First Loss in 51/2 Years
by Laurel S. McQueen

LEASING IN TAMPA BAY'S OFFICE MARKET CONTINUED TO SLOW through the third quarter, resulting in the first regional net loss in occupancy in five-and-a-half years. Only two of the region's six counties saw positive net absorption for the quarter. Hillsborough's third-quarter absorption was down 81 percent from second quarter, while the vacancy rate dipped 0.8 of a percentage point. Annual absorption, on the other hand, moved up 20 percent as a very small third quarter 2000 absorption dropped out of the four-quarter moving rate. The county's Class A space netted 90,470 sf of quarterly absorption ­ nearly three times last quarter's total, but annual Class A absorption dipped 9 percent.

Downtown Tampa experienced a fairly flat quarter with just 46,700 sf of move-ins at seven buildings. This was tempered by 24,125 sf of move-outs at three buildings. Not included in the totals, however, was a full floor of sublease space at SunTrust Financial Center that was re-leased. The vacancy rate moved up 1.5 points with the addition of the Kress Square development to the survey. The Class A vacancy rate was at 9 percent; the Class B & C rate climbed 8.1 points to 29.4 percent.

Westshore's net quarterly absorption was nearly non-existent. And the submarket's annual leasing dropped to a net occupancy loss as a large level of absorption from last fall dropped out of the moving rate. The vacancy rate moved back into double digits, up 0.6 point.

The I-75 Corridor continued as the top leasing market. Large blocks of space were taken at Hidden River Center III and at Regency Corporate Park. The vacancy rate moved up 1.3 points because of the addition to the survey of the now vacant Washington Mutual Financial building at Hidden River.

Pinellas County continued the downward slide of last quarter. The vacancy rate moved up 1.3 points while annual absorption declined 13 percent. The Class A vacancy rate climbed 2.3 points. Annual Class A absorption was 278,830 sf.

The Bayside submarket took the worst hit this quarter with a loss of 42,000 sf at Arbor Shoreline. This space has been empty for some time, but the lease just ran out in July. As a result, the vacancy rate climbed 4.5 points.

Countryside experienced its fourth consecutive quarterly loss in occupancy, reaching a 10.5 percent vacancy rate. Downtown Clearwater moved up to a 17.3 percent vacancy situation, while the Dunedin, Palm Harbor, Tarpon Springs market vacancy rate moved up to 13.2 percent.

Sarasota County's annual absorption dropped 91 percent as a high level of absorption from third quarter 2000 was replaced by a net loss in occupancy this quarter in the moving rate. The downtown Sarasota market is 8.1 percent vacant, up 1.4 points. Suburban Sarasota slipped up to 18.4 percent vacant, while the Venice market was unchanged at 23.4 percent vacant.

No activity was reported in Manatee County during the third quarter. Just one 3,200-sf lease was reported in Pasco County. Polk County reported activity at only four locations.

Across the region as a whole it would now take six years to fill up all the vacant space at the current annual pace of leasing. Add the space under construction (and not preleased) and the lease-up time moves up to 6.3 years.

NOTE: Office buildings fully leased for two or more quarters do not appear in the survey charts. All office buildings are updated each quarter. Previous quarterly data is revised as new information is received. Survey charts may include sublease space, which is not included in analysis numbers.
For more complete information call the Maddux Report's Research Department at 727/321-3225.