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Office space losses in Hillsborough County continue to frustrate and thwart both itself and the region. From almost any angle, Tampa Bay’s largest office market is in the crosshairs. Hillsborough’s annualized loss this period of 850,000-plus sf is nearly two-thirds that of the region’s. That loss is 80 percent greater than the combined losses of the other counties. The county’s 12-month loss today far exceeds any experienced by the entire region over the past 25 years … except for the past six quarters.
Of the six counties surveyed, four reported losses for the quarter
and five for the 12 months. Only Pasco is in the black for both the
quarter and the 12 months. There is a silver lining, however. For tenants
in the market, space abounds, rents are cheap and deals are happening.
In Pasco, we had lost contact with Medallion Corporate Park near
the beginning of 2009. During those missing quarters 36,000 sf was
absorbed, so Pasco’s numbers for the last three periods have been
adjusted upward. With this quarter’s activity, the county’s annualized
gain increased by more than a third from last period. But a vacancy
rate of 28.4 percent continues to be the region’s highest, hovering
slightly above that of Pinellas.
Polk posted its first quarterly gain in over a year, which decreased
both its 12-month loss from last period and its vacancy rate. We
removed five buildings this quarter from the Polk survey, the activity for
which we’ve been unable to verify for some time.
In Hillsborough, the losses again were led by Westshore, which
accounts for about three-fourths the county’s decline. That submarket’s
first-quarter loss of over 270,000 sf was comparable to the previous quarter; its vacancy rate climbed by 2.7 points. Major losses in Westshore hit
six Class A buildings while one Class B actually signed a substantial lease.
Meanwhile, downtown Tampa’s first-quarter loss was three times that of the
previous quarter, and the I-75 Corridor’s loss was more than twice as much.
The Pinellas market looks almost healthy when stacked against Hillsborough.
The first-quarter loss was 85 percent less than the previous quarter.
And its 12-month loss actually improved by one-fourth, although it’s still
significant at over 300,000 sf. Quarterly losses in Bayside and downtown
St. Petersburg kept the county in the red. And Pinellas’ vacancy rate of 28.1
percent stands at its highest level since 1993.
In Sarasota County, the downtown market enjoyed its first positive period
since third quarter 2008. In a reversal, suburban Sarasota (which includes
Venice) took its first hit in a year. The county’s activity continues to remain
negative for both the quarter and the past 12 months.
Manatee’s net loss for the quarter was the smallest of the four counties
that reported losses. It also was the county’s smallest in the last four periods.
Around the region, 13 million sf of multi-tenant office space stands vacant
today (22.5 percent) versus 11.8 million a year ago (20.3 percent) and
9.2 million two years ago (16.3 percent). At the end of 2009, real estate
agents projected nearly a half-million sf of space would come available in
2010; half of that hit the market this first quarter. Available sub-lease space
increased by 20 percent.
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