"Developers and investors should be wary, however," Steven M. Ekovich, vice president/regional manager of the California real estate investment brokerage firm, tells GlobeSt.com.

"Office vacancies in these submarkets are among the fastest rising in Central Florida and the resultant competition for tenants has led to largely stagnant rents," Ekovich says.

By comparison, Orlando's 28 million-sf market is showing a first-quarter, 10.8% vacancy level, up from 9.3% in the fourth quarter, according to a separate report by Grubb & Ellis Co.

Tampa is 80 miles west of Downtown Orlando and with an inventory of 33 million sf is Florida's second largest office market next to Miami's 42 million-sf inventory.

Despite a slowdown in growth along I-75, the continuing popularity of the corridor with commuters to and from Tampa's central business district will make this submarket a major development player shortly, the report predicts. "The next building boom is likely not far off," Ekovich says.

By submarket, Pinellas County leads the Tampa area with 500,000 sf of new space under way in both St. Petersburg and Clearwater. Downtown Tampa and the Westshore submarket are growing at a slower pace with 700,000 sf of starts between them. Area wise, construction starts have dropped to 2.8 million sf from 3.7 million sf in 1999.

Rents are rising but at a slower 1.3% gait than the previous year. The metro average overall rent is $16.03 per sf. Class A is at $19.96 per sf; class B, $14.92 per sf; and class C, $12.62 per sf. The highest rents are in the North I-75 corridor, Downtown and Westshore with a peak of $18.26 per sf. The central business district saw the strongest rent growth at 4.4% to an average asking rate of $17.98 per sf.

"Although there are no real weak areas in Tampa Bay for office rents, rates were low in St. Petersburg and Pasco and Hernando counties," Ekovich tells GlobeSt.com. "While rents in Pasco and Hernando are a reflection of their geographical isolation from the rest of the Bay, available information suggests that St. Petersburg should be much stronger."

Ekovich predicts St. Petersburg is "an excellent candidate for future rental upside in the next 12 to 24 months."

Sales of office properties are strong in most Tampa Bay submarkets, the report finds. Prices reached $87.68 per sf last year, up from the 1998-2000 three-year average of $70.99. The highest prices, averaging $126.91 per sf, were posted in the South I-75 corridor, Westshroe and Northwest Hillsborough.

"Office investment prices should continue to hover in the high $80s per sf through the end of the year," Ekovich feels. He senses a record number of deals will be done in 2001.

"Investor focus is anticipated to shift toward larger properties, sales of which have been somewhat slow of late," the Marcus & Millichap executive predicts.