Downtown Tampa is seeing strong activity.

MIAMI—At the end of the third quarter, office fundamentals in Tampa remained solid with an impressive 228 bps decline in the direct vacancy rate over the trailing 12 months to a current 11.03%, healthy net absorption for the year-to-date of 530,963 square feet, and a notable uptick in the asking rental rates of $1.49 per square foot since the third quarter of 2016 to a current $22.89 per square foot on a full-service gross basis. That's according to Avison Young's latest report.

Nearly every submarket has recorded positive net absorption so far in 2017 with the exception of North Pinellas and Downtown Saint Petersburg. Saint Petersburg's bump was largely due to a significant block of office space landing on the market following the disposition of the former Priatek Plaza during the second quarter, Avison Young reports.

Although the market is finally experiencing a fair amount new speculative development, Trey Carswell, principal at Avison Young, tells GlobeSt.com most of this focus appears to be on larger tenants. By larger he means 200,000 square feet or more.

“Many of the small to mid-size users are forced to find options within existing product, which is becoming quite scarce,” Carswell says. “Although we are definitely seeing rent growth and reduced landlord concessions, the average market rent growth is still somewhat constricted by the absorption of older product which can be weighing down some of the numbers.”

E-commerce, building construction, and consumer products continue to be driving forces for Tampa Bay's industrial market, according to Lisa Ross, a senior vice president at Avison Young. Online retailers are absorbing more space, she says, whether it be directly or via their logistics partners, and we don't see this trend subsiding any time soon.

(Did you read this? Four Good Reasons We're Not Seeing More Office Construction)

“We, the consumers, are demanding our products more and more quickly,” Ross says. “And the available categories for online products continues to expand. Who would have guessed we'd be ordering our food—and our pets' food—online now?”

Both multifamily and single-family development remains very active in Tampa, she continues, and Avison Young is seeing growth in its tenant base. That growth is tied to building construction as well as consumer products: cabinets, countertops, flooring, roofing supplies, furniture, and appliances, just to name a few. “Not only are we seeing local growth in these companies,” Ross says, but local companies are becoming regional and/or national companies as their customer base demands they expand in to other markets to service their relationship.”

(Did you read this? Four Good Reasons We're Not Seeing More Office Construction)

Instant Insights /

This Office Market Ends Q3 With 'Impressive' Numbers… Mostly

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