Market Spotlight: Tampa Bay Office/Industrial

The significant momentum that the Tampa Bay commercial real estate market began 2020 with carried through much of the year in the office and industrial sectors, despite the havoc brought about by the COVID-19 pandemic.

Perhaps not surprisingly, the office sector suffered from increased sublease availability and vacancy rates last year, even as rental rates inched upward to hit new plateaus, especially in Hillsborough County.

Absorption and leasing activity also were down in 2020, contributing to the higher vacancy levels.

Industrial activity, by contrast, soared in the Tampa Bay area in 2020, according to statistics compiled by commercial real estate brokerage firm Cushman & Wakefield.

Asking rental rates rose considerably throughout the year in the region, even as deliveries rose and added millions of square feet to the market. And while leasing activity overall in 2020 fell, the level of absorption over the course of the past two years has been nothing but positive.

$27.44

Amount per square foot landlords were able to command for office space on a full-service basis in the Tampa Bay area at the end of 2020.

4.8%

Amount of the increase, on a percentage basis, of direct office asking rental rates in Hillsborough County last year. Pinellas County rental rates, by comparison, gained 1.1% throughout the year to finish 2020 at $23.54 per square foot — only the second time in history, together with 2019, that asking office rental rates finished the year above $23 per square foot.

$29.60

The amount, on a per square foot basis, of office rental rates in Hillsborough County at the close of 2020. The rate set a new record.

360

The amount, in basis points, of the increase in office vacancy rates in 2020. At the close of last year, overall vacancy had climbed to 14.5%, the result of a flood of sublease availability brought on the market by the coronavirus pandemic.

300,000

The amount, in square feet, that available space in the Tampa Bay area grew in 2020 because of sublease opportunities, as many companies abandoned their offices in favor of work-from-home platforms or re-assessed, at least temporarily, their office space needs.

2.4%

Amount of total office sublease space availability as a percentage of the overall inventory at the end of 2020. Hillsborough County’s percentage is 2.6% of the total, while in Pinellas County, the rate is 1.8%. In both counties, the percentages represent historic high levels.

(-60%)

The amount, on a percentage basis, of the decline in office leasing activity in the Tampa Bay area in 2020 as compared to 2019.                                                              

579,132

The amount of negative absorption, or net space added to the market through sublease opportunities, in the Tampa Bay region last year. Of the total, some 70% came from tenants moving out of office space in suburban Pinellas County. By comparison, the negative absorption in 2020 alone represents half the total amount of space that came back to market stemming from the financial meltdown of 2008.

6.4%

Amount of the increase, on a percentage basis, of asking industrial rents in the Tampa Bay area throughout 2020. The gains came despite new deliveries of inventory, which rose 4.6% in Hillsborough County and 2.9% in Polk County year-over-year.

$6.94

The amount, on a per square foot basis, of asking industrial rents in the Tampa Bay area at the close of 2020. The amount is conveyed on a triple-net basis, meaning that tenants also are responsible for charges such as utilities, taxes, maintenance, janitorial services, insurance or other expenses.

6.5%

Amount of industrial vacancy at the end of 2020 in the Tampa Bay region, a 900 basis point increase vs. the same period in 2019. The increase stemmed largely from the additions to inventory.

1,800,000

Amount of new industrial space, on a square foot basis, added to the Plant City submarket in Hillsborough County in 2020.

7,000,000

Amount of new industrial space, on a square foot basis, added to the Tampa Bay market since the start of 2019. The figure represents the most new space ever added in a two-year period.

(-26.3%)

The amount of the decrease, on a percentage basis, of industrial leasing activity in the Tampa Bay area in 2020 as compared to the previous year. Although the amount of activity was down last year, since the start of 2019 leasing totaled nearly 9 million square feet.

Source: Cushman & Wakefield

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