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TAMPA, FL-The exiting of a single large user at the beginning of the first quarter has dropped Tampa Bay area office statistics into the basement from where they may not improve for a few years, according to a new market analysis by Colliers Arnold Commercial Real Estate Co.

MCI Worldcom Intermedia voided its 800,000-sf lease at its building in the Highwoods Reserves project in the northwest submarket of New Tampa, FL. “This tenant leaving is the main reason the Bay area dipped so heavily into negative absorption” in Q1, says Colliers Arnold analyst Jeremy Kral.

The North American arm of Germany-based Deutsche Bank in New York has been inquiring about the vacant space, Kral says.

Continued weak demand has raised class A office vacancies to 16.93% in Q1, up 2.5% from 14.36% in Q4 of 2002. Kral predicts vacancies could top 17% by yearend.

“Demand will remain dismal until market conditions show strong signs of improvement and business confidence recovers,” the analyst says. “This type of market is a good time to be a tenant and a difficult time to be a landlord.”

Total net absorption of Tampa’s 70 million-sf office market was a negative 542,011 sf in the first period, down from a positive 97,946 sf logged in Q4 of 2002. Class A absorption was a negative 636,364 sf. The suburban market accounted for a negative 626,069 sf. The Downtown class A sector stood at a negative 10,295 sf.

One of the few encouraging signs of the first quarter’s performance was the slowing of the sublease space volume, which grew by only 1.2% in Q4.

Downtown class A space, including sublet premises, shows a 17.85% vacancy factor, up from 17.65% in the previous quarter. Suburban class A vacancies are at 16.68%, up about 3.5% from Q4.

Still, class A average quoted rental rates Downtown are up 34 cents to 19.71 per sf. Suburban rents decreased seven cents to $19.08 per sf. The overall market average for quoted rental rates is $19.16 per sf, down two cents from last quarter’s average of $19.18 per sf.

Despite the gloomy Q1 numbers, Kral says Tampa Bay “continues to expand and adds about 49,000 workers to the labor force every year.”

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