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IT’S OFFICIAL: 2009 is the worst on record for Tampa Bay’s office
leasing market. The region’s vacancy rate rose to its highest point in 17 years; meanwhile, net move-outs plunged to the worst levels seen in years; 25 years – a negative 1.14 million sf. The two largest counties, Hillsborough and Pinellas, account for nearly 80 percent of that hemorrhaging.
What’s happening with office space losses is a direct reflection of
the region’s job losses. The jobless rate in the Tampa-St. Petersburg MSA, for example, moved up to 12.3 percent this past November
– more than 2.6 times greater than the rate in December 2007.
Anecdotally there is some optimism that the worst may be over.
Leasing agents report more calls expressing
interest, some deals are being consummated.
But rents across the region
dropped and concessions are deal makers … or breakers.
With a vacancy rate of 16.0 percent, Sarasota looks downright
stable in comparison to the other counties, which range in vacancy
from 20.2 percent to 31.8 percent. Yet Sarasota, too, had a loss in
occupancy for the year – 70,380 sf. Nonetheless, the net outflow the
past three quarters has averaged just under 5,500 sf per quarter.
Hillsborough, after a slight rebound last quarter, again experienced
losses this quarter equivalent to a year ago, when this freefall began.
Westshore is the hardest hit market. Fourth quarter’s loss – 225,800
sf – was the worst since second quarter 2003. Significant move-outs
this quarter at six office buildings totaled nearly 200,000 sf. Westshore’s
loss for 2009 of more than 400,000 sf is unparalleled.
Downtown Tampa’s market improved a bit from a year ago – its
loss in 2009 was about one-fourth that experienced in 2008. Downtown
hasn’t experienced an annualized gain since 2007, and at that
it was slight. The I-75 Corridor clung to a net gain in 2009 despite
losses the last two quarters. Even so, the Corridor’s vacancy rate rose
2.8 points during the year as new space entered the market.
Pinellas’ net losses in 2009 were 50 percent greater than in 2008.
That pushed the county’s vacancy up by 3.8 points to the highest level
since 1993. Two of five submarkets squeaked out positive quarterly
gains, but all five suffered serious losses over the full year.
Manatee saw its vacancy level increase by 4.2 points in 2009 to its
highest point in 22 years.
Pasco was the only county to report a net gain for both the fourth
quarter and for the year, but just by a hair. Meanwhile, the vacancy
rate climbed 3.1 points over the year and remains the region’s highest.
Polk’s vacancy rate took the biggest hit in 2009, climbing 6.3
points. The county’s rate has stood right at or above 20 percent for
the past decade.
Around the region, 12.9-million sf of office space stands vacant
today (21.8 percent) versus 10.9-million a year ago (19.0 percent).
Asking rental rates declined by $.61 per sf on average from a year
ago. Pinellas saw the biggest shrinkage at $.93 per sf. Agents report
nearly a half million sf of space is coming available in the next 12
months as leases expire. Space available on a sub-lease basis
remains stable.
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