Surging industrial sector in Tampa is expected to continue in 2020, while office development remains in the "peaking phase" of the economic cycle
Commercial real estate brokerage firm JLL, in a series of recent reports on the Tampa-area and Polk County markets, concludes that industrial absorption in the final quarter of last year was strong and is expected to continue in 2020, but the area’s office market remains solidly in a “peaking phase” in Tampa – especially in downtown and Westshore.
On the level of activity in the Tampa industrial market: “The construction pipeline has cooled to it’s lowest level since 2016, with 638,811 square feet worth of projects underway heading into 2020. Rent appreciation has also slowed, but nears 5 percent year-over-year.”
On where the region’s various office submarkets are in the economic cycle: “Active areas like Westshore and Tampa CBD continue to climb the peaking phase, with new construction finally starting in these areas, we could see this trend continue for the near future.”
On rising office rents and their causes in the Tampa area: “Asking rents have been soaring across Tampa but particularly in Westshore and the CBD submarkets. Here, not only has new construction attributed to asking rent growth but existing owners have taken the opportunity to adjust the benchmark of their own assets. This has resulted in average asking rates for existing buildings seeing year-over-year increases of over 10 percent.”
On the equilibrium in the office supply and demand equation in Tampa in the year ahead: “We expect an additional 873,000 square feet to deliver in 2020 which may bring some new, available space to market.”
On the amount of new office space underway in the Tampa Bay market and how it stacks up to development in recent years: “The construction pipeline is the most active its been since 2007, with nearly 1.5 million square feet under construction across Tampa CBD, Westshore, and Northwest Tampa submarkets.”
On the influx of younger workers into the Tampa Bay area through 2024: “Proven to be a fertile ground for start-ups and tech companies, Tampa Bay’s population of 25-34-year-olds is forecast to grow by 4.4 percent over the next four years.”
Amount per square foot, on a triple net basis, of the average asking rent for industrial space in the Tampa Bay area at the close of the fourth quarter of 2019.
Percentage of vacant industrial space in the Tampa Bay area as of Dec. 31. By comparison, the rate of vacant industrial space in the nearby Polk County at the same juncture stood at 8.6%.
Amount of industrial space absorbed, or removed from the market as a result of leasing activity, in 2019 in the Tampa Bay area. In the fourth quarter alone, 667,474 square feet of space was absorbed in the Tampa area.
Amount of new industrial space, as measured in square feet, that has been added to the inventory in the Tampa Bay submarket over the past 24 months.
Amount of new office space, as measured in square feet, currently under construction across the Tampa Bay market at the conclusion of the fourth quarter of 2019.
Percentage of vacant office space in the Tampa Bay area at the end of the final quarter of last year. The figure represents a decline of 100 basis points, however, from the 14.4% mark that stood at the end of 2018.
Average office asking rent amount in the Tampa Bay area, as measured on a per square foot basis, at the end of 2019. Asking rents for Class A office space, defined as less than 25 years old, in superior locations and with modern amenities, are actually closing in on $40 per square foot. Two years ago, by comparison, average asking rents stood at roughly $24 per square foot, with Class A rents at about $28 per square foot.
The amount of new funding raised for start-up companies in the Tampa-St. Petersburg metropolitan service area in August 2019.
The unemployment rate in the Tampa Bay area, as measured as a percentage of total workforce, as of October. The percentage is lower than the national average by as much as 100 basis points, according to some calculations.