As with many U.S. cities, the number of businesses leaving the market or downsizing has placed a large amount of sublease space on the Tampa Bay market, according to Insignia/ESG’s Tampa Bay Year-End 2002 report. The report notes that while office leasing has been greatly affected by the rise in sublease space, the investment market has been on the rise due to low interest rates. Since retail tends to follow residential development, the retail market in Tampa is doing better than most due to a rise in residential growth throughout the area.

Retail

Tampa’s retail outlook is expected to fare better than the national outlook due to tourism and migration to the Sun Belt. Local retail hot spots include New Tampa, Channelside, Centro Ybor and South Howard. Shutdowns by retailers such as Montgomery Ward, Waccamaw, Service Merchandise and Kmart have left a fair amount of vacant existing space, especially among big box stores. However, chains such as Kohl’s, Macy’s and Bloomingdales are said to be interested in entering the market.

The Tampa Bay Buccaneers plan to purchase the former 895,000-square-foot Tampa Bay Center mall, just east of Raymond James Stadium. The 83-acre site will be used for additional parking in the short-term, but ultimately will be used for a new training facility for the team. The mall, owned by The Rouse Company and originally built in 1977, lost its last tenant in September when Sears moved to WestShore Plaza.

DeBartolo Property Group dropped out of a proposed deal to build the Tampa area’s largest mall off State Road 56 in Wesley Chapel. The project, Cypress Creek Town Center, was to be built on pastures between State Road 54 and Interstate 75, bisected by SR 56. State regulators were concerned that the 1.5 million-square-foot mall would destroy too many wetlands and pollute Cypress Creek. Although the mall proposal has been hampered by environmental concerns, project planners say they have other developers interested if DeBartolo doesn’t return.

Although traffic studies must be completed to deal with clogged intersections, developers are one step closer to building homes and commercial property near Gunn Highway and SR 54 in Pasco County. Next year, Centex Homes plans to develop 575 homes, 75 townhouses and a 150,000-square-foot shopping center there. Construction is expected to start in 2003 and last until 2006.

A traffic study is also required before a shopping center in New Tampa is approved. A shopping center planned for the north side of Compton Drive may be anchored by Border Books & Music if curb cuts are approved to improve access.

Terrace Plaza in Temple Terrace is likely to be sold or undergo eminent domain proceedings. The city wants to acquire the plaza for its downtown redevelopment project, which is centered on the southeast quadrant of Bullard Parkway and 56th Street.

Lifestyle Fitness Centers announced recently that it will backfill most of the space at the former Jacobson’s location at Old Hyde Park Village.

Lowe’s is said to be considering building on one of several properties near the Wal-Mart Supercenter along U.S. 301 in Zephyrhills, located 30 miles northeast of Tampa. In addition, Concire Centers has proposed a 9.1-acre development there called North Town Center, with nine retail stores and two parcels to be leased at a later date.

Investors recently bought 264 acres in St. Leo, 34 miles northeast of Tampa, and plan to build a regional mall within 6 years with residential units nearby. The land, on the southeast corner of I-75 and SR 52, was purchased for $7 million from the monks at Saint Leo Abbey.

Recent sales include:

• Shoppes at New Tampa — a 158,559-square-foot Publix-anchored center, purchased by Inland for $19.25 million in December

• Plant City Crossing — a 90,340-square-foot Publix-anchored center, purchased by Inland for $10.75 million in December

• Walk at Highwoods Preserve — a 134,053-square-foot power center anchored by Circuit City, Linens ‘n Things and Michaels, purchased by Inland from Centennial American Properties-Woolbright for $24.03 million in August

• Shoppes at Carrollwood and Colonial Square — sold in November as part of a portfolio package offered by American Capital Partners. Turnberry Associates and Schiff JV paid $73 million for the six-property portfolio.

