2018 Q1 Industrial Outlook

1. © 2018 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Q1 2018
Tampa Bay
Industrial Insight
While 2018 seems to be off to a strong start in terms of positive net absorption
and a continuously declining vacancy rate—currently near the 4.0 percent
historical low—the lack of large blocks of space begins to limit just how much
activity we will be able to see over the course of the year. In fact, newly
delivered product such as the 605,000-square-foot-CenterState Logistics Park
are often leased before the building is complete—in this case by Quaker Sales
& Distribution who accounted for most of the positive absorption in the West
Polk submarket this quarter. With a healthy supply of speculative product in
the pipeline, it is in new construction that we will see the large lease
transactions this year.
In terms of existing product, some landlords continue to be able to “ride the
wave” of increasing asking rates and are enjoying some of the ancillary spill
over from large users choosing Tampa. The development activity influences
fundamentals across the region, despite where the final product is actually
built. Good news for areas like Pinellas County and the Airport, as scare land
sites prevent the level of development we have seen in eastern submarkets.
Outlook
Depending on how much interest the big blocks of space coming to market
garner, 2018 could be the year where vacancy begins to level out. New
product will place continued upward pressure on asking rates, but the
increased availability would provide more options for firms choosing Tampa
for their local or regional industrial operations. Of course, this could also have
implications on Tampa’s older industrial inventory if firms begin opting to
move to new construction rather than renewing in place. Still, demand for
older, more affordable space is still prevalent with firms that care less about
clear heights and more about their annual real estate cost.
Fundamentals Forecast
YTD net absorption 1,382,816 s.f. ▲
QTD net absorption 1,382,816 s.f. ▲
Under construction 4,544,892 s.f. ▲
Total vacancy 4.1% ▼
Average asking rent (NNN) $5.67 p.s.f. ▲
Tenant improvements Falling ▼
0
2,000,000
4,000,000
6,000,000
2013 2014 2015 2016 2017 YTD
2018
Supply and demand (s.f.) Net absorption
Deliveries
Speculative construction will help alleviate tightening
market this year
9.4%
7.9%
6.6%
5.7%
4.8%
4.1%
2013 2014 2015 2016 2017 2018 YTD
Total vacancy
For more information, contact: Kyle Koller | Kyle.Koller@am.jll.com
• Net absorption was strong in the first quarter, led by a couple of large
tenants moving into their spaces in Polk County
• Over 4.5 million square feet is currently under construction across the
region, much of it speculative with East Tampa holding the largest share
• Asking rates climbed by just 0.7 percent to start the year, but this is
expected to increase as the newest projects deliver throughout 2018
$0.00
$2.00
$4.00
$6.00
2013 2014 2015 2016 2017 2018
YTD
Average asking rents ($/s.f.)
W&D Manufacturing

2. Tampa Bay
Q1 2018
Industrial Statistics
Inventory
(s.f.)
Quarterly
total net
absorption
(s.f.)
YTD
total net
absorption
(s.f.)
YTD
total net
absorption
(% of stock)
Total
vacancy
(%)
Total
availability
(%)
Average
total asking
rent
($ p.s.f.)
Quarterly
completions
(s.f.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
Tampa Bay Totals
Warehouse & Distribution 151,133,249 1,490,431 1,490,431 1.0% 4.2% 10.9% $5.55 1,022,241 1,022,241 4,514,692
Manufacturing 53,810,073 -107,615 -107,615 -0.2% 3.7% 5.8% $6.31 0 0 30,200
Totals 204,943,322 1,382,816 1,382,816 0.7% 4.1% 9.6% $5.67 1,022,241 1,022,241 4,544,892
Submarkets
North Pinellas
Warehouse & Distribution 4,582,189 -2,843 -2,843 -0.1% 1.9% 3.1% $6.89 0 0 0
Manufacturing 2,018,122 0 0 0.0% 1.2% 2.5% $6.89 0 0 0
Totals 6,600,311 -2,843 -2,843 0.0% 1.7% 2.9% $6.89 0 0 0
Mid Pinellas
Warehouse & Distribution 7,284,276 17,487 17,487 0.2% 2.5% 5.8% $6.24 32,000 32,000 136,450
Manufacturing 7,928,235 -500 -500 0.0% 5.7% 8.1% $6.51 0 0 0
Totals 15,212,511 16,987 16,987 0.1% 4.1% 7.0% $6.40 32,000 32,000 136,450
Gateway
Warehouse & Distribution 9,917,207 -126,001 -126,001 -1.3% 5.4% 9.0% $6.59 0 0 0
Manufacturing 7,977,817 -67,523 -67,523 -0.8% 5.7% 9.6% $6.35 0 0 0
Totals 17,895,024 -193,524 -193,524 -1.1% 5.5% 9.3% $6.48 0 0 0
South Pinellas
Warehouse & Distribution 7,016,165 9,958 9,958 0.1% 1.3% 6.2% $4.70 0 0 0
Manufacturing 3,046,789 3,031 3,031 0.1% 2.7% 7.3% $5.79 0 0 0
Totals 10,062,954 12,989 12,989 0.1% 1.7% 6.5% $5.07 0 0 0
Westshore/Airport
Warehouse & Distribution 9,718,778 5,948 5,948 0.1% 3.3% 8.2% $6.62 0 0 21,000
Manufacturing 2,824,723 34,330 34,330 1.2% 1.8% 3.0% $6.10 0 0 0
Totals 12,543,501 40,278 40,278 0.3% 3.0% 7.0% $6.57 0 0 21,000
East Side
Warehouse & Distribution 49,428,175 250,467 250,467 0.5% 6.0% 14.9% $5.41 132,041 132,041 2,179,008
Manufacturing 10,444,871 17,211 17,211 0.2% 3.2% 5.3% $5.15 0 0 0
Totals 59,873,046 267,678 267,678 0.4% 5.5% 13.2% $5.39 132,041 132,041 2,179,008
Manatee/Sarasota County
Warehouse & Distribution 22,931,507 65,818 65,818 0.3% 3.3% 4.9% $8.41 28,200 28,200 220,000
Manufacturing 8,486,933 -65,828 -65,828 -0.8% 2.9% 4.8% $7.67 0 0 0
Totals 31,418,440 -10 -10 0.0% 3.2% 4.8% $8.21 28,200 28,200 220,000
East Polk
Warehouse & Distribution 15,647,713 537,534 537,534 3.4% 4.5% 18.9% $4.70 830,000 830,000 207,676
Manufacturing 3,808,800 0 0 0.0% 1.2% 2.6% $2.33 0 0 0
Totals 19,456,513 537,534 537,534 2.8% 3.8% 15.7% $4.66 830,000 830,000 207,676
West Polk
Warehouse & Distribution 24,607,239 732,063 732,063 3.0% 2.9% 9.6% $4.88 0 0 1,750,558
Manufacturing 7,273,783 -28,336 -28,336 -0.4% 3.9% 4.2% $6.96 0 0 30,200
Totals 31,881,022 703,727 703,727 2.2% 3.1% 8.4% $5.12 0 0 1,780,758
Kyle Koller | Senior Research Analyst
401 East Jackson, Suite 1500, Tampa Bay, FL 33602 | tel +1 813 387 1323 | kyle.koller@am.jll.com
2018 Jones Lang LaSalle IP, Inc. All rights reserved.