Engage in Tampa Bay Q319

Q3 2019 MARKETBEAT tampa/hillsborough county

308 TOTAL BUILDINGS

30,742,594 SF TOTAL INVENTORY

Tampa Office Economic Indicators

Market Indicators (Overall, All Classes)

Q3 18 Q3 19 12-Month Forecast

Q3 18 Q3 19 12-Month Forecast

Tampa Bay MSA Employment

Vacancy

10.9% 13.3%

1.35 M 1.37 M

1,573,704 SF 2019 LEASING ACTIVITY

YTD Net Absorption (sf) 203k -396k Under Construction (sf) 203k 1.3 M Average Asking Rents* $26.21 $27.11

Tampa (Hillsborough) Unemployment

3.5% 3.4%

U.S. Unemployment 3.8% 3.7%

CONSTRUCTION AND DEVELOPMENT UPDATES

*Numbers above are monthly figures, February 2019 FL Dept. Economic OPP.

* Rental rates reflect gross asking $psf/year.

At the close of the third quarter, there was approximately 1.3million square feet of office space under construction. The third quarter marked the most office construction the market experienced since the second quarter of 2008. The CBD led with 825,000 sf under construction, the highest level since the early 1990’s. In late 2018, SoHo Capital’s Heights Union broke ground on two 150,000 sf buildings in a mixed-used development including a food and event hall called Armature Works. Pre-leasing activity has been robust with a 75,000-sf lease to Axogen in the first building and a 50,000-sf lease by WeWork in the second building. Both buildings will be completed by mid-2020. In addition, 1001 Water Street was underway, a 380,000-sf free-standing office building located in Strategic Property Partners’ (SPP) Water Street, a multi-billion dollar mixed-used project backed by Lightning owner Jeff Vinik and Bill Gates. It was the second office building under construction in the project, joining the 150,000-sf office portion of the mixed-used development Sparkman Wharf. Sparkman Wharf was slated for completion in mid- 2020 with 1001 Water Street following in mid-2021.

ECONOMY The unemployment rate in Tampa/Hillsborough County fell by 10 basis points (bps) over the past twelve months to 3.4%. Tampa Bay’s economy accelerated over the past year, adding 21,700 jobs for an annual growth rate of 1.6%. Financial Activities had the highest annual growth rate when compared to all other Florida metros, adding 3,400 jobs for an annual increase of 2.9%. The Professional & Business Services sector had the second highest annual job growth rate adding 6,000 jobs, an increase of 2.4% year-over-year (YOY). CLASS A SPACE DRIVES THE MARKET Overall market rents increased by 3.4% to $27.11 per square foot (psf) full service. Class A rents closed out the third quarter up 2.0% to $30.89 psf, marking the second consecutive quarter overall Class A rents have averaged over $30.00 psf. Class A rental rate gains were bolstered by the Central Business District (CBD) and Westshore submarkets which rose 3.1% to $32.77 psf and 10.7% to $35.99 psf, respectively. Class A asking rents in Westshore rose to its highest level ever recorded for the submarket.

Class A asking rents inWestshore rose to its highest level ever recorded for the submarket.

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12 Cushman & Wakefield