Tampa Bay Office Market Report - Q1 2012

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  • 1. Q1 2012 | OFFICETAMPA BAY FLORIDAOFFICE RESEARCH REPORT Tampa Bay Florida Market Poised for Steady Advance EXECUTIVE SUMMARY The Tampa Bay office market activity was steady during the first quarter of 2012. The market continues to show signs of positive progress in its recovery as the economy improves. Tampa’s unemployment rate continues to drop reporting in at 8.9% for the month ending in March. The flight to quality is a dominant theme, as tenants seize the opportunity to lock in lower rates as they relocate to Class A space. This trend is particularly prevalent in St. Petersburg’s Gateway submarket, which posted the area’s lowest vacancy rate - 13%. Rates remain relatively flat overall with concessions abating slightly during the first quarter. The Healthcare market remains strong, as large medical practices move to facilities that have prime locations relative to the patient baseMARKET INDICATORS they service. Meanwhile, construction of new office space – something not even contemplated Q1 2012 Q2 2012* since 2007 – seems to be around the corner. In downtown Tampa, Trammell Crow is planning construction of a 400,000 square foot project – SouthGate Office Tower. In Westshore, Crescent VACANCY Resources has reintroduced their plans to build two 300,000 square-foot buildings, as has Rubenstein’s with their Westview Center - three buildings totaling 580,000 square feet. NET ABSORPTION CONSTRUCTION • Landlords are now meeting the market • Investment sale activity was quiet. Class A OVERALL norms in terms of rates, tenant improvement buildings in top locations and single-tenant RENTAL RATE allowances and free rent. net lease deals continue to command the CLASS A RENTAL • Downtown Tampa: good things are lowest cap rates. RATE happening; downtown residential is now • Call centers continue to be active for*Relative to prior period. Arrows compare over 95% occupied, the CAMLS project is significant blocks of space. Insurancecurrent quarter to the previous quarter historically open and operating, and Channelside Retail companies, technology firms, marine/adjusted figures. All data in this report includes will be sold and revitalized under new environmental activities and law firms arebuildings 10,000 square feet and greater. ownership. driving demand for office space. COMPLETIONS, ABSORPTION AND VACANCY RATESOVERALL OFFICE MARKETSUMMARY STATISTICS, Q1 2012 Completions Net Absorption Overall Vacancy Class A Vacancy VACANCY RATES CURRENT VACANCY RATE: 15.9% 20% 500 Tampa Bay’s overall office vacancy rate 18% Square Feet (1,000s) - Bar Graph PREV. QTR. VACANCY RATE: 15.5% 400 rose to 15.9 percent in Vacancy - Trend Line YEAR AGO VACANCY RATE: 16.4% 16% the first quarter of 300 14% 2012. Class A vacancy 200 also increased slightly NET ABSORPTION: -235,889 sf 12% to 15.5 percent. 10% 100 UNDER CONSTRUCTION: 286,000 sf 8% 0 6% CURRENT AVG. ASKING RATE: $19.36/FS -100 4% PREV. QTR. AVG. ASKING RATE: $19..59/FS 2% -200 YEAR AGO AVG. ASKING RATE: $19.72/FS 0% -300 SOURCE: COSTAR & COLLIERS INTERNATIONAL Q1 11 Q2 11 Q3 11 Q4 11 Q1 12
  • 2. RESEARCH REPORT | Q1 2012 | OFFICE | COLLIERS INTERNATIONAL TAMPA BAY FLORIDA UNEMPLOYMENT TRENDS VACANCY submarket at $16.85 per square foot. Tightening market conditions and lower unemployment Tampa Bay’s office vacancy rose slightly by 0.4 rates are expected to keep rental rates steady percent during the first quarter of 2012, Florida Tampa MSA USA for the remainder of 2012. Class A large blocks14% finishing the quarter at 15.9 percent. The of space remain difficult to find which will bode highest vacancy rates are located in the I-75 well for Landlords and their ability to begin a12% Corridor at 17.3 percent, and North Pinellas at slow increase in rental rates in 2013. We 16.9 percent. Lowest total vacancy rates are10% continue to see concessions in the form of free seen in the Gateway submarket for the second rent and above average tenant improvements. consecutive quarter of the year, at a rate of 8% 13.0 percent. INVESTMENT SALE