Office Leasing Slow; Pinellas Way Down
by Laurel S. McQueen

The Tampa Bay region’s third-quarter office leasing market improved somewhat on the previous quarter’s modest net quarterly absorption pace but still finished 2002 in the doldrums. Across the region absorption for 2002 was 40 percent lower than in 2001.

Hillsborough County finished the year with solid leasing pushed along by firm gains in Westshore and the I-75 Corridor. Absorption for the year saw a modest 15 percent gain over the previous year. Meanwhile the vacancy rate slipped up .3 percent since yearend 2001 and weighted average rent increased by 15 cents a foot. The stock of sublease space that appears in our survey charts increased from 249,700 sf to 267,640 sf in Hillsborough. Most of this space is split between Westshore and the I-75 Corridor. If this empty space were included in the county’s vacancy rate, it would climb to 17.4 percent.

The I-75 Corridor was the county’s most active market. But over half of the 190,930 sf of move-in space was located at the Atrium Center at Sabal Park. Move-outs totaled 83,322 sf at five buildings. The vacancy rate dropped 2.2 percentage points from last quarter, but up 1.6 points from year a ago. The weighted average rent increased by 61 cents a foot from a year ago. The Westshore market followed closely on the I-75 Corridor with net absorption up from a net loss. Weighted average rent dropped 17 cents per foot.

Pinellas County’s unexceptional net leasing dropped 26 percent from last quarter’s modest activity. The county’s total absorption for 2002 was actually a net loss in occupancy – the first time Pinellas has been in this position since MADDUX REPORT began surveying the market in 1984. The county’s vacancy rate moved up 1.8 points over the course of the year while weighted average rent dropped nine cents a foot. Pinellas has at least 145,460 sf of sublease space available, which, if included, would raise the county’s vacancy rate to 17.1 percent.

In the northern part of the county, Countryside recorded a net quarterly loss in occupancy of 31,600 sf driving the vacancy rate up 3.1 points from the year-ago position. The downtown Clearwater market saw a net loss of 12,190 sf.

For the third consecutive quarter the Gateway neighborhood had the county’s only noteworthy quarterly absorption, more than double last quarter. However, the modest total for the year was down 65 percent from 2001. Meanwhile Downtown St. Petersburg’s 2002 loss in occupancy was the first time in 10 years that the sub-market had such a bleak year. Sarasota County leasing activity saw a reasonable increase over the previous quarter, but it wasn’t enough to bring the 2002 total up to last year’s level – instead the year had a 22 percent drop. The county’s vacancy rate moved up 2 points during the year, while rents remained stable.

Leasing activity in Manatee County resulted in a net quarterly loss in occupancy for the third consecutive quarter. Annual absorption took another small dip from the previous quarter, but was actually up 54 percent from 2001. Manatee leads the region with 58 percent of all new construction. Pasco County ended the year with a minor net loss. In Polk average rents dropped by 18 cents a foot over the course of the year.

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 sublease space, which is not included in analysis numbers. For questions regarding the survey, or to receive a full survey chart, send an email request to MADDUXResearch@AOL.com. Or, call the MADDUX REPORT Research Department at 727/321-3225 or 727/8234394.