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TAMPA, FL-Central Florida’s largest industrial real estate market is gradually changing from a tenants’ market to a landlords’ market, according to separate third-quarter studies by the Tampa Bay offices of Grubb & Ellis Commercial Florida and Colliers Arnold.

Positive net absorption of 507,564 sf in the third quarter has brought the vacancy level to 7.3%; spurred speculative construction; raised rents; and is triggering fewer concessions, says Melanie Garlock, marketing and research manager, Grubb & Ellis.

She sees the trend as “a transition” in which “higher construction costs are also impacting rental rates as well as contributing to the already short supply of industrial properties for sale.” Garlock is confident “the strong growth of the industrial market should continue well into 2005.”

Russ Sampson, executive vice president and director of brokerage, Colliers Arnold Real Estate Services, is also seeing new trends in the market, largely stemming from the damage done to industrial properties by the unprecedented four-hurricane assault on Florida in August and September.

“The big story in Florida for the third quarter 2004 was simply the weather,” says Sampson. “Many tenants are now requesting more information relative to flood zone classifications and power supplies,” he says. “Some brokers report their marketing strategies are being revised where possible to boast of ‘high and dry, non-evacuation zones.’” Sampson adds, “Challenges exist but market activity has remained brisk.”

He says investment interest and activity “remains strong for industrial buildings, particularly those ranging in size from 10,000 sf to 50,000 sf.” Investors have been pursuing this specific product for the past 18 months “with no end in sight.” Land sales are also strong as developers plan future projects, the Colliers Arnold executive says.

The third-quarter vacancy level of 7.3% in 13 monitored submarkets compares to the 7.2% vacancy posted in the second period and is a sharp improvement from the 17.1% vacancy mark in the first quarter of this year, according to Grubb & Ellis statistics. Colliers Arnold puts the overall vacancy at 8%.

The net absorption of 507,564 sf for the third quarter and 449,581 sf for the year to date is also up from 356,422 sf in the second quarter and a negative 414,405 sf logged in the first three months of 2004, according to Grubb & Ellis. Colliers Arnold puts the quarter-to-date absorption number at 311,519 sf.

Grubb & Ellis tracks one million sf of new construction in the third quarter versus 1.2 million sf in the second period and 653,680 sf in the first quarter. Colliers Arnold has 981,795 sf as the under-construction figure for the third quarter with 84,380 sf completed.

Average asking rent for warehouse and distribution space is $4.54 per sf and $7.88 per sf for flex space, according to Grubb & Ellis. Colliers Arnold has warehouse/distribution space going for an average $4.42 per sf; manufacturing, $4.35 per sf; and flex/service space, $7.82 per sf.

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