At a time when states like California and New York are seeing more move-outs than move-ins, approximately 1,000 people a day continue to move to Florida.  With the ability to work from anywhere during the pandemic, some came to Florida to escape dense urban environments, stricter Covid restrictions as well as to take advantage of Florida’s pleasant winter weather.  It appears that after having spent the winter in Tampa Bay, some execs decided not only to relocate their families but also their companies.  Aside from jobs, these move-ins will have a positive impact on Tampa Bay’s office market.

Of the companies mentioned below, Pfizer, ID.me, CrossBorder Solutions, Signode and QuoteWizard Insurance have each leased large blocks of office space.  The following is a list of companies that have either relocated their headquarters or opened a new office in Tampa Bay in 2021 together with comments from company execs as to why they relocated or opened new offices.

Pfizer

Pfizer opened a large operations hub in Tampa and, based on the amount of office space leased (100,000 Square feet), it is estimated that Pfizer may be hiring as many as 600 people locally.  Tampa was attractive in part because of the presence of a large and diverse talent pool, a precedent of similar life science operations in the area (Bristol Myers Squib, Johnson & Johnson and Amgen) and an attractive quality of life.

CodeBoxx

CodeBoxx, a company that trains software developers, relocated its headquarters from Quebec City to St Petersburg.  For Codeboxx, St. Petersburg was a logical choice based on a sense of community, shared values and common beliefs.

Suzuki Marine USA

Suzuki Marine USA, a division of Suzuki Motor of America selected Westchase for its new headquarters beating out Orlando, St. Augustine and Atlanta.  The Westchase location was selected based on proximity to Suzuki Marine’s Panama City technical and testing facility, proximity to Tampa International Airport, and proximity to dealers and boat builders.

TrustLayer

TrustLayer, an insurtech startup backed in part by Jeff Vinik moved its headquarters from San Francisco to Tampa.  Its founders looked at Austin but picked Tampa given the growing number of insurance companies in the area and the local talent.

Procoto

Procoto, a software-as-a-service company moved to Tampa from Atlanta.  Proximity to the beaches and the startup climate were important considerations.

Signode

Signode, a $2 billion transit packaging company is relocating its corporate headquarters from Chicago to Tampa.  Signode expects to bring 200 jobs to the area.  Tampa was selected based on its attractive cost of living, climate, and abundant cultural and recreational options.

QuoteWizard Insurance Solutions

Fintech company QuoteWizard Insurance Solutions, a branch of Seattle-based Lending Tree, opened a Medicare-focused sales office in Tampa bringing approximately 100 jobs to the area.

ID.me

Virginia-based tech company ID.me is opening a second office in Tampa and expects to hire at least 500 people before year-end.  Tampa beat out Jacksonville, Provo, Utah, and Greenville South Carolina largely based on the friendliness of the people, business climate, talent and proximity to the ocean.

RabbitRun

Toronto-based tech company RabbitRun relocated its headquarters to St Petersburg largely because of the telecom and tech activity happening in Florida and to be near their customers.  RabbitRun plans to hire 25 new employees by year-end.

While Miami’s Mayor Suarez seems to be grabbing most of the national headlines for his tech recruiting efforts, you can see from the list of companies above that Tampa Bay is doing an excellent job in attracting tech companies.  In its Cyberstates 2021 report The Computing Technology Industry Association (Comp TIA), Tampa Bay ranked 22^nd in the Nation for net tech employment behind Miami (19^th) and Orlando (20^th).  With billionaire Jeff Vinik as Tampa Bay’s number one cheerleader and tech investor, we may soon see those rankings shift in Tampa Bay’s favor.

At Mobiliti CRE we focus 100% on representing commercial tenants with site selection, office relocations, expansions, contractions, and subleases throughout Tampa Bay and the entire West Coast of Florida.  We also assist businesses that are looking to purchase office, medical office, industrial, and retail space.  Reach out to us for assistance with all of your commercial real estate needs at (813)-300-2227 or email pam@mobiliticre.com

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More Tenant Related Information

• How to Maximize Tenant Renewals
• 11 Tips for a Successful Real Estate Tour
  
• Is a Sublease Right For You?
• How to Prepare for an Office Move
• Cost Saving Strategies to Reduce Rental Expenses
• How is my office building growing when there’s been no construction?
• Determining How Much Office Space You Need
• How to Avoid Commercial Real Estate Pitfalls
• What is a Letter of Intent and Why Are They Useful?
• Related: Guide to the Tampa Neighborhoods

The post Tech Company Relocations to the Tampa Bay Soar in 2021 appeared first on Mobiliti CRE.

