Tampa Bay Industrial MarketBeat Report | Q2 2019

admin  /   July 23, 2019

Economy

The Tampa Bay economy accelerated over the past year, adding 27,100 jobs for an annual growth rate of 2.0%. As of May 2019, the unemployment rate in Hillsborough County fell by 20 basis points (bps) over the past twelve months to 3.1%. Nearly all industrial-related industries saw employment growth. Transportation, warehousing, and utilities experienced the bulk of job gains, adding 1,700 jobs for a job growth rate of 5.5%. The region’s pace for new housing and rising wages benefited the industrial market as companies take space to meet consumer demand.

Market Overview

Overall triple net (NNN) asking rents increased by 8.4% year-over-year (YOY) to $6.48 per square foot (psf). All industrial types recorded YOY rental gains in the second quarter. Warehouse/distribution increased by 2.5% YOY to $5.32 psf, marking the eighth consecutive quarter the asking rate was greater than $5.00 psf. The Airport submarket boasted robust warehouse/distribution rent growth with a 19.8% YOY increase to $7.32 psf. In addition, rates increased in four of the five submarkets for flex space. Most notably, the flex product in the Airport submarket ended the second quarter at $10.36 psf, up 18.6% YOY.
The overall vacancy rate rose 80 bps YOY to 6.9%, marking the 16th consecutive quarter the overall vacancy rate has remained below 7.0%. The rise in vacancy was attributed to the Eastside Central/South submarket, which recorded a 280 bps bump in the last 12 months due to 1.2 million square feet (msf) of vacant new construction. In contrast, the Near Eastside submarket recorded a 530 bps decrease and ended the second quarter at 2.5%. The Near Eastside and Airport submarkets continued to have some of the lowest vacancy rates in Tampa Bay as tenants seek out valuable infill locations.
Overall absorption substantially improved with +935,602 sf of absorption year-to-date (YTD) as several large tenants occupied space. The second quarter’s +839,159 sf of absorption was the third highest quarterly total since 2010. Absorption was bolstered by Bunzl, TreditTire, and Nationwide Industries who combined occupied over 500,000 sf. Leasing activity continued to trail historic 2018 figures with 980,000 sf leased YTD, a 43.1% YOY decrease. Leasing activity looked to improve in the last half of the year as several large tenants have space requirements currently in the market. Through mid-year 2019, approximately 700,000 sf was leased in the Eastside submarket, the majority of which in warehouse/distribution, which totaled approximately 569,000 sf leased YTD.

Outlook

• Cushman & Wakefield anticipates sales activity to
improve as new construction delivers in 2019.
• The industrial market continued to post positive
market fundamentals through mid-2019.
• Cushman & Wakefield anticipates an increase in
vacancy levels and asking rents on available
space in new deliveries.

Thank you to Cushman & Wakefield’s Michelle McMurray and Jason McCormick for providing our team with the Tampa Industrial Quarterly MarketBeat Report.

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