Tampa Bay office market recovering from the pandemic

Tampa Bay’s office market showed strong signs of recovery in the second quarter of this year, even deliveries in the Westshore section of Tampa pushed vacancy rates slightly upward, according to a new report.

Positive absorption, or the amount of space removed from the market through leasing activity, grew to above 100,000 square feet in the quarter, commercial real estate brokerage firm CBRE Group notes.

It marked the first time that the market went “in the black” regarding absorption of space since the second quarter of 2020, the firm states in its latest Marketviews report.

“Positive absorption this quarter was strongly influenced by the Class B market, especially in Westshore, thanks to a couple of key move ins” by Heritage Insurance and ID.me, the report states.

Still, overall vacancy ticked upward to 16.7%.

Deliveries of new office buildings SkyCenter One at Tampa International Airport and a pair of buildings — Midtown West and The Loft — at the $500 million Midtown Tampa project brought 494,387 square feet to the market, CBRE reports.

In downtown Tampa, the 20-story Thousand & One office tower will add roughly 375,000 square feet when it is officially completed later this year.

Absorption still has a way to go overall, however. Despite the positive turn in the previous three months, since the beginning of the year the market has posted negative absorption — more space brought to market than taken off through new leasing — of 279,336 square feet, largely the result of subleasing opportunities.

CBRE expects greater economic recovery in the second half of this year, however, “as the pandemic fades and society and commerce normalize,” its report states.

The nation’s largest commercial real estate brokerage firm is predicting U.S. gross domestic product will surge to 7% in 2021, which would be the highest rate for the country in a single year in decades.