By Joanne LeBlanc, director at Colliers International
During my 30+ years in Tampa, I have never experienced a more exciting time to be in this area than now. Tampa has been ranked a #3 place to relocate in the U.S. and The Economic Development Council reports 200 people a day moving to the region. Attracting companies, and talent, is easy due to the positive tax environment in Florida, high quality of life, a labor force of 1.97+ million, easy access to domestic and international travel and endless entertainment opportunities just to name a few.
The State of The Tampa Office Market
Demand for office space in Tampa Bay remains positive as investors, owners and tenants see long-term growth in the region. In Q1, the Tampa Bay metro area had an impressive job growth rate of 5.5% and office landlords benefited from these steady employment gains specifically in office-using sectors such as professional & business services, financial activities and information/technology industries.
Although absorption trended negative for the seventh consecutive quarter due to occupiers continuing to adapt their space needs as a result of the pandemic, demand for quality office space remained positive.
Office Layout Trends
In this market, companies compete with the work from home trend that took shape during the pandemic. Productivity, focus and collaboration are just a few reasons companies want their employees back in the office. To attract people back, companies are offering cutting-edge spaces with open ceilings, zoom rooms, collaborative areas and café style breakrooms. They are also providing a flexible work schedule with a few days in the office and a few days working from home.
Lease Term & Tenant Fit-Out
Construction costs have increased 40% since last year and materials such as flooring, lighting, millwork, etc. are changing daily. In order to cover the cost of the tenant fit-out, some companies are taking long-term leases so they do not have to come out of pocket. In the most popular submarkets such as Westshore and Downtown, 5-to-7-year leases are standard. For new construction, 7-to-10+ year leases are required. Some Landlords might agree to a short-term, 3-year lease if the space is leased as-is or with very minimal improvements.
Market Lease Rates
Tampa Central Business District
- New Construction: $57-$59/sq.ft., Full Service
- Class A: $38-$43/ sq.ft., Full Service
Westshore
- New Construction: $48-$55/ sq.ft., Full Service
- Class A: $45-$47/ sq.ft., Full Service
Downtown St. Petersburg
- Class A: $32-$36/ sq.ft., Full Service
Timeline
The City of Tampa recently moved to an electronic system to submit the Construction Documents (CDs) and Mechanical and Engineering Plans (MEPs) for permitting. Not only is the department short-staffed but now are in the hurdle of learning this new online system. Needless to say, there are significant delays being experienced due to these factors as well as the increased demand in construction among many product types.
Here’s an estimate of what to expect when taking on the office leasing process:
- Touring: 1-2 weeks
- Proposal: 2 weeks
- Test Fit & Pricing: 4-6 weeks
- Negotiations: 2 weeks
- Lease Review: 4-6 weeks
- Construction Documents: 4-6 weeks
- Permits: 6-12 weeks
- Construction: 8-20 weeks
This ±14-month estimate depends on the scope, in terms of permit review, and is based on not using a permit expeditor. For construction, again depending on scope, it could be 8-20 weeks, depending on material/finish availability. Unless it is a very simple project, and small, Colliers’ construction team sees nothing getting done in less than 8 weeks.
Local Market Knowledge
Not all real estate is created equal and the space you choose for your organization can have a profound impact on your business. At Colliers International, we take time to learn about your company and create long-term, comprehensive strategies that combine financial, business and real estate objectives. Our market knowledge provides a forward-looking analysis to help you take advantage of trends and we offer a single point of accountability for your project to connect all the specialists available to serve you.
Whether it is locking in a new lease, renewing in place, identifying an asset for purchase, finding more suitable space or disposing of unused or unwanted property – we are committed to accelerating your success.
Colliers is a Global Commercial Real Estate Services firm with 15,000 employees in 400 offices throughout 68 countries. In Florida, Colliers has 11 locations with one in Tampa and one in Clearwater.
Joanne LeBlanc is a Director at Colliers International in Tampa, Florida and specializes in the leasing and sales of office properties. Joanne has more than 17 years’ experience working in the commercial real estate industry locally and in multi-city markets. To learn more about Joanne or to discuss commercial real estate needs in any product type, call 813-871-8535 or visit https://www.linkedin.com/in/joanneleblanc
