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ORLANDO-Eighty miles west of Downtown Orlando, the 33.7-million-sf retail market at Tampa Bay is prospering as first-quarter vacancies of 11.5% have dropped to 10.1% at the end of the third quarter, a new Grubb & Ellis Co. survey shows.

“Tampa Bay remains a hot spot for retailers,” Grubb & Ellis senior vice president/managing director Jeffrey S. Sweeney tells GlobeSt.com. “Long-term, the picture remains bright” as redevelopment of older shopping centers “continues to change the retail horizon with a new updated look.”

New suburban residential development is opening up large parcels for commercial ventures especially in the submarkets of Pasco/New Tampa, Brandon/Southeast, Citrus Park, 4th Street-St. Petersburg and Lakewood Ranch in Sarasota/Manatee counties.

“As population and employment growth increases and the number of single family homes in these areas continues to soar, so, too, does the need for retail space,” Sweeney says. “An explosion of new residential growth around the perimeter of the metropolitan area is occurring.”

Tampa Bay, which encompasses seven counties, has an estimated permanent population of 3.5 million and a labor force of 1.7 million, according to the latest study by the University of Florida in Gainesville, FL and the 2002 Tampa Corporate Guide. Tampa Bay is the largest consumer market in Florida and the 10th largest retail market in the nation.

The area is home to 87,289 businesses, generating $76 billion of regional product. Three international airports and three deep-water ports export products annually valued at $2.4 billion. There are 19 colleges and universities in the Tampa Bay market.

Even though new niches are surfacing with the population growth, Sweeney tells GlobeSt.com “landlords of grocery-anchored centers face significant challenges as grocers vacate aging centers.” He says “many drug stores, Walgreens and Eckerd’s in particular, continue developing freestanding stores while vacating the same centers once occupied by grocery chains.” Property owners “will remain challenged to backfill these dark, often dated centers.”

Among Tampa Bay’s 10 submarkets monitored by Grubb & Ellis, Northwest Tampa turned in the strongest leasing performance in the third quarter with positive net absorption of 195,809 sf and a 5.4% vacancy level among its 6.78 million-sf market.

Brandon came in with a positive 28,359 sf and a vacancy mark of 7.4% in its 5.4 million-sf market. Riverview was the only other submarket showing positive net absorption with 300 sf and a 1.7% vacancy factor in its 251,443-sf area.

Quoted average rents at neighborhood retail centers are $12.13 per sf, but average $20.25 per sf when super-regional, specialty/theme, power and strip centers are factored in.

For example, super-regional malls such as International Plaza and Westshore Plaza are averaging $35 per sf to $75-plus per sf. In new grocery-anchored and non-anchored centers, average rents of $20 per sf are not uncommon, Sweeney says. Power center anchors average $10 per sf to $15 per sf. Many new town center developments are seeing rents from $25 per sf to $28 per sf.

“The pace of new construction is expected to remain steady as numerous grocery-anchored, big-box, home-improvement, wholesale and discount retailers expand across the region,” Sweeney tells GlobeSt.com.

He says, “Retailers will remain bullish on the Tampa Bay market through the foreseeable future as Central Florida diversifies its economy and becomes the state’s most desired location, not only to visit, but also to shop.”

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