While rent growth rises, office supply in Tampa remains stubbornly low.
Times are good for some Tampa area landlords.
Tampa, according to a new report from CoStar, had the No. 8 highest average office rent growth nationwide over the past year. At 4.2% growth, the region was tied with Sacramento. Jacksonville, at No. 6, 4.8% growth, was the other Florida city on the list. Austin, Texas, at 5.8%, is the fastest growing nationally in highest average office rent, the report shows, while four of the 10 cities in the list are in California.
The CoStar report cites San Antonio-based insurance and investment giant USAA, which has had a big presence in Tampa for several years, as one of the key drivers of absorption of space. That, and a few other recent lease deals, have drained the supply.
“This is another city in which office rents have gone up primarily because new construction has remained so low,” the report states. “Financial industry growth has boosted employment but developers have remained wary of the Tampa market, which has been one of the lowest construction metros in the nation this cycle.”
Proof? Of the Top 10, Tampa, the report shows, has the lowest percentage of total office space under construction, at 0.7%.
On a national scale, office rents in cities with at least 1 million people have continued to rise, the report adds, albeit at a slower pace now than several years ago. That rate is now at 2.1% over the past 12 months, CoStar reports, roughly one-third of what office rent growth was several years ago.
Market average office rent growth/past year
San Jose 5.7%
San Francisco 5.5%
Raleigh, N.C. 4.6%
East Bay, Calif. 4.1%