In the 6.5-million-sf central business district, overall second-quarter vacancy sits at 19.3%; class A is at 20.3%. Overall net absorption was only 1,950 sf. But despite the weak performance numbers, investment sales activity remains strong. "Tampa Bay office investors have found a variety of product to pique their curiosity," says Colliers Arnold research director Kimberly Kaiser.

Among major sales transactions, year to date, were SunTrust Financial Center which went for $73.6 million and the 130,000-sf International Academy of Design & Technology Building in the Westshore submarket which sold for $31.2 million or $240 per sf. The IADT building sale was part of a $55.3-million acquisition by Toronto-based IPC US REIT. The deal included the City Center building in the St. Petersburg, FL central business district.

Two user sales have taken more than 300,000 sf of vacant class A space off the market. GunnAllen's $9.5-million purchase of Tropical Sportswear's new but never occupied headquarters building fills 130,000 sf in northwest Tampa. Depository Trust & Clearing Center's $19.7-million purchase removes 176,000 sf from WorldCom/MCI's vacated corporate campus in northeast Tampa.

Second-quarter absorption in Tampa Bay's entire metropolitan statistical area was 180,000 sf. "While not stellar, it comes on the heels of two straight quarters of negative absorption," notes Kaiser. "If local government leaders continue their efforts, bringing new businesses to Tampa Bay, it should increase occupancy." Overall vacancy in the Tampa Bay area is 16.9%; class A is 18.8%.

Overall rental rates are $17.83 per sf; class A is at an average $19.95 per sf. "Although rents have remained stable for several quarters now, all of this interest and activity will likely translate into higher rental rates as demand takes more vacant space off the market," Kaiser says.

Tampa's neighbor, the 2.3-million-sf St. Petersburg central business district posted vacancy rates under 10% with sublease vacancies dropping to below 2%. "The time seems ripe for new class A office product," says Kaiser.

"Unlike some of the older submarkets in the Tampa Bay area, St. Pete's CBD has not suffered from overbuilding during the '90s," Kaiser says. "However, only one significant new office tower has been built during the last 15 years." She says that "may change soon with Progress Energy's recent announcement that it wants to build 200,000 sf of office and retail mixed-use space where the Florida International Museum now sits."