TAMPA, FL-Office building owners in the 69.6-million-sf Tampa Bay office market are seeing rents rising as existing space is leased quickly and the anticipation that 1.12 million sf of new space under construction will also carry higher rent ranges, according to a new market study by Colliers Arnold. Only 176,323 sf of new product was completed by June. Office condominiums represent 32% of the total new space in the construction pipeline.

Russ Sampson, executive vice president and director of brokerage in the Tampa office of Colliers Arnold, confirms there are “fewer choices of existing space” on the market compared to the first quarter. A total 304,654 sf was absorbed in the second quarter. The class A suburban office vacancy rate is at 6.1%, an improvement from 6.3% in the first quarter. The 20-million-sf class A suburban market comprises one third of the total 61.6 million total suburban office space.

Sampson says the class A suburban market vacancy is the second lowest in the country. “The No. 2 ranking is an extremely well-regarded and respected position in a range of cities showing up to 37.2% vacancy rates,” he says. Las Vegas was ranked first with a 6% vacancy. Tampa tied with Little Rock, AR for second-place honors. The overall Tampa Bay office market shows a 10% vacancy level.

Average direct lease rates are averaging $19.06 per sf, up from $18.18 per sf. Class A direct lease rates are at an average $21.35 per sf, up from $20.49 in second quarter 2005. Class A rents in six of the largest submarkets monitored by Colliers Arnold show the 14-million-sf Westshore submarket at an average $25.12 per sf; the 13-million-sf I-75 corridor at $21.57 per sf; the 7.9-million-sf Tampa CBD at $20.32 per sf; the 6.7-million-sf Gateway area at $21.01 per sf; the 4.5-million-sf North Pinellas market at $24.21 per sf; and the 3.35-million-sf St. Petersburg CBD at $23.07 per sf.

Although lower vacancies in the suburban markets helped keep the rate at 10%, the biggest loser in the second quarter was Tampa’s central business district. This submarket shows a class A vacancy of 21.2%; an overall vacancy of 17.1%; and a negative absorption of 154,912 sf. Sampson says the Downtown exit of two large tenants created the higher vacancy. CP Ships vacated 139,013 sf at 401 E. Jackson St. and Verizon vacated 53,923 sf at 201 N. Franklin St. New construction Downtown totals 85,000 sf.

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