MARKETBEAT OFFICE SNAPSHOT PINELLAS COUNTY, FL Q3 2014 A Cushman & Wakefield Research Publication Overall Vacancy Direct Asking Rents (psf/yr) YTD Leasing Activity (sf) Cushman & Wakefield of Florida, Inc. One Tampa City Center, Suite 3600 Tampa, FL 33602 www.cushmanwakefield.com/knowledge For more information, contact: Angie Hunt, Sr. Research Analyst 813 204 5373 [email protected] 19.2% 17.6% -1.3pp $17.91 $18.16 +1.4% 541,463 823,731 +52.1% 12 MONTH FORECAST $18.50 20.0% 15.0% $18.00 10.0% $17.50 5.0% $17.00 0.0% 2010 2011 2012 2013 DIRECT GROSS RENTAL RATE 3Q 2014 DIRECT VACANCY RATE OVERALL ACTIVITY 2010 2011 LEASING ACTIVITY 2012 2013 0.8 0.8 0.0 0.8 0.5 0.74 1.0 0.9 msf 1.5 0.89 Average asking rental rates in the Pinellas office market ended the quarter at $19.85 per square foot (psf), the third consecutive quarter ending above the $18.00 mark. The most significant shifts were in class B space in the South St. Petersburg submarket, which saw rates up 13.1% year-over-year and in the North Pinellas submarket, where overall asking rents were down 2.3% year-over-year. Y-O-Y CHANGE 25.0% 0.77 ASKING RENTS UP 9.8% OVER SECOND QUARTER Q3 2014 $19.00 LEASING ACTIVITY DOUBLED OVER SECOND QUARTER Third quarter leasing activity was more than double the leasing activity in the second quarter 2014. The 440,089 sf in the third quarter accounted for over half of all year-to-date leasing activity. The highest spike was in the Bayside submarket where class B product had 220,290 sf of activity. Two of the largest lease transactions this quarter included the 24-7 Intouch lease with 123,116 sf in the Bayside submarket, and Accenture’s 17,475 sf lease in the Mid-Pinellas/Gateway submarket. Q3 2013 DIRECT RENTAL VS. VACANCY RATES 1.3 Overall net absorption in Pinellas County was positive 170,289 square feet (sf) in the third quarter, down 17.5% from the same quarter last year when absorption was 206,303 sf. The St. Petersburg CBD market rebounded this last quarter with overall net absorption positive at 62,053 sf, while it was negative (27,925) sf twelve months earlier. Additionally, North Pinellas had negative (126,829) sf last year, but made up ground year-over-year with only negative (2,399) sf recorded in the past quarter. Clearwater and Bayside had the best performance in overall vacancy rates in the third quarter. Clearwater went from 21.9% vacancy last year to 13.9% this quarter. Bayside saw its vacancy rate drop 4.5 percentage points over the same time to 23.2%. STATS ON THE GO 0.8 ABSORPTION POSITIVE IN THIRD QUARTER Cushman & Wakefield expects the Pinellas County office market will maintain the current trend of positive growth through the end of the year. Looking to the future, as tenant demand remains strong, and with tightening vacancies, expect some built-to-suit opportunities to break ground as well as further occupancy improvements in secondary markets. 0.14 Pinellas County, part of the Tampa Bay MSA, saw economic improvement in the third quarter. The unemployment rate in Pinellas County was 5.8% in September, down 1.0 percentage point from the rate twelve months earlier. Additionally, nonagricultural employment in the area was up 1.3% from a year ago with 15,600 jobs added over the year. Most of the gains were from jobs created in the professional & business services and trade, transportation & utilities sectors. The Pinellas office market had another strong quarter of growth that saw rental rates increase and the vacancy rate drop another 0.4 of a percentage point from the previous quarter. OUTLOOK psf/yr ECONOMIC OVERVIEW 2014 YTD SALES ACTIVITY The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2014 Cushman & Wakefield, Inc. All rights reserved. 1 PINELLAS COUNTY, FL SUBMARKET INVENTORY OVERALL VACANCY RATE DIRECT VACANCY RATE YTD LEASING ACTIVITY UNDER CONSTRUCTION YTD CONSTRUCTION COMPLETIONS YTD DIRECT NET ABSORPTION YTD OVERALL NET ABSORPTION OVERALL WTD. AVG ALL CLASSES GROSS RENTAL RATE* DIRECT WTD. AVG. CLASS A GROSS RENTAL RATE* Mid-Pinellas/Gateway 4,780,938 22.0% 21.3% 142,366 0 110,000 75,429 58,971 $18.86 $21.29 Bayside 1,622,702 23.2% 23.2% 329,281 0 0 38,293 38,293 $14.40 $19.91 Countryside 1,299,265 12.7% 12.7% 62,790 0 0 (14,470) (14,470) $19.10 $19.16 North Pinellas 1,400,453 18.0% 18.0% 56,033 0 0 (9,239) (2,399) $18.85 $18.75 580,715 14.3% 14.3% 15,429 0 0 2,249 2,249 $18.52 N/A 2,801,931 12.0% 11.8% 180,397 0 0 60,089 62,053 $19.91 $21.89 708,344 13.9% 13.9% 37,435 0 0 25,592 25,592 $17.45 $19.00 SUBURBS 9,684,073 19.9% 19.6% 605,899 0 110,000 92,262 82,644 $17.99 $20.38 TOTALS 13,194,348 17.9% 17.6% 823,731 0 110,000 177,943 170,289 $18.22 $20.68 South St. Petersburg St. Petersburg Downtown Clearwater Downtown * RENTAL RATES REFLECT ASKING $PSF/YEAR MARKET HIGHLIGHTS SIGNIFICANT Q3 2014 LEASE TRANSACTIONS SUBMARKET TENANT BUILDING CLASS 16120 U.S. Highway 19 North Bayside 24-7 Intouch B 123,116 140 Fountain Parkway Mid-Pinellas/Gateway Accenture A 17,475 11101 Roosevelt Blvd Mid-Pinellas/Gateway KONICA MINOLTA A 9,247 SIGNIFICANT Q3 2014 SALE TRANSACTIONS SUBMARKET BUYER PURCHASE PRICE / $PSF 5380 Tech Data Drive Mid Pinellas/Gateway Bay Vista Office LLC $7,500,000 / $52.49 142,892 100 Central Avenue North St. Petersburg CBD Covergent Capital Partners $10,500,000 / $77.44 135,000 SIGNIFICANT Q3 2014 CONSTRUCTION COMPLETIONS N/A SUBMARKET MAJOR TENANT COMPLETION DATE BUILDING SQUARE FEET (% LEASED) SIGNIFICANT PROJECTS UNDER CONSTRUCTION N/A SUBMARKET MAJOR TENANT COMPLETION DATE BUILDING SQUARE FEET (% LEASED) Cushman & Wakefield of Florida, Inc. One Tampa City Center, Suite 3600 Tampa, FL 33602 www.cushmanwakefield.com/knowledge For more information, contact: Angie Hunt, Sr. Research Analyst 813 204 5373 [email protected] SQUARE FEET SQUARE FEET The market terms and definitions in this report are based on NAIOP standards. No warranty or representation, express or implied, is made to the accuracy or completeness of the information contained herein, and same is submitted subject to errors, omissions, change of price, rental or other conditions, withdrawal without notice, and to any special listing conditions imposed by our principals. © 2014 Cushman & Wakefield, Inc. All rights reserved. 2
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