Office space glut in Tampa Bay area means 'negotiable rent'

As unemployment swells above 10 percent in the Tampa Bay area, a deluge of empty office space has landlords muttering what used to be curse words: "negotiable rent."

"Negotiable. Flexible. Affordable. Choose any of the buzzwords," said Pat Kelly, president of Clearwater's RRE Realty Services.

A report released Thursday by the Colliers Arnold real estate firm highlighted growing desperation in the 79.3 million-square-foot local office market.

Large blocks of contiguous vacant office space — chunks larger than 20,000 square feet — totaled 78 last summer. As of March, Colliers counted 126 such contiguous blocks of emptiness.

"This indicator clearly shows what brokers see every day — the deluge of space coming back on the market," Colliers said.

The problem is accelerating: 569,941 square feet of space became available in the first quarter of 2009. In all of 2008, the total was 745,987 square feet.

St. Petersburg and North Pinellas remained sore spots, with vacancies of more than 20 percent among the highest quality, "Class A" offices. But even Tampa's West Shore, the region's densest conglomeration of offices, reported 18.4 percent vacancy among Class A space.

Since office demand tracks employment, brokers don't predict a recovery for a couple of years. The region's overall office vacancy was 14.2 percent in first quarter 2009, up from 11.8 percent in the first quarter of 2008.

"Back in the office market slump of the early '90s, everyone was running around saying, 'Alive in '95,' " Kelly said. "I'm already trying to coin, 'Be well in '12.' "