Tampa Office Vacancies at 15.9%

Even with an improved fourth-quarter leasing period showing a positive 34,453 sf of net absorption, Jeffrey Sweeney, Grubb & Ellis managing director for Florida, sees cloudy skies for property owners this year.

"Landlords face a difficult year with higher vacancies and intense competition to attract and retain tenants," Sweeney tells GlobeSt.com. "The best news for owners is that new construction has halted in Tampa Bay."

There was also good news as 2002 ended. The 9.9-million-sf Westshore submarket posted net absorption of 76,000 sf and Downtown St. Petersburg, FL showed 29,000 sf in positive absorption.

"It appears that the Tampa Bay office market may have finally stabilized in the last half of 2002," Sweeney says. But a recently abandoned 800,000-sf lease by Intermedia "impacted any short-term rebounds the office market has seen, and puts a tremendous strain on an already vulnerable leasing market," the Grubb & Ellis executive says.

Tampa's 6.1 million-sf Downtown submarket, struggling with an 18.4% vacancy rate, heard good and bad news when Bank of America decided to remain in the central business district with a 14-year, 131,000-sf lease at the Bank of America Plaza, 101 E. Kennedy Blvd.

"However, by consolidating its operations, Bank of America will occupy half the space it currently does, adding more vacant space to an already challenged submarket," Sweeney tells GlobeSt.com.

The most severely hit submarket is the 5.2 million-sf Interstate 75 corridor with a 20.6% vacancy rate; one million sf of empty product; and only 28,929 sf of net absorption for the year. The I-75 hub is the second largest submarket next to Westshore.

All of the larger 12 submarkets analyzed by Grubb & Ellis are showing vacancies over 10%. Only the 821,872-sf Mid Pinellas submarket (8.9%) and the 547,537-sf South Tampa submarket (6%) are under the 10% vacancy bar.

Asking average class A rents are $21.01 per sf; and class B rents are $17.44 per sf. Downtown Tampa class A averages $20.80 per sf; class B, $18.58 per sf. Westshore is the most expensive with class A at $22.66 per sf; class B, $19.72 per sf. Of Tampa Bay's total 35.6 million-sf inventory, the suburbs comprise 29.4 million sf.

"As recovery hangs in the balance, another year of uncertainty begins for landlords," Sweeney says. "The economic conditions that hindered the marketplace will likely continue through the first half of 2003. However, at any moment, an act of terrorism or war with Iraq could stall recovery, causing further woes." He adds, "at this point, only time will tell."