Ryan Kratz, president of Colliers International Tampa Bay, Central Florida ad Southwest Florida

MIAMI—Florida is still seeing gains on the industrial and multifamily front, but what about office space? Many major cities have absorbed the pre-recession glut, but is it time for another round of office space construction at this juncture in the current cycle?

GlobeSt.com caught up with Ryan Kratz, president of Colliers of International Florida, to get his take on this question in part three of this exclusive interview. You can still read parts one and two: Four Good Reasons We're Not Seeing More Office Construction and How Office Landlords Are Adapting to Changing Tenant Needs.

GlobeSt.com: What are successful tenant rep brokers doing to help clients find the office space they require?

Kratz: Office tenant rep brokers are counseling their clients to adapt to the current tighter market conditions. Brokers suggest starting the office search early—even for renewals—considering all available options—on market and off market—and setting expectations on rental rates, tenant improvement allowances, free rent and other concessions. For space improvements, tenants should expect permitting to take longer and the cost of the buildout to be higher than in recent years given the increase in construction and labor costs.

GlobeSt.com: When do you think the Tampa Bay market will see a new office product and where is the need the greatest?

Kratz: For starters, there are possibilities for several new projects in the future in the Downtown Tampa and Westshore markets that are expected to include office space. In Tampa's CBD, Feldman Equities is planning a waterfront mixed-use property with 200,000 square feet of office, in addition to retail and residential.

Also in Tampa's downtown, Strategic Property Partners is set to kick off the initial development of a $2-plus billion investment on the 40 acres near Amalie Arena. This transformative development will bring residential, retail, medical, education, entertainment and office users to the area, likely attracting some major businesses with it.

Tampa's Westshore submarket, the largest business district in the Tampa Bay area, has long been favored by corporate tenants due to its central location with dozens of restaurants, two enclosed malls, several hotels, convenient access to Tampa's airport, and proximity to residential neighborhoods. Several landlords and landowners are looking for anchor tenants, and once they're signed, this will be the catalyst for new development in Westshore. The submarket's asking rental rates for class A-plus assets are approaching mid-$30s per square foot.

Across the bay, Saint Petersburg's CBD is 5.7%vacant with average class A rental rates of $27 per square foot. The area could likely accommodate a new office building, but the challenge is finding available land for office use. There are few well-located sites available to accommodate new office development. As the rental rate delta between existing top-of-market class A space and newly built space shrinks, the ability to justify new construction will increase throughout the market.

GlobeSt.com: What are successful tenant rep brokers doing to help clients find the office space they require?

GlobeSt.com: When do you think the Tampa Bay market will see a new office product and where is the need the greatest?

Instant Insights /

Is New Office Construction Justified?

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