Where's the Market?

Office leasing was flat across the Tampa Bay Region during the first quarter, with total net absorption for six counties totaling just 36,360 sf, the lowest quarterly total in five years. Hillsborough County saw its slowest quarter since a net loss in absorption in the first quarter of 1996. Move-ins totaling 228,930 sf were offset by move-outs of 179,518 sf. Annual absorption for the county dropped 24 percent, while the vacancy rate edged up just .3 of a percentage point. During last year office space surveyed in Hillsborough grew by nearly 1 million sf, 60 percent of it in the I-75 corridor.

Downtown Tampa recorded a slight improvement over fourth quarter results. The vacancy rate slipped down .4 percent while annual absorption dipped 11 percent. Class A space in the market recorded net absorption of 15,960 sf, resulting in a vacancy rate of 7.9 percent. Absorption in Westshore, which represents 44 percent of the Hillsborough office market, was a wash for the first quarter. Class A space absorbed totaled 7,630 sf, for a vacancy rate of 4.4 percent. Net absorption along the I-75 corridor was 21,700 sf. The vacancy rate dropped .7 percent while annual absorption dropped 36 percent. This market has the highest Class A vacancy rate at 23.5 percent, which reflects new construction. Class A absorption was 14,970 sf.

To the west of the bay, Pinellas County experienced a net quarter loss in occupancy. The vacancy rate moved up slightly, while annual absorption dropped 48 percent. Office space surveyed in Pinellas grew by 427,440 sf over the last year, with virtually all of the increase in the Gateway market.

The Clearwater and North sub-market had 64 percent of positive absorption recorded in two sub-markets. Following four quarters of net occupancy losses, downtown Clearwater finally recorded net quarterly absorption of 21,010 sf. Countryside's vacancy rate is the lowest in the region at 4.4 percent, with annual absorption of 36,715 sf.

Gateway saw a net loss in occupancy of 50,365 sf, which pushed the vacancy rate up 1.5 points. Annual absorption dropped 42 percent. Class A space is 7.1 percent vacant. Downtown St. Petersburg also saw a net loss in occupancy, which nudged the vacancy rate up .5 percent. Annual absorption dropped 40 percent.

The Manatee market grew by 93,400 sf over the past year. Annual absorption dropped 68 percent during first quarter.

Sarasota County's vacancy rate was unchanged, while annual absorption dipped 7 percent. Class A space is 9.9 percent vacant with annual absorption of 135,530 sf. Class B and C space is 9 percent vacant with an annual net loss in occupancy of 18,690 sf. Downtown Sarasota, which represents 44 percent of the county total, is 8.3 percent vacant and there was a net quarterly loss in occupancy of 19,780 sf.

Leasing activity was recorded at only one building in Pasco County this quarter. Polk County's vacancy rate moved up .7 percent, while annual absorption skyrocketed 125 percent. This was caused by a large net loss in occupancy from first quarter 1998 dropping out of the four quarter total.

Weighted average rents decreased by $.12 per sf during the first quarter. Hillsborough's average rate decreased $.43 per sf, while Pasco's was unchanged. The other four counties saw increases ranging from $.07 in Sarasota to $.13 in Polk. Quarterly changes occur not only as individual buildings change their rates, but also as various buildings change their listings from Òvaries" or Ònegotiable" to a monetary rate. For buildings that list a rental range, the midpoint of the range is used in calculating the market average.

NOTE: Office buildings fully leased for two or more quarters do not appear in the survey charts. All office buildings are updated each quarter. Previous quarterly data is revised as new information is received. Survey charts may include sub-lease space, which is not included in analysis numbers.

For more complete information call the Maddux Report's Research Department at 727/321-3225.