Activity Down, Rates Up

Retail leasing activity dropped in the Tampa Bay Region in the third quarter, with three of five counties experiencing a net loss in occupancy. The market remains fairly tight, however, causing landlords to continue to raise asking rental rates. The region's weighted* average rental rate rose 3 percent this quarter to $11.24 per sf.

Hillsborough County had the most successful third quarter with net quarterly absorption of 95,770 sf, a figure down 22 percent from the second quarter level. But annual absorption jumped 50 percent, because a net loss in the third quarter of 1997 was replaced by this quarter's gain in the twelve-month moving figure. Average asking rents moved up by more than $.50 per foot to $11.34.

The southeast sub-market accounted for two-thirds of Hillsborough's net absorption, with 66,390 sf absorbed. Construction was completed on an additional 49,150 sf at Lake Brandon Village. This space was taken by Linens n' Things, Kinko's, Taco Bell and a dry cleaner. Annual absorption moved up 93 percent.

Hillsborough's northeast sub-market netted 37,890 sf, causing annual absorption to more than double. The vacancy rate was pushed down almost a full percentage point. This sub-market has the region's lowest average rental rates at $10.03 per sf, but that is up $.16 from last quarter.

The county's jump in average asking rental rates was attributable to the smallest sub-market, the southwest. A sharp jump in rates at Old Hyde Park Village skewed the rates. This sub-market moved up to the highest average rates in the region at $14.32 per sf.

Sarasota County posted the region's other net gain in absorption for the third quarter. The 31,040-sf increase was a welcome relief from three consecutive quarters of net occupancy losses. Annual absorption, however, remains at a net loss position for the second quarter running. Average rental rates here moved up $.11 per sf to $12.65.

Pinellas County suffered a net occupancy loss of 22,960 sf. Annual absorption dropped 54 percent. Average asking rents increased by $.33 to $11.19 per sf. North Pinellas recorded a net loss in occupancy of 34,660 sf. Annual absorption dropped 77 percent, and average rents were up $.54 to $11.28 per sf. South Pinellas saw net quarterly absorption of just 11,700 sf. Annual absorption dropped 34 percent. Average rents are $11.08 per sf.

Manatee County reported a net occupancy loss of 5,200 sf. However, this was minor in comparison to a much larger loss from the third quarter of 1997 in the continuously moving annual rate. The county's average rent slipped slightly to $10.52 per sf.

Pasco County also had a net occupancy loss, this one of 12,985 sf. The result is the annual rate soared 49 percent to 217,240 sf. Average rental rates were up $.21 to $10.24 per sf. Pasco's occupancy loss was primarily attributable to the closing of the Winn Dixie store at East Richey Square, as the grocery chain continues its trend toward moving to large freestanding stores.

Across the region a number of anchor spaces are empty, but remain under lease. This space is not reflected in the counties' regular vacancy rates. The figures in parentheses below indicate what each county's vacancy rate would be if the vacant anchor space was accounted for. The total of this space has dropped by one-third during 1998, because leasing representatives are successfully turning this space over.

Hillsborough 61,050 s.f.(7.4%)
Sarasota 29,000 s.f. (5.7%)
Pinellas 98,080 s.f. (7.4%)
Pasco 12,070 s.f. (9.8%)
Manatee 68,800 s.f. (9.2%)

*All rates are weighted average, taking into account the asking range plus the size of the buildings involved.

Shopping centers fully leased for two or more quarters don't appear in the survey charts. All shopping centers are updated in the database each quarter. For more information on the survey, or for a copy of the Pasco Retail Guide, call the Maddux Report research department at (727)321-3225.