Engage in Tampa Bay_Q2-2020

Q2 2020 MARKETBEAT tampa bay ECONOMY

The Tampa Bay MSA, which includes Hillsborough and Pinellas Counties, had an unemployment rate of 13.1% in May 2020, down 10 basis points (bps) from the previous month and 1,000 bps higher than the region’s rate from one year ago. Nonagricultural employment decreased by 7.4%, over the year. The employment sectors that gained jobs year-over-year (YOY) were Construction, adding 300, and Government with 100 new jobs. Every other sector forfeited jobs with half from the Leisure & Hospitality sector, at 51,700 jobs gone. The COVID-19 pandemic struck the U.S. in March 2020, late in the quarter but with enough time to have a significant impact on first quarter market fundamentals. In the second quarter of 2020, the U.S. economy felt its effects more fully, as government-mandated shutdowns along with shelter-in-place ordinances pushed the country deeper into recession. The situation remains very fluid. Access the most recent information specific to COVID here. SUPPLY Overall vacancy ended the second quarter at 12.8%, an increase of 120 bps over last year and rising 50 bps in the first six months of 2020. Class A vacancy rose by 80 bps YOY to 11.0% with space in Class B climbing by 170 pbs to 15.8%. Suburban submarkets were more stable compared to vacancy increases in the CBD submarkets, rising 100 and 180 bps, respectively. New construction in Tampa Bay was concentrated in Hillsborough County with approximately 1.4 million square feet (msf) of office space under construction. The Tampa CBD led with 825,000 square feet (sf) in activity, the highest level for this submarket since the early 1990’s. DEMAND New leasing demand fell in the second quarter to approximately half of the volume leased in the first quarter. New lease deals totaled approximately 1.4 million square feet YTD with only 30% occurring in the second quarter. Most new lease deals were in Class A buildings, 827,000 sf compared to only 452,000 sf in Class B assets. Suburban submarkets outperformed the CBD submarkets in terms of new leasing activity with 78% of all activity in Tampa Bay occurring outside of the CBD submarkets. The I-75 Corridor submarket recording the greatest YOY increase in leasing activity, with approximately 330,000 sf leased YTD, a 97% increase over this time last year. MARKET PRICING Overall asking rents increased 2.1% YOY to $26.81 per square foot (psf) full service. For Class A assets, rental gains achieved cycle highs in the second quarter, rising to $30.22 psf, the first time Class A asking rents averaged above $30.00 psf in Tampa Bay. YOY gains were recorded in both the CBD and suburban submarkets driving rental rates to $26.22 and $30.11 psf, respectively. Class A assets in the Tampa CBD submarket recorded the largest YOY increase, up 6.1% to $34.24 psf.

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Cushman & Wakefield

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