at Colliers Arnold. "We were probably six months behind them."
Miami market ranks No. 3
In second place behind Tampa Bay was Orlando with an absorption increase of 74,540 square feet, according to Cushman & Wakefield. Miami came in third with 50,487 square feet.
Palm Beach and Broward counties were the biggest losers, according to the report. Palm Beach County lost 542,430 square feet, and Broward saw a 296,882-square-foot dip.
Overall absorption, defined as the change in occupied space, fell only once in Florida between 1996 and 2006. In 2002, the year following the terrorist attacks on the United States, absorption decreased by 113,007 square feet. Sampson of Colliers Arnold, a Clearwater-based commercial real estate firm, said he has only seen negative office absorption two or three times in his 20-plus years in the Bay area.
"I don't think you're going to see a whole lot going on in 2008," said Sampson. "It's going to be an interesting year."
As for Tampa Bay submarkets, downtown Clearwater's year-end vacancy rate was the highest at 23.8 percent, followed by north Pinellas at 18.6 percent. Others were Gateway, 18.1 percent; Tampa's central business district, 17.2 percent; Interstate 75 corridor, 16.9 percent; Ybor City, 14.9 percent; Bayside, 14 percent; downtown St. Petersburg, 13.2 percent; Countryside, 12.6 percent; south St. Petersburg, 11.3 percent; Westshore, 9.3 percent; Northwest, 7.9 percent; Southwest, 6.8 percent; and Hyde Park, 6.3 percent.
As companies continue to downsize, more subleases will become available and often at a reduced rate. In turn, businesses in search of new offices are likely to find more concessions in today's market.
Nearly 100,000 square feet of office space will become available in the Interstate 75 corridor when Home Depot closes its call center at 100 Legacy Park on U.S. 301 in Riverview later this month.
And about 69,000 square feet at the Carillon Center in St. Petersburg remain available for sublease since Xerox closed its call center.
In addition, roughly 22,000 square feet of Class A space is available for sublease at Harborview Plaza on North Rocky Point Drive since E*Trade Financial Corp. closed its Tampa office. CB Richard Ellis is handling the subleases for all three companies.
Rental rates on watch
It remains to be seen whether landlords will lower rental rates, Richey said. More concessions, such as free rent and extra money for tenant build-out, are expected.
Despite the slowdown, asking rents increased in 2007 to $22.35, up $1.79 from a year earlier, Cushman & Wakefield reported.
Sampson doesn't expect the market to soften as much as it did in the early '90s when the federal government bailed out the savings and loan industry.
"This is nothing compared to that," he said. "The dynamics are just totally different."
Tampa Bay sublease space is approaching a million square feet, Sampson said. But in the early '90s economic recession, there were several million square feet available for sublease.
"We will have to work a whole harder and smarter, and we won't have the revenues we had in the past," Sampson said. "We can't make a market."
Richey calls 2007 a "pause" year.
"When you have double-digit increases in rental rates and office demand, you can't sustain that," Richey said. "The only thing we can be certain about in this industry is there will be cycles and there will be fluctuations."
jleiser@bizjournals.com | 813.342.2468
http://tampabay.bizjournals.com/tampabay/stories/2008/01/21/story7.html?b=1200891600^1577617&page=2