(Carl Cronan is editor of RealEstateFlorida.)

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TAMPA-Average asking rents in the Tampa-St. Petersburg officemarket reached an all-time high in the first quarter, according toa research report by CB Richard Ellis. The report also notes thatthere is nearly one million sf of vacant sublease space in theoffice market surrounding Tampa Bay.

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The current trend of negative absorption and corporatedownsizing, which contributed to an overall vacancy rate of 14.7%through the first three months of 2008, is expected to continue, atleast over the short term. Economic uncertainty is causing sometenants to put expansion or relocation plans on hold, CBREreports.

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"Many businesses are thinking long and hard before they makecommitments related to their real estate requirements," saysMichael Hoffman, first vice president with CBRE in Tampa. He notesthat residential real estate's troubles are becoming more visibleon the commercial side, caused by factors such as renewed financialmarket uncertainty and increasingly tightened credit.

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Office vacancy in the Tampa Bay market grew at least apercentage point from the end of 2007 and three points from lastyear's first quarter, CBRE figures show. Southeast Tampa has takenthe worst hit, at 31.7% vacancy, largely due to the closing of a100,000-sf Home Depot call center in January.Tampa's Westshoreoffice submarket continued to show strength during the lastquarter, finishing with roughly 10% vacancy, while Downtown Tampavacancy reached nearly 15% and Pinellas County stood at 17%.

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Despite rising vacancy rates and negative absorption of 173,600sf for the quarter, asking office rents continued climbing steadilyto $21.55 per sf in the first quarter, with class A rents reaching$24.17, according to CBRE. Westshore continued to command thehighest class A office rent around Tampa Bay at $29.19 per sf,though that price is down slightly from the end of 2007.

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Area experts believe strong class A rents are continuing to propup overall asking prices for local office space, though thosenumbers may not swell much more given increasing competition amonglandlords and concessions offered to prospective tenants. "At thispoint, I think we're going to see some flattening of rents throughthe rest of the year," says Randy Smith, research director for GVAAdvantis in Tampa.

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Despite reaching a new high mark last quarter, Tampa's askingrents appear in the midrange among Florida's major office markets.Through the first quarter, rents are more expensive in Miami at$30.88 per sf and Orlando at $22.24 per sf, yet cheaper in FortLauderdale at $18.43 per sf and Jacksonville at $18.19 per sf,according to CBRE research.

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Investment activity in the Tampa Bay market remained strongduring the first quarter, particularly among less-than-trophyoffice assets, CBRE stated. The largest local sale this year is the171,000-sf Bridgeport Center building in Tampa, which AEW CapitalPartners sold to Flagler Development Co. for $29.5 million, or $172per sf.

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