Tampa Bay Economy.

The Tampa Bay region had an unemployment rate of 4.2% in February 2021, down thirty basis points (bps) from January 2021 but up 110 basis points from a year ago.  The national unemployment rate was 6.2% in February 2021, so the Tampa Bay region appears to once again be faring better than the US economy as a whole.  Nonagricultural employment in Tampa Bay was 1.37 million, down 43,600 jobs or 3.1% from a year ago.  The only three employment sectors that gained jobs year-over-year were Financial Activities, Professional & Business Services and Construction which collectively added 5,000 new jobs year over year.   Leisure and Hospitality had the greatest job losses since last year with 27,700 jobs gone followed by Education and Health Services which lost 8,200 jobs.

Office Market Supply. 

Overall office vacancy (includes Class A, B and C) increased 2% year over year and ended the quarter at 14.6%.  Unlike last year when the increase in vacancy was due primarily to an increase in sublease space, this quarter the increase was primarily a result of direct move outs and give backs.  The amount of office space available for sublease barely decreased from last quarter and remains fairly stagnant at a record high number (883,482 SF).  Approximately 1 million square feet of new office space is scheduled to deliver in 2021 with minimal pre-leasing.  There will need to be significant leasing activity in the near future in order to slow or stop increasing vacancy.

Office Market Demand.  

Absorption was negative 377,000 square feet which is the third quarter in a row of negative absorption.  Negative absorption this quarter was in large part the result of over 20 move outs greater than 10,000 square feet with only a few move ins of the same size.  Demand for office space in the first quarter of 2021 doubled from the fourth quarter of 2020 but was still down 68% from the first quarter of 2020 and down 31% from the five-year average for first quarter activity.

Pricing. 

Average asking rates leveled off with less than 3% of building owners making any rental rate adjustments in the first quarter.  Average direct asking rents are down 2.0% year-over-year largely as a result of the repricing of recently delivered new space and soon-to-be-delivered space that took place in the second quarter of 2020.  Since that repricing overall rates have essentially remained flat decreasing only $0.12% since Q42020.  However, there have been rate increases in individual submarkets since the last quarter.  For example, rates in the St Petersburg CBD increased $0.28 and rates increased $0.06 in Tampa’s CBD.

Outlook. 

Expect office market fundamentals to decline further over the next 3 to six months as over a million square feet of new office space is delivered in Hillsborough County with little pre-leasing.  Those deliveries combined with the record-high amount of sublease space are bound to further increase vacancy and put downward pressure on rents.  However, there is room for optimism.  Americans are being vaccinated at a daily rate of 2.5 million people per day and everyone wanting a vaccine should be able to get one by early July.  In addition, the Tampa Bay region continues to attract out-of-state companies looking for more cost-effective real estate solutions, no state income taxes, wonderful weather and a favorable business climate.

At Mobiliti CRE we focus 100% on representing tenants with office relocations, expansions, contractions, and subleases throughout Tampa Bay and the entire West Coast of Florida.  We also assist businesses that are looking to purchase office, medical office, industrial, and retail space.  Reach out to us for assistance with all of your commercial real estate needs at (813)-300-2227 or email us at pam@mobiliticre.com

The post Tampa Bay Office Market Report Q1 2021 appeared first on Mobiliti CRE.

Nearly one thousand people are relocating to Florida each day. In a study on migration, HireAHelper,  a digital marketplace for small moving companies found that in 22 states, Florida is the top destination for those who decide to move out.  The report finds that Florida is the top destination for people from states like North and South Dakota, Wyoming, Maine, Tennessee, Connecticut, Michigan, North Carolina, New Jersey, and Indiana.  Since the pandemic began, migration has increased from highly taxed areas like New York, Chicago, Boston and California.  So why are all of these people moving to Florida and in many instances relocating their businesses?  Here are 9 reasons both personal and professional why you should relocate to Florida.

