The Roller Coaster Ride Continues.
by Laurel S. McQueen

BUSINESS PARK LEASING IN THE region has been on a roller coaster this year. Up dramatically the first quarter, down startlingly the second quarter. Now in the third quarter the market is on the upswing again. Regardless, three of the last four quarters have been reasonably strong, boosting the 12-month volume to 2.57 million sf, a highwater mark for the past three years. Similarly, this quarter’s volume of 868,510 sf is a three-year high. Meanwhile, not all counties are on the same path. Hillsborough soared while Pinellas slumped, and Manatee rose nicely while the remaining counties limped along.

Hillsborough pulled down its best quarter of net leasing activity in five years, pushing its annualized absorption up by 40 percent. The vacancy rate dropped by 2 points, but Hillsborough still has the region’s highest vacancy level at 11.3 percent. Two properties in east Hillsborough that have been part of the multi-tenant market for years were sold to end users, contributing 35 percent of the quarter’s gain. Elsewhere, large chunks of space (20,000 sf or more) were taken down at eight locations across the county. Duke Realty’s space at Fairfield Distribution filled up this quarter, prompting them to start construction on a new 92,000-sf facility. This represents 56 percent of all space under construction in the region.

In Manatee, space that has been listed as under construction for several years at the Airport Manufacturing Center is now completed and occupied. The Ringling Center for Arts and Industry took 60,000 sf. The county’s vacancy rate dropped while annualized absorption nearly doubled. Pasco’s contribution was primarily hangar space at the Zephyrhills Municipal Airport. Waiting in the wings are three new buildings totaling 31,250 sf, now under construction at West Pasco Industrial Center. The county’s vacancy rate dropped 3.2 points while annualized absorption moved up 48 percent.

Polk rose from a net loss last quarter, but was close to a wash in real activity. The 12-month volume dropped slightly from last report period.

The lion’s share of Sarasota’s modest absorption was at Sarasota Business Center in south county. Its annualized volume fell 40 percent as a much higher quarterly volume a year ago dropped from the 12-month moving rate. Pinellas was the low point in the region’s third-quarter picture. Five large chunks of space totaling 320,450 sf came back on the market – all in the Gateway area. The vacancy rate climbed 1.2 points while annualized absorption dropped 56 percent.

Across the region, a total of 479,110 sf of speculative space has been completed through the third quarter. Only 149,250 sf is under construction heading into the final stretch of the year. Down the pipeline, 250,500 sf of space has been announced, but most of it is on hold until the developers see more stability in the market.

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 regarding the survey, call the MADDUX REPORT research department at 727/321-3225 or email MADDUXResearch@AOL.com.