Office Market Pace Slows

The Tampa Bay region office market had a slow quarter in five of the six counties covered by Maddux Report. But the sixth (and largest), Hillsborough, sent its net quarterly absorption rate soaring to a two-year high.

At 345,800 sf, Hillsborough's net third quarter absorption was more than four times last quarter's. The vacancy rate nudged up to 9 percent by the addition of new space, while annual absorption moved up 14 percent to 823,850 sf. The county's weighted average leasing rate* moved up to $17.48 per sf. The average for Class A space is $19.72 sf, while the B&C space average is $14.01 sf.

Two Harbour Place was completed in the downtown market, opening at 50 percent occupied. The addition of new space caused the Class A vacancy rate to climb to 8.4 percent, while the Class B&C space rate slipped to 24.3 percent. Downtown's average leasing rate is $17.96 per sf and breaks down to $19.91 per sf for Class A and $14.15 per sf for classes B&C.

Westshore's net quarterly absorption was off 31 percent from the 2nd quarter. The market's vacancy rate dipped to 5.8 percent. Class A space in the market is 5.1 percent vacant. Class B&C space is 6.6 percent vacant. The market has the region's highest average rent at $18.49 per sf with Class A space averaging $20.31 per sf and Class B&C space averaging $16.08 per sf.

Construction was completed on Hidden River Center II and a new building at Pinebrook Business Park. Together the two buildings add 186,524 sf to the I-75 corridor market, 79 percent available. This increased vacancy 5.5 points to 12.1 percent. The corridor's average rent is $15.80 sf: Class A at $17.12 sf and Class B&C at $10.09 sf.

Pinellas County took the third quarter off, with net quarterly absorption dropping back 93 percent from the second quarter level. Annual absorption slid 10 percent to 991,500 sf. The county's average rent is $14.40 sf, with the Class A average at $15.96 sf and the Class B&C average at $13.09 sf. In northern Pinellas, Countryside is 5.1 percent vacant, while downtown Clearwater's vacancy rate is 21.6 percent and the Palm Harbor/Tarpon Springs market's vacancy rate is 9.1 percent. North Pinellas' average rent is $14.24 sf, with Class A averaging $15.86 sf and Class B&C averaging $10.94 sf.

Bayside continues to have the region's lowest vacancy rate. It also has Pinellas County's highest average rent at $15.76 sf. Class A rents average $17.55 sf with B&C space averaging $13.09 sf. Bayside's Class A vacancy rate is 2.7 percent, with the largest contiguous space just over 3,500 sf. The Class B&C rate is 6.4 percent vacant.

The Pinellas Gateway's average rent is $13.90 sf, with Class A at $14.39 sf and Class B&C at $13.27 sf. Downtown St. Petersburg's vacancy rate slipped to single digits this quarter for the first time. The average rent is $15.39 sf, with Class A's average at $16.22 per sf and the Class B&C average at $13.02.

Third quarter absorption was 30,290 sf for the region's other four counties combined. Average rents range from $10.88 per sf in Pasco County to $14.75 sf in Sarasota County. Construction was completed this quarter on a 26,000 sf building at Manatee's Lakewood Ranch Town Centre, opening 50 percent occupied. The second building at Sarasota's Cattle Ridge Business Park was also completed, 60 percent pre-leased.

*All rates are weighted averages, taking into account the asking range plus the size of the buildings involved. Office buildings fully leased for two or more quarters don't appear in the survey charts. All office buildings are updated in the database each quarter. Survey charts may include sub-lease space not included in analysis numbers.

For more information, or to receive a copy of the Pasco County and Polk County surveys, call the Maddux Report Research Department at 727/321-3225.