9 Reasons Why You and Your Business Should Relocate to Florida

1. The Weather. When you think of Florida, you think of sunshine, beaches and great weather. The average year-round temperature in South Florida is 72’ (northern Florida is 67’) and the state enjoys 250 days of sunshine each year. If you love the outdoors, Florida is for you.  There are plenty of water sports such as kayaking, stand-up paddleboarding, swimming, diving and boating.  Golfing, tennis, biking, jogging, rollerblading and camping are all year-round sports in Florida.
2. There is no individual state income tax. Florida residents pay no state income or estate tax and receive a homestead exemption of up to $50,000 on a primary residence and a 3 percent annual cap on home assessments.
3. Affordability. The State of Florida has been experiencing a strong real estate market and many new housing developments are being built.  The strong demand has caused prices to steadily increase and the average Florida home sale price as of May 2020 is now $270,00. This represents an increase over 2019 and experts expect this trend to continue as long as the state’s population continues to grow. However, Florida still represents a great overall value when compared to many northern states and California where home prices are much higher.
4. Professional and College Sports. From professional sports to college sports, Florida offers some of the best sports teams in the country. While most states have one or two professional football teams Florida has the Miami Dolphins, the Tampa Bay Buccaneers and the Jacksonville Jaguars.  Florida has two professional baseball teams, the Florida Marlins and the Tampa Bay Rays. Florida also offers two professional basketball teams the Miami Heat and the Orlando Magic.  Finally, Florida has two professional hockey teams the Florida Panthers and the Stanley Cup winning Tampa Bay Lightning. College’s such as the University of Florida and Florida State University also offer their own teams for students and alum to rally around.
5. The Beaches. Florida has 825 miles of beaches to choose from.  They range from powdery smooth and white to hard-packed and dotted with seashells and other treasures. Florida beaches are consistently ranked among the best beaches in the world by international travel publications and on beach expert lists.  From Pensacola to Daytona Beach to Siesta Key to Miami Beach, each coastal oasis has its own vibe.
6. You can vacation where you live. If you live in Florida, a fantastic vacation is never more than a few hours’ drive away.  The state’s many beaches, theme parks and attractions mean there are hundreds of vacation options all close to home.  From the secluded sandy beaches along the Gulf Coast to the family-friendly theme parks of Disney World, there is no shortage of fun and exciting places to visit in your own state.
7. Business Climate and Business Taxes. Florida offers competitive costs, expedited permitting, incentives for job creation, investment and training and a pro-business tax structure.  Florida has no tax on the following:

• • corporate income tax on limited partnerships
  • corporate income tax on subchapter S-corporations
  • corporate franchise tax on capital stock
  • state-level property tax assessed
  • property tax on business inventories
  • property tax on goods-in-transit for up to 180 days
  • sales and use tax on goods manufactured or produced in Florida for export outside the state
  • sales tax on purchases of raw materials incorporated in a final product for resale, including non-reusable containers or packaging
  • sales/use tax on co-generation of electricity

8. Education The state’s 12 public universities, 6 major medical schools, and numerous private colleges and universities work closely with the business community to build programs that reflect the needs of Florida’s industries. Florida’s colleges and universities are among the nation’s top performers of research & development (R&D) and commercialization of technologies.
9. The Economy. Florida is one of the United States’ economic powerhouses.  It’s the third biggest state in the country by population and has the fourth-biggest economy. In fact, its GDP is larger than all but 16 countries.  Florida’s economy is extremely diverse.  It is known for its tourism and agriculture but also has a significant and growing presence in industry clusters, such as Cleantech, Life Sciences, Infotech, Aviation/Aerospace, Logistics & Distribution, Defense/Homeland Security, Financial/Professional Services, Technology and Manufacturing.

Additional: Moving Trends and Statistics in the US During COVID-19

If all of this doesn’t make you want to pack up and move, check out this video featuring my adopted home City of St Petersburg, Florida care of the St. Petersburg Economic Development Corporation.

