The sun shines once again on Tampa’s office sector — especially for the Westshore submarket, the largest in the Tampa Bay area. Job growth and a lack of new development have led to strong net absorption and declining vacancy in 2012. All those factors create the very real possibility for speculative office development in 2013, especially given the region’s lack of large blocks of contiguous Class A space.
Overall vacancy for Tampa’s 32 million-square-foot office market was 16.7 percent through the third quarter, a full percentage point lower than vacancy at the beginning of 2012. Westshore captured 250,000 square feet of the area’s 350,000 square feet of net absorption, but even the Downtown submarket totaled 100,000 square feet of net absorption through the third quarter — not bad for a section of the market that’s struggled disproportionately over the past few years and has 6.5 million square feet of office space.
Conversely, Tampa’s I-75 submarket struggled, with negative 40,000 square feet of net absorption through the first three quarters of 2012, but it has a strong track record over the past 15 years and brighter prospects ahead. Net absorption could’ve been greater, too, but potential tenants waited out election results. Either way, they were going to have to make a decision, and the result now is pent-up demand that should serve us well in 2013 and 2014.
Healthy Office Market
Healthcare is one of the leading drivers for the Tampa economy and office market. Tampa picked up 22,840 net new jobs through the first three quarters of 2012, with many of those gains in the healthcare and insurance industries. UnitedHealthcare has had a major, growing presence in the Tampa Bay area for the past five years. WellCare has increased its area headcount to 2,530, a 10 percent increase since January 1, and now occupies more than 500,000 square feet of Tampa-area office space. Downtown, the University of South Florida (USF) Health System opened its 90,000-square-foot Center for Advanced Medical Learning and Simulation (CAMLS) in the first quarter of 2012, expanding USF Health’s already burgeoning presence across the region.
USF’s growth combined with 10,000 new residents since 2010 create momentum for the CBD, but there are other factors shaping a bright future — not just for Downtown but all of the Tampa MSA. Mayor Bob Buckhorn has proven to be a pro-business, non-partisan leader, and his administration is set to unveil a new Downtown master plan that will link the CBD’s office district with its entertainment and residential districts. Newly appointed Tampa/Hillsborough County Economic Development Corp. CEO Rick Homans already has re-established the region’s ties to financial firms based in the Northeast U.S., with recent media reports pointing to 1,000 new financial services jobs in the next few months, cementing Tampa’s status as “Wall Street South.”
A re-emergent financial services sector is especially good news for the I-75 corridor, where, since the late 1990s, many such firms have clustered, including JP Morgan Chase, Progressive, Citigroup and Depository Trust & Clearing Corp., which, as this publication goes to press, is negotiating to bring 255 additional new jobs paying $80,000 per year to the area.
The Westshore submarket, too, has profited from financial services and healthcare, but it also benefits from its location as the “center of the wheel” of Tampa Bay’s employment base and its proximity to Tampa International Airport, which is consistently ranked in the Top 5 in the U.S. and Top 10 in the world. Already the absorption leader, Westshore also will have PwC moving into a 250,000-square-foot build-to-suit at MetWest in January and fully operational by April. The area is a high-end retail and dining destination as well and has 900 multifamily units slated for delivery in the next 12 months, part of a $300 million wave of new development either permitted or under way in the city of Tampa.
Tampa has re-emerged as the Southeast’s low-cost/high-quality-of-life option for Corporate America, a position we held for the better part of a decade. That will continue to be a draw for financial and consulting firms, while healthcare continues to flourish. Continued job growth and strong political and economic development leadership will continue to push the Tampa office market toward strong net absorption and overall health.
— Ron Ruffner, senior vice president with Cassidy Turley