Tampa Office Real Estate Activity Highlights: Q3 2024
Absorption soared in the second quarter of this year, mainly due to one tenant. The second quarter was the best quarter for absorption, with roughly 270,000 SF since mid-2021. CAE USA completed and moved into its new 290,000-SF headquarters in the Westshore Submarket. That one move-in accounts for approximately 65% of Westshore’s trailing 12-month absorption. This, coupled with a few other large move-ins in Westshore and Downtown Tampa later this year, for instance, Masonite occupying its new 128,000 SF headquarters, will likely make 2024 the second consecutive year that Tampa has recorded positive absorption.
Tampa’s office vacancy has remained relatively stable over the past several years, sitting at 9.4% as of the third quarter of 2024. However, the vacancy rates vary widely across the region based on factors such as location, access to amenities, and overall quality of the available spaces. For instance, in Westshore, the vacancy rate has decreased 100 basis points year over year to below 12%, marking a four-year low. On the other hand, the Northeast Tampa submarket has seen an increase of by more than 150 basis points in its vacancy rate to 15%.
Asking rent growth has slowed considerably over the past few years as the upward pull from new construction has diminished. As of the third quarter of 2024, office asking rents are up year over year to $30.00/SF, down from a peak of 7.6% in 2022Q4. Annual rent growth for 4 & 5 Star buildings has been below 3% for two consecutive quarters, and asking rents for that quality subset now average $38.00/SF. Commodity-based 3- star office buildings now lead the region in rent growth, up 3.5% year over year. There is room for additional growth in that quality subset as 4 & 5 Star asking rents average 35% higher on a per SF basis. The uncertainty in the office sector and the tightening lending landscape have limited new office construction. For a project to break ground, significant pre-leasing is required. For instance, Midtown East, a 430,000-SF building located within Bromley’s mixed-use Midtown project, is already 75% accounted for. The next significant office building to break ground will be the 115,000 SF office building in the mixed-used development GaxWorx in Ybor City, which is 50% pre-
leased to Grow Financial.
Based on current trends, demand in Tampa’s primary and secondary submarkets will continue to differ significantly over the next year. However, tenants with larger requirements will find submarkets like Gateway and Northeast Tampa have space with lease rates 20% to 35% cheaper than Downtown Tampa and Westshore.
You can view our commercial properties in Tampa and elsewhere in Central Florida to see what real estate assets are available for lease / sale.
Tampa Office Real Estate Stats Highlights Q3 2024
Below are some key statistics for the office market in Tampa over the last quarter: cap rate, absorption, vacancy rate, and the current asking rate per square foot.
Cap Rate: 7.1%
Absorption: 97,575 SF
Vacancy Rate: 9.4%
Asking Rate / SF: $30.17
Tampa Office Real Estate Stats Overview – Last 12 Months
Over the last 12 months, the total deliveries of completed Tampa office real estate space is 548K square feet, while there has been an aggregated absorption of 47.5K square feet. The current vacancy rate of office space in the area is 9.4%, and the rental rate has grown 2.2% total during the same time. To give some context, Tampa’s office vacancy rate is below the national average of nearly 13% overall.
12 Month Deliveries (in SF): 548,000
12 Month Absorption (in SF): 47,500
Vacancy Rate: 9.4%
12 Month Rent Growth: 2.2%
Tampa Office Real Estate Sales Summary for Q3 2024
Office sales activity surged in the second quarter of 2024, primarily due to the sale of 100 N Tampa. Roughly $340 million in total sales volume was recorded in 2024Q2, $151 million of which was to 100 N Tampa.
On the whole, office investment activity has slowed considerably over the past several quarters. Trailing 12-month sales volume has declined to $772 million. In comparison, current investment volumes are well below the five-year average of $1.1 billion.
The bulk of activity over the past year has taken place in the Downtown and East Tampa submarkets, accounting for a little over 35% of the total transaction volume. It is important to note that 100 N Tampa accounts for 85% of Downtown Tampa’s trailing 12-month transaction volume.
Both 100 N Tampa and Netpark of Tampa Bay traded for a similar amount that they sold for fifteen to twenty years ago. Prudential sold 100 N Tampa to The Brookdale Group for $151,300,000, or $265/SF. They purchased the building in June 2007 for $151,822,000. The seller put the building on the market a few years ago but pulled it when they did not achieve the pricing they were expecting, around $300/SF.
Saxum Real Estate purchased Netpark for $45 million, or $38/SF, from Bluett Capital, which bought the building in 2005 for $42.4 million. Netpark is the largest office building to trade in the southeast in over two years.