  At Mobiliti CRE we focus 100% on representing tenants with office relocations, expansions, contractions, and subleases throughout Tampa Bay and the entire West Coast of Florida.  We also assist businesses that are looking to purchase office, medical office, industrial, and retail space.  Reach out to us for assistance with all of your Tampa Bay commercial real estate needs at (813)-300-2227 or email us at pam@mobiliticre.com

More Tenant Related Information

• Tampa Bay Commercial Office Market Snapshot
• How to Maximize Tenant Renewals
• 11 Tips for a Successful Real Estate Tour
• Tips for Renegotiating Rent Due to COVID-19
• Is a Sublease Right For You?
• How to Prepare for an Office Move
• Cost Saving Strategies to Reduce Rental Expenses
• Determining How Much Office Space You Need

The post 9 Reasons Why You and Your Business Should Relocate to Florida appeared first on Mobiliti CRE.

Tampa Bay Economy.

According to the Bureau of Labor Statistics, the Tampa Bay region had an unemployment rate of 6.8% in August 2020, up from 3.3% in August 2019.  The national rate was 8.4% in August 2020, so Tampa Bay appears to be fairing better than the US economy as a whole.  Nonagricultural employment in Tampa Bay was 1.3 million, down 59,000 jobs or 4.3% from a year ago.  The only two employment sectors that gained jobs year over year were construction up 1.7% and Government up 2%.  Not surprisingly, Leisure and Hospitality had the greatest job losses in the last 12 months with 34,400 jobs lost resulting in a 21% decline.

Office Market Supply. 

Overall office vacancy (includes Class A, B and C) increased 2.1% from Q3 2019 and ended the quarter at 13.8%.  The increase was due primarily to an increase in sublease space and new construction deliveries.  Office space which is available for sublease increased throughout Tampa Bay to 1,500,000 square feet.  Almost 700,000 feet has been placed on the market since the pandemic began in March.   Of that 1,500,000 feet, approximately 850,000 is currently vacant.  Delivery of Sparkman Wharf and Heights Union (West) added 355,000 square feet of new space.  Approximately 57% of that new space has been pre-leased but move ins have been delayed.

Office Market Demand.  

The total amount of office space leased in Tampa Bay through Q3 2020 was 1.8 million compared to approximately 1,982,000 through Q3 2019.  Of the 1.8 million leased to date in 2020 only about 18% was leased in the third quarter.  If leasing continues to be lackluster in the fourth quarter, we could be looking at a double-digit decline from 2019.

Pricing. 

Rents for Class A, B, and C combined increased 1.4% from Q3 2019 averaging $26.89 per square foot full service.  Rents for Class A averaged $30.27 a foot.  Class A assets in the downtown Tampa submarket increased 13.4% to $37.15 a square foot.  Until recently, Tampa Bay had not seen significant office construction since the early 1980s.  The relative scarcity of space seems to be holding face rates at pre-pandemic levels.

Outlook. 

Between Midtown Tampa, Water Street Tampa, and the Heights, just over 1,000.000 feet of new office space will become available in the first half of 2021.  Seven hundred fifty thousand feet of that new space has yet to be pre-leased.   That square footage combined with the 1,500,00 available for sublease is bound to increase vacancy and put downward pressure on rents.  So far advertised rates have not fallen but landlords are offering more in the way of concessions such as free rent.

At Mobiliti CRE we focus 100% on representing tenants with office relocations, expansions, contractions, and subleases throughout Tampa Bay and the entire West Coast of Florida.  We also assist businesses that are looking to purchase office, medical office, industrial, and retail space.  Reach out to us for assistance with all of your commercial real estate needs at (813)-300-2227 or email us at pam@mobiliticre.com

More Tenant Related Information

• Tampa Bay Commercial Office Market Snapshot
• How to Maximize Tenant Renewals
• 11 Tips for a Successful Real Estate Tour
• Tips for Renegotiating Rent Due to COVID-19
• Cost Saving Strategies to Reduce Rental Expenses
• Determining How Much Office Space You Need
• St. Petersburg Commercial Real Estate

The post 3rd Quarter Office Market Summary appeared first on Mobiliti CRE.

The prospects for the Tampa Bay area office market remain bright due largely to steady business expansion, strong in-migration, employment growth, and solid consumer confidence.  The pace of job growth in the Tampa Bay region continues to outpace both the state of Florida and the nation as a whole.