ACTIVITY 6% ABSORPTION Healthcare REIT purchased a 95,000sf medical 4% Overall net absorption registered negative office facility at 3000 Medical Park Drive in -235,889 square feet, reversing the positive Tampa for $16.865 million ($177 psf). Interstate 2% direction seen over the previous two quarters. Center on MLK in Tampa, a 344,896 sf office The Gateway submarket vacated 74,904 facility sold for $17,250,000, $50.02/SF. And 0% square feet of office space, while the I-75 a trio of office buildings traded in Clearwater Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Corridor saw a net positive absorption of for $9.412 million (approx. $145 psf). These 45,602 square feet. properties, at 83-93 Park Place Blvd., were The Tampa Bay MSA unemployment rate RENTAL RATES sold to Johnson-Lancaster & Associates. posted 8.9 percent March 2012, which represents a 12 percent decrease from the Direct overall asking rates reached $19.36 in Colliers International has Lakeside Technology end of the fourth quarter 2011. The State of the first quarter of 2012, declining $0.20 from Plaza, a 224,000 sf property in Westshore, Florida rate was 8.6 percent in March 2012, the previous quarter. Overall Class A asking while the national rate ended March 2012 at listed on the market at the time of this writing. rates ended the quarter at $23.20 per square 8.4 percent. Other properties are expected to come to foot, down $0.09 from the fourth quarter of market in the coming quarters, particularly in Source: Florida Research & Economic 2011. The Westshore submarket continued to the Tampa CBD and Westshore, due to pent up Database command the highest rental rates at an average demand and stabilizing fundamentals of of $23.34 per square foot full service, while well-leased office projects. North Pinellas remained the most affordable TRANSACTION UPDATE SALES ACTIVITY PROPERTY NAME CLASS BUYER NAME SIZE SF SALES PRICE SUBMARKET The Pointe A Parkway Properties 252,000 $46,900,000 ($185.86/sf) Westshore Interstate Corporate Center B Rialto Capital Management LLC 344,896 $17,250,000 ($50.02/sf) Northeast Tampa 5585 Rio Vista Dr* B Magellan Realty Partners 30,000 $2,600,000 ($86.67/sf) Bayside 4610 Eisenhower Blvd* A Girl Scouts of West Central Florida 24,000 $2,150,000 ($89.58/sf) Westshore LEASING ACTIVITY PROPERTY NAME CLASS TENANT NAME SIZE (SF) LEASE TYPE SUBMARKET Thompson Center Waters* B Real Estate Investors 23,570 New Northwest Tampa Park Tower* B GSA/ATF 14,275 Renewal/Expansion Tampa CBD 100 N. Tampa A KPMG 13,944 Renewal Tampa CBD Wells Fargo Center* A BDG Architects 8,625 New Tampa CBD Plaza Tower* B H&R Block Eastern Enterprises 3,737 New St Pete CBD*Colliers International TransactionP. 2 | COLLIERS INTERNATIONAL TAMPA BAY FLORIDA
  • 3. RESEARCH REPORT | Q1 2012 | OFFICE | COLLIERS INTERNATIONAL TAMPA BAY FLORIDAUPDATE SUBMARKET COMPARISONSSUBMARKET BREAKDOWN Total Net Absorp. New Property Total Inventory Direct Vac. Net Absorp. YTD Under Avg. Direct Asking Rate Full Bldgs. Vac. Current Completions Class S.F. % S.F. Construc. S.F. Service % Qtr. S.F. S.F.TAMPA CBD A 12 4,783,266 14.6% 15.5% -8,768 -8,768 0 0 $23.09/fs B,C 62 3,640,074 12.1% 12.1% 10,101 10,101 0 0 $18.43/fs Overall 74 8,423,340 13.5% 14.0% 1,333 1,333 0 0 $21.51/fsWESTSHORE A 40 7,603,852 17.9% 18.4% -29,120 -29,120 0 286,000 $26.08/fs B,C 202 7,928,650 11.8% 12.1% 723 723 0 0 $19.18/fs Overall 242 15,532,502 14.8% 15.2% -28,397 -28,397 0 286,000 $23.34/fsI-75 CORRIDOR A 43 6,737,143 15.6% 16.6% -34,984 -34,984 0 0 $21.52/fs B,C 282 9,301,450 17.5% 17.8% 80,586 80,586 0 0 $17.47/fs Overall 325 16,038,593 16.7% 17.3% 45,602 45,602 0 0 $19.09/fsNORTH PINELLAS A 15 1,319,383 19.5% 19.5% -15,243 -15,243 0 0 $19.16/fs B,C 155 3,827,324 16.0% 16.0% 24,430 24,430 0 0 $15.73/fs Overall 170 5,146,707 16.9% 16.9% 9,187 9,187 0 0 $16.85/fsGATEWAY A 24 3,077,170 4.8% 5.3% -32,803 -32,803 0 0 $21.22/fs B,C 123 4,724,410 17.7% 18.0% -42,101 -42,101 0 0 $16.44/fs Overall 147 7,801,580 12.6% 13.0% -74,904 -74,904 0 0 $17.60/fsST. PETERSBURG CBD A 9 1,635,246 22.2% 22.4% -288 -288 0 0 $22.30/fs B,C 55 2,168,690 9.4% 