At 1.1 million SF, the former mall was 60% leased at the time of sale with a well below market asking rent of $19.50/SF, modified gross. Market participants have indicated that Saxum plans to redevelop the site for industrial use. However, that will take five or more years to come to fruition as the existing office tenants still have remaining term and options to renew. Market participants have indicated that some of Netpark’s tenants are now out in the market looking for space.
Cap rates continue to rise, up 30 basis points year over year, and are currently averaging around 9.2%. However, investors have been less concerned with the going-in cap rate as many of the recent transactions have been owner-user or opportunistic plays.
Buyers have been more concerned with the price per square foot and acquiring properties at a discount. Office sale pricing has fallen over the past several years, now averaging $184/SF, a decline from the peak of $200/SF in mid-2022. This trend is likely to continue over the coming years, with Tampa’s average sale price not expected to surpass the $200 threshold until 2028.
Tampa Florida Significant Office Property Sales for Q3 2024
Over the near term, office investment deals are expected to remain challenging to finalize due to several factors. A lack of motivation to put office assets on the market, except under extreme circumstances such as impending debt maturities, has led many sellers to delay listing their properties. Furthermore, disparities in pricing expectations between buyers and sellers persist, with many bids falling 5% to 15% below pricing guidance.
Here are the top office real estate sales statistics in Tampa, FL from a total of 472 sales comparables. The average cap rate of these sales was 7.1% with an average price per square foot of $170. The properties were sold with an average vacancy of 17.0%.
Sales Comparables: 472
Average Cap Rate: 7.1%
Average Price / SF: $170
Average Vacancy During Sale: 17.0%
Here are the Top 5 Tampa Office Property sales during the last 12 months:
1. 100 North Tampa – 100 N Tampa St
Rating: 5*
Bldg SF: 596,383
Year Built: 1992
Vacancy: 13.7%
Sale Date: 6/25/2024
Price: $151,300,00
Price/SF: $254
2. Netpark – 5701 E Hillsborough Ave
Rating: 3*
Bldg SF: 947,176
Year Built: 1976
Vacancy: 33.0%
Sale Date: 7/3/2024
Price: $45,000,000
Price/SF: $48
3. Regency Park North – 599 Lake Kathy Dr
Rating: 3*
Bldg SF: 58,210
Year Built: 2001
Vacancy: 100%
Sale Date: 3/14/2024
Price: $35,134,217
Price/SF: $608
4. One Clearwater Tower – 600 Cleveland St
Rating: 4*
Bldg SF: 144,346
Year Built: 1975
Vacancy: 28.2%
Sale Date: 4/1/2024
Price: $33,200,000
Price/SF: $230
5. Women’s Care Florida – 5016 W Cypress St.
Rating: 3*
Bldg SF: 63,289
Year Built: 2017
Vacancy: 0%
Sale Date: 6/28/2024
Price: $29,200,000
Price/SF: $461
Office Space Under Construction in Tampa Q3 2024
Here are the top stats for office properties currently under construction in Tampa, FL. From the 20 properties under construction there is a total of 604,994 square feet being added to the market, which represents nearly 1% of the total market.
Total Properties Under Construction: 20
Total Square Feet Being Built: 604,994
% of Inventory Under Construction: 0.5%
Preleased: 75.8%
Here are the top office real estate assets under construction in the Tampa market.
1. Midtown East – 1 Midtown Pl
Rating: 5*
Building Sq Ft: 428,929
Stories: 18
Start: January 2023
Complete: March 2025
Developer: The Bromley Companies
Owner: Highwoods Properties Inc
2. 2894 Hueland Pond
Rating: 3*
Building Sq Ft: 60,000
Stories: 2
Start: March 2023
Complete: September 2024
Developer: Not Listed
Owner: Onicx
3. 6606 Simmons Loop
Rating: 3*
Building Sq Ft: 42,000
Stories: 2
Start: September 2024
Complete: April 2025
Developer: Not Listed
Owner: Not Listed
4. 16643 Fishhawk Blvd
Rating: 3*
Building Sq Ft: 10,075
Stories: 1
Start: Mar 2024
Complete: June 2024
Developer: Not Listed
Owner: Florida Kidney Physicians
5. 5382 Primerose Lake
Rating: 3*
Building Sq Ft: 8,000
Stories: 1
Start: April 2024
Complete: December 2025
Developer: Not Listed
Owner: Not Listed
Take a look at our featured Tampa office real estate spaces, or other Tampa commercial real estate properties here, or contact the Bounat team to start your own search for properties in the area.
* Data is courtesy of CoStar Group Inc.