Office Market Overview – Hillsborough County

Overall rents (including all classes and direct and sublet space) increased in the fourth quarter by 5.6% to $27.54 per square foot full service over the last twelve months.  Class A rents closed out the fourth quarter up 6.4% to $31.47 a foot over the last 12 months.  Class A rents in Downtown Tampa and in Westshore increased over the last twelve months by 4.7% to $33.77 a foot in Downtown Tampa and by 10.6% to 36.87 a foot in Westshore.  Trophy assets in Westshore and Downtown Tampa are asking rents of $40 plus per square foot which are the highest asking rents ever recorded in Downtown Tampa and Westshore.  The overall vacancy rate for office space in Hillsborough County increased by 190 basis points from the same time last year to 13.8% in the fourth quarter. This increase was due in large part to large direct and sublease spaces becoming available in the I-75 submarket.

At the close of the fourth quarter, Tampa/Hillsborough County had approximately 1.3 million square feet under construction.  This is the most office space under construction since 2008 and has been driven by high tenant demand.

Significant projects include:

• Heights Union – 300,000 feet of office space under construction in two 150,000 square foot office buildings together with a mixed-use development. Both buildings are expected to be completed by mid-2020.
• Water Street – 1001 Water Street is a 405,000 square foot office tower located in Water Street, a multi-billion dollar mixed-use project being developed by Jeff Vinik and Bill Gates’ Strategic Property Partners. 1001 Water Street is the second office building under construction in the project which includes the 150,000-foot office tower under construction in the mixed-use development called Sparkman Wharf.
• Midtown One – Phase I is to be completed before the 2021 Super Bowl and includes retail, a hotel, multi-family, apartments, parking garages, and a 151,845-foot speculative office tower.
• At Tampa International Airport construction has begun on Sky Center One a 270,000-foot office building. Approximately half of this building is expected to be leased by the airport.

Office Market Overview – Pinellas County

Fourth-quarter overall rents increased by 4.8% in the last 12 months to $23.20.  Asking rates for Class B assets increased 3.4% year over year to 20.64.  Class A rates in downtown St Petersburg rose 6.5% year over year to $31.99 per square foot.  Rates in the Gateway submarket rose 8% from the same time last year to $20.53 per square foot.  The overall vacancy rate for office space in the county fell 230 basis points year over year to 9.6% which is the lowest vacancy level in over 20 years. In downtown St Petersburg the vacancy rate fell 520 basis points year over year to 6.5%.  This is a record low vacancy.

While St Petersburg does not currently have any new office property under construction, there are several new projects in the pipeline:

• Red Apple Group is moving forward on a planned 45-story, 300- unit luxury condo tower with a 225 room hotel and 20,000 SF of office space on a 2.3-acre site in the 400 block of Central Avenue in downtown St. Petersburg. Work is scheduled to begin in the spring of 2020.
• The DeNunzio Group plans to build a mixed-use development at 450 First Avenue North. This project will contain a total of 40,000 feet of class A office space.
• Edge Central Development Partners has been selected by the City to redevelop the old St Petersburg Police headquarters at the corner of 13th Street and Central Avenue. This will be a mixed-use development with at least 100,000 feet of much needed Class A office space.
• Universal Insurance Group plans to construct a 150,000 square foot office headquarters at 800 First Avenue South. This project will not provide any new market office space as Universal will occupy the entire building.
• The City of St. Petersburg is in discussions with five developers regarding the redevelopment of the municipal services center at the corner of 4th Street and Central Avenue.  Most of the proposals involve mixed-use developments with a significant amount of office space.

The post Q4 2019 Tampa Commercial Real Estate Update appeared first on Mobiliti CRE.

Real property leases are taxed on base rent as well as other payments tenants must make as a condition of their occupancy. This includes common-area maintenance fees, property taxes and utilities payable by the tenant as outlined in the lease.

In addition to the state tax, the property owner is required to collect from tenants any county-imposed local-option sales surtax on the total rent charged.  In Hillsborough County, the surtax is 2.5% bringing the total sales tax to 8%.  In Pinellas, Polk, Lake, Manatee, Sarasota and Pasco Counties the surtax is 1%, bringing the total sales tax to 6.5%.

