JLL Florida sat down with Senior Vice President Brent Miller to talk about what’s next for Tampa’s office market.
JLL: What are the main factors driving demand for office space in the Tampa Bay area?
Miller: Strong demand in the Tampa Bay office market continues to rise, especially in the Central Business District (CBD). This is in large part due to the strengthening local economy and the decrease in unemployment. As demand for space continues to rise, tenants seeking large blocks in Tampa’s CBD, Westshore and Gateway/Bayside are left with fewer options. Landlords are continuing to increase rates, especially in the lower tier Class A space. For spaces totaling more than 30,000 square feet, there are currently only five Class A spaces available in these submarkets mentioned. That’s two spaces in Westshore and three in the Tampa CBD. As a result of the tightening office market and steady tenant demand, landlords now have the upper hand and we foresee this trend continuing into next year until new office space product is built.
“Landlords now have the upper hand and we foresee this trend continuing into next year until new office space product is built”
JLL: What level of investment activity is the Tampa Bay office market experiencing?
Miller: Tampa is a very dynamic and attractive market for real estate investors and has been experiencing significant trading activity over the past two years. Approximately half of the Class A office buildings in Tampa’s CBD have sold since 2014, with one of the buildings trading hands twice during this period of time. After a record stretch of investment activity over the past 21 months, interest in downtown Tampa office assets continues with Tampa’s downtown SunTrust Financial Center recently selling and the Bank of America Plaza being put up for sale. Over the past two years, all but one of these office properties sold has exceeded their original purchase price by more than $50 per square foot, which speaks to the level of investor appetite for Tampa’s office product.
JLL: What project deliveries or new developments are planned to meet the growing demand for office space in the Tampa Bay area?
Miller: The Tampa office market has not experienced any new deliveries in the past two years and the only building currently under construction is fully pre-leased. With the strong market dynamics and demand for quality office space, we expect to see new development activity over the next 18 months. For example, Strategic Property Partners has plans for the Channelside District that continue to draw interest from multiple large companies across the country. The group recently announced it is also considering a regional headquarters to headline its planned development. Additionally, Feldman Equities and Echelon recently unveiled plans for two more potential developments that would reshape the Tampa market.
Get in touch with Brent Miller today to discuss your real estate strategy for 2016. Email firstname.lastname@example.org