Up with Absorption!
by Laurel S. McQueen

The office-leasing picture for the first quarter showed a notably positive contrast to the first quarter of 1999, when the entire region's net absorption totaled just 16,350 sf. All six surveyed counties outdistanced their year-ago performances, resulting in annual absorption rates rising from 13 percent (Polk County) to 95 percent (Pasco County) over their fourth-quarter levels.

Annual absorption for the region rose 52 percent. Hillsborough County saw its net annual absorption rise 62 percent. Class A net quarterly absorption was 446,230 sf, resulting in a vacancy rate of 11.5 percent. Class A's weighted average rent was $18.74 per sf. Class B and C space, on the other hand, was merely a blip, with 14,790 sf absorbed (13.6 percent vacant).

Downtown Tampa's vacancy rate dropped 1.7 percent, while annual absorption more than doubled. Three new tenants combined to lease 50,500 sf at Harbour Island's Two Harbour Place. In the Class A category, available space dropped to 8.3 percent; average rents are $20.27 per sf.

Westshore continued to soar during first quarter with the completion of Lake Point II at Tampa Bay Park. The 225,000-sf building hit the market at 52 percent leased. The shifting of tenants to new Class A space continued as the Class B and C vacancy rate climbed 1.3 points. Class A rents shifted up a penny and Class B and C rents dropped $.40. Hillsborough's northwest sub-market gained seven times its fourth-quarter net absorption level. Annual absorption was up 27 percent.

Along the I-75 Corridor construction was completed on Legacy 100 and Northwood Business Center, driving the sub-market's vacancy rate up 1.7 points. Class A space is 25.3 percent vacant, reflecting the large amount of new construction in the market in the last two years. Class A rents slipped $.41 per sf this quarter to $18.62.

Pinellas County didn't fly as high as Hillsborough during the first quarter. Net quarterly absorption was down 71 percent, while annual absorption rose 30 percent. Rents for Class A space rose $.18 per sf to $16.62, while the vacancy rate dropped 1.3 points to 10.7 percent.

Annual absorption for Clearwater and north was up 22 percent. Downtown Clearwater netted 36,900 sf in absorption, dropping the vacancy rate 3.8 points to 17.9 percent. Both Countryside and the northern part of the county recorded net occupancy losses. Countryside is 6.1 percent vacant while the northern market is 10.3 percent vacant.

Downtown St. Petersburg's annual absorption was up 64 percent. Class A space is 6 percent vacant, while the Class B and C rate is 24.8 percent. Class A average rents were up $.35 per sf to $16.39.

Sarasota County's first-quarter absorption was down 50 percent from the fourth quarter, but was nearly five times the level of last year's first quarter. Annual absorption was seven times higher than a quarter ago. Construction was started on four more suburban multi-tenant buildings near I-75 totaling 185,700 sf. The suburban market's vacancy rate dropped slightly to 11.7 percent; the downtown market saw a slight increase in the vacancy rate to 7.4 percent. In Venice, the market's rate dipped to 14.1 percent. In Manatee County, first-quarter absorption was three times the county's five-year average quarterly absorption. Two buildings were completed and occupied at Lakewood Ranch Town Center.

Five buildings totaling 101,500 sf were added to the survey in Polk County, resulting in a 2.2-point rise in the vacancy rate. Pasco County's vacancy rate dropped 1.4 points.

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 sublease space, which is not included in analysis numbers. For more complete information call the Maddux ReportŐs Research Department at 727/321-3225.