9.4% -1,932 -1,932 0 0 $19.76/fs Overall 64 3,803,936 14.9% 15.0% -2,220 -2,220 0 0 $20.87/fsTAMPA BAY OVERALL OFFICE MARKET Total Net Absorp. Net New Under Overall Avg. Class A Avg. Total Inventory Direct Vac. Qtr. & Year Bldgs. Vac. Current Absorp. Completions Construction Direct Asking Direct Asking S.F. % % Qtr. S.F. YTD S.F. S.F. S.F. Rate F.S. Rate F.S. 2012 1Q 1,765 79,460,235 15.5% 15.9% -235,889 -235,889 0 286,000 $19.36/fs $23.20/fs 2011 4Q 1,763 79,406,735 15.2% 15.5% 429,696 641,362 0 250,000 $19.59/fs $23.29/fs 2011 3Q 1,763 79,406,735 15.8% 16.1% 324,789 211,666 0 0 $19.63/fs $23.35/fs 2011 2Q 1,763 79,406,735 16.1% 16.5% -41,720 -113,123 0 0 $19.60/fs $23.16/fs 2011 1Q 1,763 79,406,735 16.0% 16.4% -71,403 -71,403 0 0 $19.72/fs $23.18/fs 2010 4Q 1,763 79,406,735 15.9% 16.3% 249,115 100,838 0 0 $19.94/fs $23.44/fs 2010 3Q 1,763 79,406,735 16.1% 16.7% 287,218 -148,277 0 0 $19.98/fs $23.61/fs 2010 2Q 1,763 79,406,735 16.5% 17.0% -216,535 -435,495 0 0 $20.02/fs $23.58/fs 2010 1Q 1,762 79,377,701 16.0% 16.7% -218,960 -218,960 0 0 $20.08/fs $23.59/fs COLLIERS INTERNATIONAL TAMPA BAY FLORIDA | P. 3
  • 4. RESEARCH REPORT | Q1 2012 | OFFICE | COLLIERS INTERNATIONAL TAMPA BAY FLORIDASUBMARKET MAP 522 offices in 62 countries on 6 continents United States: 147 Canada: 37 Latin America: 19 Asia Pacific: 201 EMEA: 118 • $1.8 billion in annual revenue • 1.25 billion square feet under management • Over 12,300 professionals TAMPA BAY CITY LEADER: Ryan Kratz Executive Vice President Brokerage | Marketing | Operations Corporate Office 311 Park Place Boulevard Suite 600 Clearwater, FL 33759 John Gerlach, CCIM TEL +1 727 442 7184 Alan Feldshue Jeff Tolrud, CCIM Managing Director Office Services Managing Director, Office Services Managing Director Investment alan.feldshue@colliers.com jeff.tolrud@colliers.com Services www.colliers.com/Alan.Feldshue www.colliers.com/Jeff.Tolrud john.gerlach@colliers.com www.colliers.com/John.Gerlach Carol Warren, CCIM Jim Allen Mia Jarrell Senior Director Managing Director Managing Director, Office Services Commercial Services Healthcare Services Group mia.jarrell@colliers.com carol.warren@colliers.com jim.allen@colliers.com www.colliers.com/Mia.Jarrell www.colliers.com/Carol.Warren www.colliers.com/Jim.Allen Christopher Leonard, CCIM Ryan Kratz Mary Clare Codd, CCIM, SIOR RESEARCH CONTACT: Director, Commercial Sales Executive Vice President Senior Office & Industrial Specialist christopher.leonard@colliers.com Brokerage | Marketing | Operations maryclare.codd@colliers.com Matt Dolan www.colliers.com/ ryan.kratz@colliers.com www.colliers.com/MaryClare.Codd Christopher.Leonard www.colliers.com/Ryan.Kratz GIS & Research Administrator Claire Calzon Jim Parker, CCIM Melanie Jackson Market: Tampa Bay Managing Director Director Commercial Services Senior Associate Office Services TEL +1 813 221 2290 Office Services jim.parker@colliers.com melanie.jackson@colliers.com claire.calzon@colliers.com www.colliers.com/Jim.Parker www.colliers.com/Melanie.Jackson FAX +1 813 224 9403 www.colliers.com/Claire.Calzon EMAIL matt.dolan@colliers.com Mackenzie Gerlach Joanne LeBlanc Kevin Yeager Associate, Investment Services Associate, Office Services Senior Associate, Office Services mackenzie.gerlach@colliers.com joanne.leblanc@colliers.com kevin.yeager@colliers.com www.colliers.com/ www.colliers.com/ www.colliers.com/Kevin.Yeager Mackenzie.Gerlach Joanne.LeBlanc Copyright @ 2012 Colliers International The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting Tampa Bay Florida on any of the material contained in this report. This report includes owner and non-owner occupied space 10,000 sf and greater. Directional arrows compare current quarter to previous quarter Accelerating success. numbers. Arrows show change when there is a 10 cent or more change in lease rate or 0.5% or more change in vacancy rate. Due to continual updates and refinements in the historical database, some of the data in this report may not match data published in previous reports. Sources: Costar Property and Colliers International Tampa Bay Florida.www.colliers.com/marketname