Absorption Nosedives
by Laurel S. McQueen

Business park leasing took a dive in 2001. Total absorption for the region fell 86 percent from the 2000 level, and fell below 1-million sf for the first time in 10 years. Only Manatee and Hernando leased more space in 2001 than in 2000. Hillsborough County suffered a net loss in occupancy for the year, the first time this has happened since 1991. By way of comparison, net leasing for 2000 was 1.06 million sf. The county's vacancy rate moved up 1.3 percentage points during 2001. Construction was completed during the year on 948,400 sf of new space, 67 percent of it built on speculation.

West of I-275 the market saw move-outs totaling 584,629 sf compared to move-ins of 174,060 sf. The sub-market's vacancy rate moved up 6.4 points from the beginning of the year. New speculative space in the market totaled 163,755 sf. East of I-275 1.42 million sf was leased, but 1.13 million sf of space was vacated during the year. The vacancy rate rose 3.8 points. New space added to the market totaled 787,660 sf, 59 percent of it speculative.

Pinellas County saw a small net loss in occupancy during 2001, a position the county has never seen before during the 17 years Maddux Report has surveyed the market. By comparison, a net of 1.1 million sf was leased during 2000. The county's vacancy rate rose 2 points during 2001.

In the Pinellas Gateway, 2001's net loss in occupancy compares to a net absorption of 681,960 sf in 2000. Here the vacancy rate moved up 3.5 points during 2001. During the fourth quarter construction was completed on 160,000 sf of speculative space at 34th Street Industrial Center.

Bolstered by a major lease at Palmetto Corporate Center, Manatee County was the region's star in 2001. The county's net absorption was no less than 20 times greater than the previous year and was comparable to the county's performance in 1999. The vacancy rate moved down 1.1 points from year-end 2000. New speculative space totaling 335,040 sf was added to the market during the year. But in Sarasota County the more familiar story of the region took place. While Sarasota finished the year with positive net absorption, the total was down 72 percent from the previous year. The vacancy rate moved up 1.1 points. Construction was completed on 72,375 sf of new space, 50 percent built on spec.

Polk County's net annual absorption was down 90 percent from the prior year's level. The vacancy rate moved up 3.5 points as 289,800 sf of new space came on line, 78 percent speculative.

Hernando County is up 17 percent and Pasco fell 75 percent.

Maddux Report first noticed a trend of rising construction levels in 1997, as the high vacancy levels of the mid 90's began to abate. During the last five years, 8.89 million sf of speculative space has been brought to the market across the region. On top of that, 3.7 million sf in build-to-suits were completed. This new space increased the region's business park inventory by 17 percent.

The pipeline finally appears to have dried up as across the region just 260,900 sf of speculative space is under construction at year-end, compared to 1.3 million sf at the end of 2000. An additional 294,600 sf remains on the planning books for future construction.

Quarterly data is revised as new information is obtained. Data on County Business Park Space Guides may not add up to numbers shown on Business Park Market chart as sub-lease space and space coming available in the next few months are shown in the guides, but not included in analysis data. For more detailed information on the survey call the Maddux Research Department at 727/321-3225 or send inquiries via e-mail to MADDUX Research@AOL.com.