Companies Sit Tight
by Laurel S. McQueen

As the economy slows down, so does office leasing across the Tampa Bay market. While in raw numbers the region's net quarterly absorption soared compared to last quarter, over 80 percent of this quarter's net leasing was at just two properties. Otherwise, only Manatee County saw a quarterly absorption increase out of the six-county survey area.

Hillsborough's second quarter net absorption was up significantly from the first quarter. But 88 percent of the quarter's net leasing activity was at netp@ark.tampabay in the North Central submarket. Otherwise Hillsborough saw net leasing of just 37,808 square feet, which is a 67-percent drop from the first quarter. The county's vacancy rate dropped 1.1 percentage points, but if netp@ark is taken out of the equation, the rate drops just .1 point.

At the current rate of leasing, it would take 5.8 years to fill Hillsborough's vacant space. If the pace of leasing a year ago had continued, it would have taken 2.8 years. In the Westshore market, where nearly a half-million square feet is under construction, it would take 9.1 years to fill the currently vacant space and the new space coming on line. The I-75 corridor actually saw the best quarterly activity. The vacancy rate here dropped 1.7 points. Class A space in this market is now 21 percent vacant, a 2.9-percent drop since the first quarter.

Pinellas County saw the same phenomenon as Hillsborough. Over 90 percent of its second-quarter leasing was a result of the completion of a new building for Franklin Templeton at Carillon. Approximately 29 percent of the building is available for lease to outside companies. Without this absorption the county would have seen only 8,830 square feet of net absorption, about half of the first quarter's activity and down 92 percent from a year ago. It would take 5.5 years to fill Pinellas's vacant space at the current level of leasing. That's up from 3.5 years if last year's leasing pace had continued. In the North Pinellas market Countryside's vacancy rate moved up a notch to 9.1 percent. Downtown Clearwater's vacancy was almost unchanged at 16.3 percent, while the rate in the Dunedin-Palm Harbor area dropped 1.7 points to 11.9 percent.

While Manatee County's net quarterly absorption was relatively modest, it is 3.5 times more than the last three quarters combined. Construction was completed on the Taylor-Woodrow building at Lakewood Ranch Town Center. It is 100-percent occupied.

Sarasota County's abysmal net quarterly absorption was the county's lowest since third quarter 1999. Suburban Sarasota has the highest vacancy rate at 17.4 percent. It is also where new construction is going up. Construction was completed at Live Oak Corporate Center and the Lakewood Corporate Center at Lakewood Ranch. These buildings totaled 117,000 square feet and are 79 percent vacant.

Although Pasco's net quarterly absorption dropped a third from the first quarter, it replaced a net quarterly loss in the four-quarter moving annual absorption rate. The current annual absorption is its highest since fourth quarter 1998. Across the region it would take five years to fill all the vacant space at the current pace of leasing. Add the space under construction and that time increases to 5.4 years, compared to 3.8 years at last year's leasing pace.

NOTE: Office buildings which have been fully leased for two or more quarters do not appear in the survey charts. All office buildings continue to be updated in the database each quarter. Previous quarterly data is revised as new information is received. Survey charts may include sub-lease space, which is not included in analysis numbers.

For more complete information on the survey, or to receive a full survey chart, call the Maddux Report Research Department at 727/321-3225.

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.