Tampa Office Market Rebounding

Overall vacancies in 16 submarkets tracked by ColliersArnold in Pinellas and Hillslborough counties are 11.65%, down from 11.85% in the second quarter and also under the national second-quarter vacancy level of 15.3%. Net absorption is 48,115 sf, up from a negative 151,598 sf.

"While this gain is modest by historical standards, it does give an indication that we may have bottomed," ColliersArnold research analyst Jeremy Kral tells GlobeSt.com.

Average quoted rents are at $15.49 per sf, up from $15.12 in the previous period. "After cutting rates in the first quarter, landlords have increased the average quoted rental rates 37 cents since last quarter," Kral says.

"We are finding that, while the quoted rates have increased, concessions such as free rent and above average tenant improvements are still widely available," he says.

The engine driving the improved performance at 1,334 buildings over 10,000 sf monitored by ColliersArnold is the 12 million-sf, 196-building Westshore submarket--the largest in Tampa Bay and the most expensive at an average quoted rent of $17.97 per sf.

Westshore logged a positive 182,700 sf in the net absorption column, a performance Kral calls "a major improvement" from the negative 210,707 sf posted in the second quarter. Vacancies are at 13.06%, down from 13.94% last quarter.

ColliersArnold president J. Patrick Duffy says in a prepared statement the third-quarter net absorption number "means the Tampa market absorbed 393,407 sf of new office space last quarter, and that's rather phenomenal." National developers are aware of the numbers, too, Duffy says."The historic strength of the Westshore market, despite its current high vacancy, is the reason that this market has the highest proposed sf with almost two million sf planned," analyst Kral says.

The analyst predicts Westshore's proximity to the Tampa International Airport and its central location to the housing stock in Tampa Bay "will continue to support this vibrant submarket."