2012 q2 tampa bay office market report
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The Tampa Bay Florida office market saw slow gains in the second quarter of 2012, with leasing activity edging up. While there was no swift rebound, vacancy rates declined from the previous quarter and year. Rental rates remained flat or down slightly in the first half of the year. Leasing activity is expected to remain steady in the second half, though not at a significant level as many businesses have adopted a wait-and-see approach locally and nationally.
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2012 q2 tampa bay office market report
- 1. Q2 2012 | OFFICE TAMPA BAY FLORIDA OFFICE RESEARCH REPORT Tampa Bay Florida Slow Gains, More Wait-And-See EXECUTIVE SUMMARY Leasing activity in the Tampa Bay area office market edged up in the second quarter, with businesses related to health care and technology being the most active. While there is no swift rebound, the market continues to improve as the jobless rates decline. About 15.9% of the region’s 79.3 million-square-foot market was vacant on June 30, down from 16.6% in the second quarter of last year and 16.9% in 2010. Tenant demand has edged up over the past few years, with rental rates remaining flat or down slightly in the first half of 2012. The overall direct asking rate of $19.16 per square foot in the second quarter was down from $19.59 a year earlier. Leasing activity is MARKET INDICATORS expected to remain steady in the second half, but a significant uptick isn’t expected since many Q2 2012 Q3 2012* businesses have adopted a wait-and-see attitude. It’s the same trend locally and nationally. Some businesses are looking to take advantage of the lower rates. VACANCY NET ABSORPTION • One month free rent remained the standard • Sales of foreclosed office properties by CONSTRUCTION on new leases. lenders appear to be picking up. OVERALL • Brokers report escalations in lease rates are • Fifth Third Center and Wells Fargo Center, RENTAL RATE growing more slowly. both Class A properties located in the Tampa CLASS A RENTAL • As for investment sales, risk appetite seems CBD, are currently listed for sale. RATE to be growing, which could lead to more • The ‘micro market’ of Hillsborough County’s *Projected modest return expectations by investors. Rocky Point is seeing rising rental rates in Arrows compare current quarter to the But a disconnect remains between sellers buildings with strong occupancy. previous quarter historically adjusted and buyers on price. figures. All data in this report includes buildings 10,000 square feet and greater. COMPLETIONS, ABSORPTION AND VACANCY RATES OVERALL OFFICE MARKET SUMMARY STATISTICS, Q2 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 fell PREV. QTR. VACANCY RATE: 16.1% 18% 400 Square Feet (In Thousands) to 15.9 percent in the YEAR AGO VACANCY RATE: 16.6% 16% second quarter of 300 14% 2012. Class A vacancy 200 declined 6.4 percent Vacancy NET ABSORPTION: 203,854 sf 12% from the previous 10% 100 quarter to 16.0 UNDER CONSTRUCTION: 374,000 sf 8% percent. 0 6% -100 CURRENT AVG. ASKING RATE: $19.16/FS 4% PREV. QTR. AVG. ASKING RATE: $19.36/FS 2% -200 YEAR AGO AVG. ASKING RATE: $19.59/FS 0% -300 Q2 '11 Q3 '11 Q4 '11 Q1 '12 Q2 '12 SOURCE: COSTAR & COLLIERS INTERNATIONAL
- 2. RESEARCH REPORT | Q2 2012 | OFFICE | COLLIERS INTERNATIONAL TAMPA BAY FLORIDA In the Bay area, seven companies are reportedly About 15.2% of Westshore’s 15.5 million square UNEMPLOYMENT TRENDS shopping for a combined square footage of 1 feet was vacant on June 30, compared to million square feet. Three want large blocks of 17.9% in the same period last year and 19.9% Florida Tampa MSA USA space, between 80,000 square feet to 100,000 two years ago. Both submarkets saw a small 14 square feet, in build-to-suit deals. Developers increase in occupied space in the first half of are competing for their business, with the the year. About 24,000 square feet downtown 12 transactions not expected to close for another and 61,000 square feet in Westshore. 10 12 to 24 months. Health care companies, including call centers tied to the medical INVESTMENT SALE ACTIVITY 8 industry, were the biggest driver in the local office market. In the first half of the year, BMD Management purchased a 80,445 square 6 WellCare Health Plans Inc. leased 66,000 foot class A office facility located at 13577 square feet at Premier Corporate Center, 3928 Feather Sound Drive in Clearwater for $9.525 4 Premier North Drive, in Carrollwood. million ($118 psf) from Highwoods Properties. The building was sold at a 9.5 percent cap rate 2 VACANCY INCHES DOWNWARD and was 98.8 percent leased at the time of 0 purchase. The building had last sold in October Supply still outweighs demand in the region’s May-07 May-08 May-09 Nov-10 Nov-11 May-10 May-11 May-12 