These sales taxes are not typically included in the rental rates quoted by landlords.  As the sales tax is not insignificant, it’s very important for commercial tenants to include sales taxes when preparing annual budgets.

Mobiliti CRE specializes in representing tenants with expansions, contractions, renewals, and moves.  We would be happy to assist you with your commercial real estate requirements.  Contact us today at 813-300-2227 or via email at pam@mobiliticre.com.

The post Reduction in Florida Sales Tax Rate on Commercial Lease Payments appeared first on Mobiliti CRE.

Rental Rates and Percentage Rent Increases

In Popular Office Submarkets in the Tampa Bay Area.

Source – CoStar Group – CoStar is the premier provider of information, analytics and marketing services to the commercial real estate industry.

At Mobiliti CRE we routinely save our commercial real estate clients time and money by locating viable options and negotiating the best possible terms whether it involves a new lease or a renewal. Don’t wait until you receive a lease renewal offer from your landlord to consider your options.

Contact Mobiliti CRE today for a free lease review. Call Pam Pester at (813) 300-2227 or email pam@mobiliticre.com

The post 2019 Tampa Bay Commercial Real Estate Rental Rates and Increases appeared first on Mobiliti CRE.

Office Market Overview – Hillsborough County

Overall rents (including all classes and direct and sublet space) increased in the last twelve months by 6.9% to $27.15 a foot.  Class A rents closed out the second quarter up 4.1% to $31.15 a foot which is the first time overall Class A rents averaged over $30.00 a foot in Tampa/Hillsborough County history.  Class A rents in Downtown Tampa and in Westshore increased over the last twelve months by 8.7% to $32.27 a foot in Downtown Tampa and by 11.3% to 35.59 a foot in Westshore.  This is the second quarter in a row in which Class A asking rents in Westshore reached historic highs.  The overall vacancy rate for office space in Hillsborough County was increased to 12.8% in the second quarter. This was due in large part to Laser Spine Institute vacating 176,000 feet in Westshore.  Downtown Tampa had the lowest overall vacancy rate at 9.1% with Class A space at a record low of 6.2%.

At the close of the second quarter Tampa/Hillsborough County had approximately 1.4 million square feet under construction.  This is the most office space under construction since 2008.

Significant projects include:

• Heights Union – 300,000 feet of office space under construction in two 150,000 square foot office buildings together with a mixed-use development.  Axogen has pre- leased 75,000 feet and WeWork has pre-leased 50,000 feet.
• Water Street – 1001 Water Street is a 380,000 square foot office tower located in Strategic Property Partner’s Water Street, a multi-billion dollar mixed use project being developed by Jeff Vinik and Bill Gates.  1001 Water Street is the second office building under construction in the project which includes the 180,000 foot office tower under construction in Sparkman Wharf.
• Met West Three – 250,000 square feet of office space under construction and pre-leased entirely by PwC.
• MidTown One – Phase I is to be completed before the 2021 Super Bowl and includes retail, a hotel, multi-family, apartments, parking garages, and a 140,000-foot speculative office tower.  Significant tenants will include Whole Foods and WeWork.

Office Market Overview – Pinellas County

Overall rents increased by 5.2% in the last 12 months to $23.11.  Class A assets saw a 6.1% increase to $26.04.  Class A rates in downtown St. Petersburg increased 7.0% to $30.84.  The Gateway submarket had the highest rent increase in the County for both overall rates and Class A rates with overall rates increasing 12.2% to $23.38 and Class A rates up 13.5% to $26.59.

The overall vacancy rate for office space fell to 10.3% which is the lowest vacancy level in over 20 years.  With very limited new construction in the pipeline and historically low vacancy, rents will continue to increase in the near future in Pinellas County.  While rents have increased, they are still below what they would need to be to encourage developers to begin new projects given ever higher construction pricing.

However, the development scene in Pinellas County could change dramatically in the next several years.  Mayor Rick Kriseman recently announced that redevelopment of the 86- acre Tropicana Field site will begin moving forward with or without the Rays.  Redevelopment of this site would be a game-changer for St Petersburg which has struggled to attract large corporate users due to a lack of large blocks of office space.

The post Tampa Bay Economy in Q2 of 2019 appeared first on Mobiliti CRE.

