A Summer Stillness

by Laurel S. McQueen

It was, shall we say, a sluggish summer on the office leasing scene across the Tampa Bay region, with modest gains over the second quarter in Hillsborough and Pinellas, but a generally poor performance across the other counties. Hillsborough rebounded from a net loss in occupancy in the second quarter to a level about 80 percent of the quarterly average over the last five years. The county's vacancy rate dipped slightly. Annual absorption dropped 39 percent as the strong third quarter of 1998 dropped out of the twelve-month moving rate. Class A space is 11.1 percent vacant, with the weighted average rent at $20.28 per sf.

Annual office Absorption* (based on the prior 12 months)

Absorption in the downtown market returned to the plus side; however, annual absorption is at a net loss position, as three quarters of modest absorption could not overcome last quarter's high net loss. Class A space is 9.7 percent vacant. Here, the weighted average rent is $20.07 per sf. Westshore suffered a net loss in occupancy for the second quarter in a row. Class A space is currently 7.8 percent vacant, with weighted average rent of $21.31 per sf. At present, only eight Class A buildings have contiguous space of 10,000 sf or more, but 578,060 sf of space under construction at three locations is due online by the end of the year.

After three quarters with net losses in occupancy, the Northwest sub-market had a strong showing, led by a lease to Critikon of 42,615 sf at Woodland Corporate Center. The vacancy rate dropped nearly three points, while annual absorption climbed 32 percent.

Out along the I-75 Corridor, net quarterly absorption dropped 55 percent from the previous quarter. Class A space is 26.4 percent vacant, down 3.2 points. Class A rents average $18.47 per sf, up $1.35 per sf from a year ago.

In Pinellas, leasing activity picked up after four very poor quarters. Third quarter's net absorption is 47 percent higher than the quarterly average over the last five years. Completion of three buildings prodded the vacancy rate up 1.4 points. Class A space is 12.6 percent vacant, up 3.1 points over second quarter. Meanwhile, Class A rents average $16.43 per sf, up $.47 since third quarter 1998.

The Gateway market had the lion's share of the quarter's activity. Completion of Roosevelt Center and Tides of Feather Sound added 308,000 sf to the market, boosting the vacancy rate four points. Castille at Carillon, completed last quarter, has quickly filled up, and Koger Center Gateway reported solid leasing. The Class A vacancy rate is 21.4 percent vacant - up 9.8 points, while average rents are up $1.36 to $15.75 per sf.

In the northern part of the county, Countryside reported net absorption of 16,785 sf with a vacancy rate of 5.9 percent. Downtown Clearwater netted just 5,685 sf and has an 18.7 percent vacancy rate. For the entire Clearwater and north sub-market, Class A space is 9.8 percent vacant, with average rents of $17.02 per sf.

Sarasota County experienced its largest net quarterly loss in occupancy that Maddux Report has ever recorded. This was due to Arthur Andersen's move from Pen West Park into a single-user building. Class A space in the market is now 12.9 percent vacant, with average rents of $17.32 per sf. Vacancy rates in the three Sarasota sub-markets are: Downtown (42 buildings), 9.1 percent; suburban Sarasota (56 buildings), 13.9 percent; and Venice (8 buildings), 17.7 percent.

Net quarterly absorption in the Tampa Bay region's other three counties totaled just 26,940 sf - a decidedly lackluster performance. Maddux Report does not track Class A space in these three counties.

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.