Tampa Office Market
Annual full-service asking rental rates reached a new high at $28.99/SF, a 4.5% increase year over year at the end of the second quarter of 2024. Vacancy rates remained relatively flat, increasing by 30 basis points quarter over quarter and decreasing by 30 basis points year over year. The under-construction pipeline continues to remain muted in the market, with 428,929 SF under construction, accounting for just 0.7% of the market’s inventory. Leasing activity ended the quarter at 815,943 MSF, significantly lagging the 16-year second-quarter quarterly average of 1.2 MSF and reflecting a decrease of 49.0% year over year.
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The market reported 590,558 SF of negative absorption in the second quarter of 2024, the first quarterly negative occupancy reported since year-end 2013. Overall rental rates declined from the historical high in 2023 by 5.0% to $8.01/SF but continued to remain elevated, reflecting positive yearly growth. Construction pipeline declined from quarterly highs in 2023 to 998,406 MSF of deliveries as of the end of the second quarter of 2024. Meanwhile, under construction flattened around the 8.0 MSF mark since year-end 2023, closing the second quarter of 2024 at 8.2 MSF. Following yearly supply outpacing demand for five out of six quarters since the beginning of 2023, vacancy increased by 170 basis points year over year to 7.3%. Landlords leased a large amount of bulk space over the past years, improving the bulk-space segment that had been dragging down the market.
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