Tampa Office and Industrial Markets Rebound

"Tampa is a niche market of sorts," says Jeff Lamm, a senior broker in Grubb & Ellis' industrial group here. "The local economy's generally low-cost structures provide for low office rents, combined with a high quality of life, which have helped Tampa become one of the nation's leading providers of back-office space."

Combined Downtown and suburban office market vacancy is at 17%, down from 19% in 2002. The CBD is at 18.7% vacancy; the suburbs, 16.7%. Industrial market vacancy is at 8.4%, down from 8.8% two years ago. Central business district average asking office rents are $19.38 per sf; the suburbs, $17.92 per sf. The average rent for multi-tenant, non-manufacturing space is $4.47 per sf.

"Rents are stabilizing, following a period of year-over-year losses," Lamm says. "Along with resurgent job growth, restraint with respect to speculative development is supporting the market's recuperation." The broker says job creation in Tampa has been "very strong in recent quarters."

The strongest office demand currently is in the Westshore submarket, next to Downtown. Crescent Resources of Charlotte, NC has completed a 300,000-sf International Center in Westshore while Highwoods Properties Inc. of Raleigh, NC plans a 400,000-sf class A building in Highwoods Bay Center. Downtown "remains sluggish," Lamm says.

Nearby St. Petersburg, however, "long a local lightweight," has drawn the attention of North Carolina-based Progress Energy Florida which plans a 200,000-sf regional office building on land owned by the city.

On the industrial side, "demand has improved, absorption has regained positive ground, vacancy is headed downward and growth has returned to rents," the Grubb & Ellis report states. New industrial development is being focused on suburban growth areas. For example, at the Hernando County Airport, the second phase of the 250-acre Airpark has been opened for development.

The 200-acre, $122-million Woods of Moccasin Wallow mixed-use project in Manatee County will include 800,000 sf of distribution space, along with other commercial space. Tampa Bay Executive Airport in Pasco County has been rezoned for industrial development where a 400,000-sf industrial-office complex is on the drawing boards. And in nearby Lakeland, Atlanta-based Haverty's furniture chain is developing a 225,500-sf distribution center.

Probably the largest project under way is the planned 620,000 sf of industrial and office space in the first phase of Port Ybor in the city core area. "This project is the largest spec industrial development ever undertaken in Tampa," Lamm says. Trammell Crow Co. and Lion Industrial trust are joint venturing the Port Ybor project.