2019-07-10_DTZ戴德梁行_Office_Q1_2019_Pinellas_County_4页_469kb

Pinellas County Office Market Summary - Q1 2019

Core Content Overview

The Pinellas County office market in Q1 2019 showed a mix of positive trends and challenges, with notable improvements in tenant demand and rental rates, but also a negative net absorption for the quarter. The report highlights economic growth, market fundamentals, and key lease and sales transactions.

Economic Indicators

• Tampa Bay MSA Employment: Increased from 1.34M in Q1 18 to 1.37M in Q1 19, showing a growth rate of 1.9%.
• Pinellas County Unemployment: Dropped by 20 basis points (bps) to 3.3% as of February 2019.
• U.S. Unemployment: Declined from 4.1% in Q1 18 to 3.8% in Q1 19.

Market Indicators

• Vacancy Rate: Overall vacancy rate fell by 20 bps to 12.4%, while direct vacancy dropped by 100 bps to 11.5%, the lowest in 18 years.
• Net Absorption: Overall net absorption was negative at -27,605 sf for Q1 19, but leasing activity was robust with 160,941 sf leased year-to-date.
• Average Asking Rent: Increased to $23.75 psf, the highest in Pinellas County history. Class A rents reached $26.50 psf, also a record.

Market Overview

• Rental Gains: Overall rents increased by 8.0% yoy, with Class A assets seeing an 8.7% rise. Suburban markets also showed strong gains, up 9.7% to $22.65 psf.
• Submarket Performance:
  • Gateway/Mid-Pinellas: Led the county in rental gains, with overall vacancy at 16.1% and Class A rents at $26.87 psf.
  • CBD: Experienced significant rental rate increases, with Class A rents at $30.60 psf.
• Leasing Activity: Strong leasing activity was reported, with over 58,000 sf leased in the CBD and nearly 103,000 sf in suburban submarkets. The market was tight in 2018 but softened towards the end of the year due to Transamerica's consolidation.

Market Highlights

• Tenant Demand: High interest from expanding technology and business services firms is expected to drive more leasing activity.
• Rental Trends: Rising rents may encourage developers to consider new projects, despite elevated construction costs.
• Visuals: Included charts on vacancy rates, net absorption, and rent trends across submarkets.

Key Lease Transactions

• 200 Central Avenue (St. Petersburg CBD):
  • Merrill Lynch, Pierce, Fenner & Smith, Inc.: Renewal
  • Dynasty Financial Partners: New lease
• 17757 North U.S. Highway 19 (Bayside):
  • Cerety: New lease

Key Sales Transactions

• No significant sales transactions were reported in Q1 2019.

Market Fundamentals

• The office market in Pinellas County started 2019 with positive trends due to persistent tenant demand and rising occupancies.
• Despite the negative net absorption in Q1, the market showed resilience with strong leasing activity and continued tenant interest.
• The county remains attractive to smaller and mid-sized high-tech startups and business services firms due to its high amenity factors, strong talent pool, and competitive rental rates.

Contact Information

• Cushman & Wakefield of Florida, LLC
  • Address: One Tampa City Center, Tampa, FL 33602
  • Contact:
    • Chris Owen: Director, Florida Research, Tel: +1 407 541 4417, Email: chris.owen@cushwake.com
    • Michelle McMurray: Senior Analyst, Tel: +1 813 204 5373, Email: michelle.mcmurray@cushwake.com
    • Jason McCormick: Analyst, Tel: +1 813 462 4211, Email: jason.mcmurray@cushwake.com

About Cushman & Wakefield

• A leading global real estate services firm with 51,000 employees in 400 offices across 70 countries.
• In 2018, the firm had revenue of $8.2 billion, covering core services like property management, leasing, and capital markets.
• The report is based on information from multiple sources and may contain errors or omissions. It is presented without warranty or representations of accuracy.