Nov-07 Nov-08 Nov-09 1997 for $8 million. two most desirable office submarkets – Watermark 5 and Watermark 7, located in the Westshore and downtown Tampa. But vacancy Westshore submarket, were both sold to The Tampa Bay MSA unemployment rate rates in both submarkets were lower than two Empire Solutions for $3.75 million ($70 psf) posted 8.6 percent in May 2012, which years ago and appear to be trending downward. from Marketview Properties III, LLC. The two represents a 19 percent decrease from May Downtown Tampa’s overall vacancy rate of building combined measure 53,867 square feet 2011. The State of Florida rate also ended May 2012 at 8.6 percent, while the national 13.7% was down from 16% in the second in size. rate posted 8.2 percent. quarter of 2011 and 15.2% in 2010. Westshore – touted for its many newer Class A Other properties are expected to come to Source: US Bureau of Labor Statistics buildings and proximity to Tampa International market in the second half of 2012, particularly Airport, downtown Tampa and Clearwater – in the Tampa CBD and Westshore, due to pent has seen its overall vacancy rate fall more than up demand and stabilizing fundamentals of 4 percentage points since 2010. well-leased office projects. TRANSACTION UPDATE SALES ACTIVITY PROPERTY NAME CLASS BUYER NAME SIZE SF SALES PRICE SUBMARKET 409 Bayshore Blvd B Tampa General Hospital 53,481 $16,777,347 ($313.71/sf) South Tampa Waterview at Feather Sound A BMD Management 80,445 $9,525,000 ($118.40/sf) Gateway Watermark - Buildings 5 & 7 B/C Empire Solutions 53,867 $3,750,000 ($69.62/sf) Westshore 100 W. Kennedy Blvd B Convergent Management LLC 67,615 $2,200,000 ($32.54/sf) Tampa CBD LEASING ACTIVITY PROPERTY NAME CLASS TENANT NAME SIZE (SF) LEASE TYPE SUBMARKET Premier Corporate Center B WellCare Health Plans Inc. 66,000 New Carrollwood Roosevelt Technology Center* A eMASON, Inc. 40,647 New Gateway Bay Vista Gardens II* C Equant, Inc. 21,665 Renewal North Pinellas Harbourside* A EmCare 19,819 New Bayside Northdale Executive Center I* A PCL Civil Constructors, Inc. 19,195 Renewal Northwest Tampa Promenade at Park Place* B Human Medical Plans, Inc. 7,953 New Bayside Wells Fargo Center* A Linkshare Corporation 6,519 Renewal Tampa CBD *Colliers International Transaction P. 2 | COLLIERS INTERNATIONAL TAMPA BAY FLORIDA
- 3. RESEARCH REPORT | Q2 2012 | OFFICE | COLLIERS INTERNATIONAL TAMPA BAY FLORIDA UPDATE SUBMARKET COMPARISONS SUBMARKET 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 4,800,639 14.4% 15.4% 867 -7,901 0 0 $23.13/fs B,C 62 3,643,678 11.4% 11.5% 21,838 31,939 0 0 $18.01/fs Overall 74 8,444,317 13.1% 13.7% 22,705 24,038 0 0 $21.37/fs WESTSHORE A 40 7,614,612 17.5% 17.9% 115,457 86,337 0 250,000 $25.86/fs B,C 203 7,938,573 11.7% 12.7% -25,979 -25,256 0 36,000 $19.03/fs Overall 243 15,553,185 14.6% 15.2% 89,478 61,081 0 286,000 $23.06/fs I-75 CORRIDOR A 43 6,736,779 14.7% 15.6% 73,920 38,936 0 0 $21.37/fs B,C 281 9,191,110 18.0% 18.2% 886 83,483 0 0 $17.28/fs Overall 324 15,927,889 16.6% 17.1% 74,806 122,419 0 0 $18.87/fs NORTH PINELLAS A 15 1,320,092 15.7% 15.7% 49,811 34,568 0 0 $19.08/fs B,C 154 3,767,782 17.7% 17.7% -39,600 -22,670 0 0 $16.00/fs Overall 169 5,087,874 17.2% 17.2% 10,211 11,898 0 0 $17.02/fs GATEWAY A 24 3,077,170 4.0% 5.7% -10,608 -43,411 0 0 $20.89/fs B,C 123 4,760,050 16.9% 17.2% 11,747 -30,354 0 0 $16.39/fs Overall 147 7,837,220 11.8% 12.7% 1,139 -73,765 0 0 $17.52/fs ST. PETERSBURG CBD A 9 1,609,161 18.5% 19.3% 56,494 56,206 0 0 $22.29/fs B,C 54 2,157,478 9.2% 9.2% 4,576 2,644 0 0 $17.82/fs Overall 63 3,766,639 13.2% 13.5% 61,070 58,850 0 0 $20.22/fs TAMPA BAY OVERALL OFFICE MARKET Total Net Absorp. Net New Overall Avg. Class A Avg. Total Inventory Direct Vac. Under Qtr. & Year Bldgs. Vac. Current Absorp. Completions Direct Asking Direct Asking S.F. % Construc. S.F. % Qtr. S.F. YTD S.F. S.F. Rate F.S. Rate F.S. 2012 2Q 1,768 79,257,603 15.4% 15.9% 203,854 -39,677 15,302 374,000 $19.16/fs $23.04/fs 2012 1Q 1,767 79,242,301 15.7% 16.1% -243,531 -243,531 53,500 389,302 $19.36/fs $23.20/fs 2011 4Q 1,765 79,188,801 15.4% 15.8% 428,794 451,564 0 442,802 $19.59/fs $23.29/fs 2011 3Q 1,765 79,188,801 16.0% 16.3% 207,617 22,770 0 120,802 $19.63/fs $23.35/fs 2011 2Q 1,765 79,188,801 16.2% 16.6% -100,762 -184,847 0 105,500 $19.59/fs $23.16/fs 2011 1Q 1,765 79,188,801 16.0% 16.4% -84,085 -84,085 10,492 105,500 $19.72/fs $23.18/fs 2010 4Q 1,764 79,178,309 15.9% 16.3% 177,975 74,300 0 98,492 $19.93/fs $23.44/fs 2010 3Q 1,764 79,178,309 16.0% 16.6% 261,427 -103,675 0 98,492 $19.97/fs $23.61/fs 2010 2Q 1,764 79,178,309 16.3% 16.9% -214,003 -365,102 29,034 98,492 $20.01/fs $23.58/fs COLLIERS INTERNATIONAL TAMPA BAY FLORIDA | P. 3
- 4. RESEARCH REPORT | Q2 2012 | OFFICE | COLLIERS INTERNATIONAL TAMPA BAY FLORIDA SUBMARKET 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