TAMPA, FL-Despite the addition of 149,595 sf of new space delivered during the quarter, the industrial market continued to show strength during the first quarter, according to market reports.

The market experienced its 10th straight quarter of positive absorption, with market demand raising industrial space occupancy by 564,653 sf during the quarter, according to a GVA Advantis Tampa Area Industrial market review for Q1.

The direct vacancy rate declined significantly, with a 60-basis point drop in Q1 that saw the rate drop to 4.1%. Rental rates continue to move higher in concert with tightening conditions and increased construction costs for new product. The average asking rate for industrial space inched slightly upward in the quarter, closing at $6.93 per sf, according to GVA Advantis.

Among significant transactions this quarter was Ikea's announcement in March of plans to construct a new 353,000-sf store at the site of the Tampa International Center. This 29-acre parcel contains 566,000 sf of industrial warehouses dating from the 1950s.

According to a Colliers Arnold Q1 industrial/flex market report for Tampa Bay, the positive trends the region has been experiencing are expected to last through 2007. Strong market fundamentals coupled with continuing demand for space has created the climate for the current rise in new construction. "This year will be solid, and there will be continued strength in Tampa's commercial market," the report states. "We have strong demand, and lease rates are continuing to increase substantially."