Sarasota Leads Region
by Laurel S. McQueen

THE TAMPA BAY REGION OFFICE LEASING MARKET CONTINUED ON A modest net quarterly absorption pace during the third quarter. But, with 50 percent of the region's new construction being in Sarasota County ­ all along I-75 ­ the county leads the region.

Sarasota's absorption climbed upward again for the third consecutive quarter this year. Year to year, Sarasota reversed its course to a positive net absorption for the quarter. Annual absorption jumped 47 percent as a net loss in occupancy from third quarter 2001 dropped out of the 12-month moving annual absorption rate. Downtown Sarasota recorded its sixth consecutive quarter of net occupancy losses. The vacancy rate downtown is 13.9 percent. The suburban market vacancy rate fell 1.0 point to 10.2 percent, while annual absorption rose 18 percent to 483,017 sf.

Elsewhere, Hillsborough County moved into a net annual loss. Hillsborough's quarterly loss dropped annual absorption to a net occupancy loss - a position it hasn't experienced since mid 1996. Annual absorption for Hillsborough's Class A space also dropped into the net loss column having lost 67,660 sf of occupancy over the last 12 months. The stock of sublease space dropped from 310,000 sf to 249,700 sf, split between Westshore and the I-75 Corridor. If this empty space were included in the county's vacancy rate, it would climb to 18.3 percent.

The northwest market was the county's most active. Move-ins totaling 116,225 sf were reported at 11 buildings. Move-outs totaled 48,006 sf, affecting six buildings. The vacancy rate dropped 2.6 percentage points. The weighted average rent dropped by 30 cents a foot ­ good news for tenants.

There is no construction under way in Hillsborough, a reflection of the economy and other factors. However, Corporate Center Three at International Plaza in Westshore is set to begin construction soon. The 286,124 sf tower is 30 percent pre-leased. Pinellas County's leasing activity was modest, but still an improvement over last quarter's dismal activity.

Pinellas has at least 145,160 sf of sublease space available, which, if included, would raise the county's vacancy rate to 17.2 percent. Half of this space is in downtown St. Petersburg.

Once again the Gateway neighborhood had the county's only noteworthy quarterly absorption, up 18 percent from last quarter. A net loss in occupancy from third quarter a year ago dropped out of the four-quarter moving rate, boosting Gateway's annual absorption back to a positive position. Mercury Insurance Services leased 41,760 sf at Tides of Feather Sound.

Leasing activity in Manatee County resulted in a small net quarterly loss in occupancy. Annual absorption took a small dip. Construction was started on a 60,000-sf medical office building for Manatee Memorial Hospital at Lakewood Ranch Town Center. The new hospital is scheduled to start construction later in the year. Manatee leads the region with 47 percent of all new construction.

Pasco County's small quarterly loss pushed the annual rate deeper into negative territory. Average rents moved down slightly. Polk County had the opposite story. It recorded the highest net absorption in seven quarters pushing the annual rate to a much more respectable level. Average rents dropped by just over $1 a foot.

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 sublease space, which is not included in analysis numbers. For questions, call the MADDUX REPORT Research Department at 727/321-3225 or email at Maddux Research@AOL.com.