Bach

“The single most significant trend in the industrial segment is the desire of tenants to become building owners,” says William Bach, senior investment advisor for Sperry Van Ness in Tampa, Florida. However, Tampa industrial tenants considering a move to building ownership have had difficulty finding spaces to relocate to. “Many private company owners have pulled their cash out of the stock market and are looking for alternative places to invest,” Bach says. “This has led to a shortage of available ‘for-sale’ buildings.”

Tenants and potential building owners in Pinellas County also are facing a shortage of land, which limits build-to-suit opportunities. “[Tenants] are resorting to short-term renewals, hoping to find purchase opportunities in the future,” Bach says. “Tenant-hungry building owners are willing to make shorter-term deals to keep their spaces occupied.”

Tampa currently has an overall industrial vacancy of 10 percent. Pinellas County, the strongest segment in the market, has about 8 percent vacancy. Flex space vacancy is slightly higher at approximately 11 percent. “No single tenant accounts for the majority of space absorption in the market,” Bach says.

Two recent industrial completions in the North Airport market have served to increase the available space in an area that already has one of Tampa’s highest vacancy rates, Bach notes. The new projects include 80,000 square feet of flex space developed by Trammell Crow Company and 103,000 square feet of distribution and flex space by EastGroup. North Airport now has more than 1 million square feet of available industrial space.

Even with an excess of available space, leasing activity remains slow. Tampa has seen only two major leases in recent months. Royal Cup Coffee leased 32,200 square feet at 3502 Queen Palm Dr., and Eckerd Corporation leased a 76,800-square-foot service center space on Bryan Dairy Road in Pinellas County. Current per-square-foot rental rates are $3 to $6 net for distribution space and $6 to $10 net for flex space.

Tampa also has had difficulty attracting manufacturing companies to the area. “The Tampa Bay market remains largely a distribution market, and distribution space is by far the largest industrial segment,” Bach explains. The area also has seen no new developers, though the rebounding economy may boost development.

“New private sector industrial development is at a standstill with no new major projects underway,” Bach says. “Several developers are holding land and [are] prepared to move forward in the future when conditions improve.”

Oldsmar, a submarket of Tampa, is poised to become a major industrial player when the market improves thanks to recent road improvements. “Once development starts again, it will be concentrated in the east Tampa market due to the availability of building sites,” Bach says.

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