TAMPA - It’s not time to call out the marching bands, but second quarter results in the Grubb & EllisCommercial Florida Quarterly Office Trends Report for the Tampa Bay region spotted some local economic data that’s been missing for more than two years – positive absorption of office space.
Patrick Kelly, managing director of Grubb & EllisCommercial Florida in Tampa, said the Office Trends Report – an in-depth quarterly survey of office leasing and sales activities from Manatee County to Polk, including Hillsborough and Pinellas submarkets – showed positive absorption of office space in one Pinellas submarket and in all but one of the Hillsborough submarkets during the quarter.
“Market activity has clearly picked up,” Kelly said.
“It’s too early to call this a trend and the net numbers are small, but second quarter results fall on the positive side of the chart for the first time in the past 10 quarters,” Kelly said.
Positive absorption results when total square footage leased by tenants outpaces new construction. The Second Quarter Grubb & EllisCommercial Florida Quarterly Office Trends Report found only one major project under construction – an 88,000 square foot facility in the northeast Tampa submarket.
The Tampa Bay region posted an overall vacancy rate of 19.5 percent, up slightly from the first quarter results. Vacancy rates range from a high of 40 percent in the Pinellas County Bayside submarket, to a promising 10.6 percent in South Tampa. Tampa’s Central Business District posted a vacancy rate of 19.7 percent and Tampa’s Westshore submarket posted 21.9 percent vacancies.
Developers typically look for sustained vacancy in the 7-10 percent range before planning new construction, and that will take some time.
“But there’s a lot of silver lining,” Kelly explained. “Tenants are value shopping. That’s a big step forward. Some of them are relocating, a sign of market velocity,” he said.
Kelly said the spread between historical rents and discounted rents is luring innovators into the market. “Especially in Class B and Class C facilities, we’re seeing entrepreneurs come back into the market with new business plans,” Kelly said.
“These startups are the underpinning of our entire economy and we need to nurture them with appropriate incentives,” Kelly said.
About Grubb & EllisCommercial Florida: Grubb & EllisCommercial Florida is an affiliated commercial real estate services firm specializing in the leasing and sale of office, industrial, retail, land and investment properties. Currently Grubb & EllisCommercial Florida has 30 brokers divided among its Tampa, Orlando and Melbourne offices which serve the entire mid-Florida marketplace.
About Grubb & Ellis: Grubb & Ellis Company (NYSE:GBE) is one of the largest and most respected commercial real estate services and investment companies in the world. Our 6,500 professionals in more than 100 company owned and affiliate offices draw from a unique platform of real estate services, practice groups and investment products to deliver comprehensive, integrated solutions to real estate owners, tenants and investors. The firm’s transaction, management, consulting and investment services are supported by highly regarded proprietary market research and extensive local expertise. Through its investment subsidiaries, the company is a leading sponsor of real estate investment programs that provide individuals and institutions the opportunity to invest in a broad range of real estate investment vehicles, including public non-traded real estate investment trusts (REITs), mutual funds and other real estate investment funds. For more information, visit www.grubb-ellis.com.
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