Tampa Bay office rents hit their highest level ever
Demand for office space is especially great in downtown Tampa, downtown St. Petersburg and the West Shore business district.

By Susan Taylor Martin
Tampa Bay Times
Published: Jul 26, 2019

As prices continue to rise, Tampa Bay's housing market gets most of the attention but the office market isn't doing too badly, either.

Average office rents climbed to $24.54 per square foot in the first half of this year, the highest ever and 14 percent higher than at the peak in 2008, a new report by the commercial real estate advisory firm Newmark Knight Frank shows.

The top average rent for premium Class A space was in Tampa's West Shore business district - Florida's largest office market - at almost $34 per square foot. Next were the central business districts of Tampa ($31.67) and St. Petersburg ($30.27).

Although Tampa Bay office rents have risen, "they remain an attractive alternative to the higher rates in South Florida,'' the report said. "The trend of fleeing to the suburbs has softened, as demand in the region's central business districts has outpaced supply for the past three quarters.''

The West Shore submarket, comprised of 4,000 businesses with nearly 97,000 employees, overshadowed all other submarkets in Central Florida as it accounted for 22 percent of midsize to large lease deals in the second quarter. In the Tampa Bay area overall, the real estate sector moved into the top spot with 156,000 square feet of larger lease deals followed by the financial sector with 149,000 square feet.

The travel and tourism sector took third place with 13,000 square feet of leasing, and the education and retail fields rounded out the bottom with less than 13,000 square feet.

Despite the demand for Class A space, only three new office construction projects to fill that need were underway in the first half of the year. The largest, the 10-story MetWest Three building on Boy Scout Boulevard, is due to be finished this summer. The professional services firm PwC has pre-leased all 250,000 square feet.

Earlier this month, Strategic Property Partners started construction on what is touted as downtown Tampa's first high-end new office tower in more than a quarter of a century. The 20-story 1001 Water Street tower, being built on speculation, is one of three office buildings planned as part of Water Street Tampa, a $3 billion mixed-use development near the Amalie Arena.

No new office projects have been announced for St. Petersburg's central business district despite the downtown area's booming growth.

How Tampa Bay office submarkets compare by rents and vacancy rates*

South Tampa - $37.56, 1.1% vacancy

Tampa CBD - $30.38. 6% vacancy

West Shore - $29.93, 8.9% vacancy

St. Petersburg CBD - $26.79, 12.2% vacancy

East Tampa - $23.62, 14.4% vacancy

NW Hillsborough - $21.95, 7% vacancy

Pinellas Gateway - $21.87, 10.7% vacancy

Clearwater CBD - $18.42, 5.3% vacancy

South Pinellas - $11.39, 4.4% vacancy

Average of Class A, B, C rents in second quarter 2019

Source: Newmark Knight Frank

Contact Susan Taylor Martin at smartin@tampabay.com or (727) 893-8642. Follow @susanskate.