Businesses and organizations that seek office space in 2024 and 2025 in Tampa are likely to have lots of leverage for lease negotiations.
That’s a big takeaway from the Avison Young 2023 third quarter office market snapshot. The report, for one, found that at least 7.4 million square feet of leases are set to expire throughout 2024 and 2025 in Tampa. “This impending wave of lease expirations comes at a time when various sectors have experienced differing levels of leasing activity in the aftermath of the pandemic,” the report from the commercial real estate firm adds.
Some 45%, 3.4 million square feet of those leases, are over 20,000 square feet, the report found. “These expirations will result in an increase in larger, less desirable spaces, prompting landlords to reconfigure them into smaller floor plans to attract tenant demand,” the report states.
Roughly half, 49.6%, of all leases expiring in the next two years are companies in banking, finance, insurance and real estate — long Tampa business stalwarts. Despite a drop in its share of leasing activity, “this sector still accounts for the largest amount of office tenant demand post pandemic,” the report found, “indicating these tenants will likely continue occupying office space moving forward.”
On the flip side two sectors are increasing space allotments in Tampa. One tenant category, law firms, has increased leasing activity by 43% since the pandemic. And leasing activity is up 67% since the pandemic in the consulting, research, accounting and recruiting sector, the report found. That nugget, the report states, indicates “a resilient demand for office space within these professional service sectors.”
One more potential perk for entities on the hunt for a lease in the next two years: Tenant improvement allowances have increased to $53.21 per square foot at the end of August, up 18.5% since pre-pandemic levels in March 2020. This, Avison Young says, is happening because “high-end spaces and amenities continue to hold high importance for employers looking to incentivize employees to return to the office.”