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Commercial real estate brokerage firm JLL says that while the impact of the novel coronavirus on the Tampa Bay office market has been minimal to date, construction starts and pressure on rental rates will likely continue for the foreseeable future. In a pair of reports pertaining to the second quarter, JLL indicates that leasing activity this year as compared to 2019 has been anemic and little change is forecast.
On the impact, to date, of the COVID-19 pandemic on the Tampa Bay office market: “After a robust 2019 and relatively sow leasing activity and rent growth heading into 2020, the second quarter was shaping up to be a telling one for Tampa amidst the pandemic. With our first true quarter of pandemic influences coming to light, we observe that initial shifts in fundamentals have been minimal.”
On how future space evaluations could impact the market: “Initial COVID impacts on the Tampa office market seem to be confined mostly to the tools that landlords are using to attract firms amidst muted leasing activity, but that may shift later in the year, driven by firms evaluating what their mid- to long-term footprint looks like in a post-COVID world.”
On how diminished leasing activity is impacting ongoing office construction projects: “While implications of the COVID-19 pandemic seem to have left construction timelines relatively intact, preleasing activity and eventual lease-up timing will likely be impacted by reduced leasing activity so far this year.”
On the future of office rental rates in the Tampa Bay area: “We expect continued downward pressure on asking rents, but shifting tenant needs, muffled leasing activity, anticipated move-ins and new deliveries are all applying different (and often opposing) forces on vacancy and absorption.”
On future office development in the Tampa Bay area over the next two years: “Amidst the current pandemic and general global uncertainty, construction starts will likely remain limited as the current pipeline fully delivers by mid-2021, adding 1.3 million square feet.”
488,054
Amount of office space, as measured in square feet, set to be delivered by the end of this year in two projects, Sparkman Wharf and Heights Union. Combined, the two buildings are 60% pre-leased.
-171,857
Amount of office space, as measured in square feet, negatively absorbed in the Tampa office market thus far in 2020. Negative absorption occurs when more space overall is added to a market through construction deliveries or sublease availability than is removed through leasing activity.
14.1%
Overall office vacancy rate in the Tampa Bay office market at the end of June. St. Petersburg’s central business district maintained the lowest vacancy, at 4.7%, while the Interstate 75/Interstate 4 corridor north and east of Tampa had the highest rate, at 22.8%.
$30.81
Average overall office rental rate in the Tampa market as of June 30. Tampa’s downtown Class A properties had the highest asking rent rate, at $43.58, and Pinellas County’s outlying areas posted the lowest asking rent, at $17.54 per square foot.
8.4%
Percentage increase in asking rental rates in the Tampa area from June 2019 through June 2020. In the second quarter, however, Class A rental rates rose just 0.5%.
1,298,904
Amount of new office space, as measured in square feet, under construction in the Tampa Bay area as of June 30.
29
Number of new office sublease opportunities in the Tampa Bay area added to overall inventory over the past 12 weeks. Combined, they total 240,000 square feet.
60%
Amount, on a percentage basis, that office leasing activity in the Tampa Bay area has dropped in 2020 as compared to that of the same period in 2019.
115,000
Amount of new office space contained in Renaissance VII, the largest new office delivery thus far this year in the Tampa Bay area. The building in Vision Properties’ Renaissance Center has been fully leased by Wellcare.
Source: JLL
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