- Lynn Leonard, NewBridge Retail Advisors

The concentration of retail development is taking place in Pinellas, Hillsborough, Pasco, and Polk, four of the seven counties that make up the Tampa Bay area. The area is expanding quickly due to urban sprawl and improved highway and interstate systems that have vastly decreased travel times in and around the Bay area. The continued urban sprawl to the north, south and east has sparked nearly all of the recent developments of grocery-anchored neighborhood and community shopping centers throughout the area. Another trend is the redevelopment of neglected urban centers such as Clearwater Mall, which is being redeveloped into an 800,000-square-foot regional center that will include major national retailers such as Super Target, Costco and Lowes.

The most significant development in 2002 was the opening of International Plaza, which was finished in the early part the year. This development has introduced new high-end specialty retailers such as Neiman Marcus and Nordstrom to the Tampa market and has put added pressure on existing luxury retailers. Tampa is still absorbing the impact of the 1.2 million-square-foot mall.

The New Tampa area in the northeastern part of Hillsborough and the southern part of Pasco County is currently the most highly sought after area and has a majority of the new major developments, including the welcomed introduction of Super Target. The freshly developed Walk Shopping Center has added over 500,000 square feet to the area with such retailers as Circuit City, Linens ‘n Things and Michaels.

New retailers to the Tampa market include such restaurants as Sonic, Smokey Bones BBQ, Zaxby’s and Moe’s Southwest Grill. The other newcomers are big box retailers like Super Target, which has one location already open and another under construction at the redevelopment of the Clearwater Mall. PetCo has made a grand introduction to the area with a number of stores that recently opened. Other newcomers include retailers such as Linens ‘n Things, Nordstrom, Neiman Marcus, Costco, Whole Foods, Harbor Freight and Cargo Furniture.

Due to the substantial growth, New Tampa (NE Tampa – S. Pasco) is one area to keep an eye on. Another area to keep a close eye on is South Hillsborough due to the dynamic growth as well as the last remaining undeveloped waterfront in the Tampa Bay market. This area is expanding rapidly with young married couples and affluent waterfront dwellers. The Suncoast Expressway to the Crystal River area is an up-and-coming hot spot as the arterial system continues to push north. Oldsmar in Pinellas County is rapidly expanding, as it is one of the last remaining undeveloped areas in that County. South Lakeland in Polk County has seen a recent surge of activity as that area begins to develop. The Tampa Bay area will continue to expand north, south and east as the road systems improve and the commutes become quicker.

- Jeremy Kral, Jim Kovacs, Ryan Roberts, Hal Colbert, Jim Roberts and Lisa McCaffrey of Colliers Arnold contributed to this article.

CBD Office

Speculative office development in downtown Tampa is on hold until rental rates increase significantly to the mid- to upper-$20 range. The central business district (CBD) has been fairly stagnant during the past 12 to 18 months; therefore, rental rates have not moved much during that same period. There had been some activity in the build-to-suit market, but that has all but gone away.

In downtown Tampa, the past year has been a time of “now you see them, now you don’t” developers. Chesapeake Atlantic Holdings Inc.’s plans for Renaissance Tampa fell through after it failed to capture the Bank of America as well as other major tenants to kick off the project. The Hogan Group’s plans for Heritage Park also fell by the wayside due to economic conditions in the region.

The only major development on track for downtown now is the Hillsborough River Tower. While rental rates are not where they need to be to justify a new development, the Hillsborough River Realty Corporation is poised to begin construction as soon as the market turns around.

Bank of America signed a 10-year lease at Bank of America Plaza in downtown Tampa. The company will occupy a minimum of 130,000 square feet with options to take an additional 50,000 square feet within the next 14 months. This is the only major tenant absorbing space in the CBD. However, the lease at Bank of America Plaza is not new net absorption because Bank of America will be vacating 400 N. Ashley Plaza. If anything, the overall occupancy in downtown may decrease slightly because of space efficiencies in Bank of America Plaza.

Currently, upper-tier Class A rental rates in the CBD are in the low $20 range with the average rental rates for the CBD in the mid-$19 range. The vacancy rate for Class A product in the CBD is 13 percent; the overall vacancy rate is 18 percent.

- Michael Hoffman, Director, Insignia/ESG, Inc.


©2003 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.