Rent for premium office space rising around Tampa Bay

TAMPA — Rents for Class A office space during the second quarter of this year were up 4.5 percent in the Tampa Bay area compared with the same three months last year, the real estate firm Cushman & Wakefield reported this week.

Asking rents for Class A office space averaged $28.07 per square foot in Pinellas and Hillsborough counties and were as high as $39 per square foot for so-called "trophy" buildings — typically, the tallest, best-appointed downtown office towers.

Meanwhile, Hillsborough County's overall office vacancy rate has fallen over the past year to 10.9 percent, its lowest level since the end of 2006.

And the county's Class A vacancy rate is down to 7.8 percent — the lowest rate in more than 20 years.

Cushman & Wakefield analysts project that rents for Class A office space could rise to the $33- to $35-per-square-foot range within the next eight to 12 months, which could strengthen the case for financing new construction.

"One of the interesting things about the Tampa Bay market is the vacancy rates are now at a level that indicates to developers that the market can sustain new speculative construction," said Chris Owen, Cushman & Wakefield's director of research for Florida.

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Compared to the same quarter in 2017, average Class A office rents rose 2.9 percent in Palm Beach, 3.7 percent in Jacksonville and 7 percent in Orlando, while dropping 2.7 percent in Miami-Dade.

Both statewide and locally, Class A office rents have climbed back above their pre-recession peaks.

The bay area's average is now about 9.4 percent above where it crested before the real estate crash, and the state's average is 12.5 percent higher.

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Contact >Richard Danielson