• Dynasty Financial Partners a billion-dollar wealth management firm relocated its headquarters from New York City to downtown St. Petersburg.
• ISOCRATES LLC a digital media and marketing firm relocated its headquarters from Connecticut to downtown St. Petersburg.
• A franchise of WorkLodge, a Houston-based co-working company will open a 28,000 foot site in downtown St.Petersburg.
• Baker McKenzie the largest law firm in the US announced that it was opening an office in downtown Tampa. It is the largest global law firm to establish an office in Tampa.

Perhaps the most exciting announcement is that WeWork, the largest coworking company in the US  will occupy 50,000 feet in Heights Union an office building under construction in the Heights.  The Heights is a mixed-use development on the northern end of downtown Tampa.  WeWork is scheduled to occupy that site in early 2020.  Shortly after that announcement, WeWork announced that it will open a second location at 501 East Kennedy in downtown Tampa.  That lease is for 60,000 feet and the building will be renamed WeWork Place.  Occupancy in the second location is also scheduled for early 2020.  Finally, there are rumors that WeWork is also looking to open an office at MidTown Tampa where construction of phase I is set to begin in the second quarter of 2020.

While not yet announced, reliable sources have indicated that WeWork is also finalizing a lease for 30,000 feet at One Progress Plaza in downtown St. Petersburg.

The addition large blocks of co-working space is great news for the burgeoning startup scene in Tampa Bay.  Most successful startups begin small and then grow rapidly which makes it hard for them to sign a typical 5 to 10-year office lease.   Co-working space provides companies with immediate access to fully operational space and offers the flexibility to grow or shrink as needs arise. You can find all Tampa co-working spaces here.

In Tampa Bay where most office leases are in the 5,000 to 10,000 square foot range, WeWork will be a significant tenant in each of the buildings it occupies.  Some real estate professionals are concerned that co-working companies could suffer disproportionately in a recession as tenants could simply walk away from their short-term leases while the co-working operator would have to continue paying rent on its long-term lease.  If the co-working company defaulted on its lease the landlord would be left with significant vacancy.

The post WeWork Leasing 110,000 Feet in Tampa and 30,000 Feet in Downtown St Petersburg appeared first on Mobiliti CRE.

Office Market Overview – Hillsborough County

Overall rents (including all classes and direct and sublet space) increased in the last twelve months by 7.1% to $26.59 a foot.  Class A rents in Downtown Tampa and in Westshore increased over the last twelve months by 6.5% to $32.49 a foot in Downtown Tampa and $33.59 a foot in Westshore.  The asking rent for Westshore was the highest ever recorded.

The overall vacancy rate for office space in Hillsborough County was 11.5% in the first quarter.  Downtown Tampa had the lowest occupancy rate at 9.2%.

In the first quarter of 2019 Hillsborough County had the largest amount of office construction in over a decade with over 730,000 feet under construction.

Significant projects include:

• Heights Union – 300,000 feet of office space under construction
• Water Street – 180,000 feet of office space under construction
• Met West Three – 250,000 square feet of office space under construction
• MidTown Tampa – 160,000 feet of office space to begin second quarter 2019

Office Market Overview – Pinellas County

Overall rents increased by 8% in the last 12 months to $23.75.  This is the highest average asking rate in Pinellas County history.  Class A offices saw an 8.7% increase to $26.50 which is another record for Pinellas County.  Class A rates in downtown St. Petersburg increased 6.9% to $30.60

The overall vacancy rate for office space fell to 12.4%.  The direct vacancy rate fell to 11.5% which is the lowest direct vacancy rate in 18 years.  With no new construction in the pipeline and historically low vacancy, rents will continue to increase in the near future in Pinellas County.  While rents have increased, they are still below what they would need to be to encourage developers to begin new projects given ever higher construction pricing.  While the rental numbers quoted above were best on averages, most of the new office buildings going up in Tampa have asking rents in the mid-forties full service while St. Petersburg’s highest quoted rates are in the mid thirties per square foot.  With the discrepancy in asking rates versus construction pricing preventing new construction it will be increasingly difficult to find large blocks of office space in Pinellas County.

The post Tampa Bay Economy in Q1 of 2019 appeared first on Mobiliti CRE.