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Talk of the bay

Office real estate not riding housing market's wave

By SCOTT BARANCIK
Published September 5, 2005

Compared to the scorching market for homes and condos in the Tampa Bay area, office real estate is positively lukewarm. But vacancy rates and rents are improving, if not everywhere.

According to Colliers Arnold's second-quarter report, the vacancy rate for Class A, or premium, office space locally is 11.5 percent, the lowest level since 2000. The average monthly lease rate for premium space is up to $20.19 per square foot.

As a result, landlords are less desperate -- and not as likely now to dangle several months' free rent or other come-ons before potential tenants. Whether or not that's good news depends on which side of the closing table you sit.

Improving conditions have not erased the fundamental gaps between various regions of the bay area. Class A vacancy rates range from a low of 2 percent in the North Pinellas submarket to 21.3 percent in downtown Tampa, where the rate actually rose.

But it appears developers are scaling back their construction plans appropriately. According to Colliers Arnold, there is no office space under construction presently in downtown Tampa. Areawide, 380,500 square feet of Class A, B or C office space are being built, versus nearly 1.4-million square feet a year ago.

North Pinellas 2 percent

Gateway 3.5 percent

Downtown St. Petersburg 8.2 percent

Westshore 9.4 percent

I-75 Corridor 12.3 percent

Downtown Tampa 21.3 percent

Source: Colliers Arnold's Office Market Report for Tampa Bay, Second quarter 2005.

[Last modified September 2, 2005, 17:54:02]