In its second quarter report on Tampa industrial, Cushman & Wakefield cites “intense tenant demand” and “favorable lease terms” during the second quarter as a source of a declining vacancy. Reis’ reporting on 106 million square feet of warehouse/distribution space shows a similar trend. A small negative total in first quarter was followed by positive 159,000 square feet of net absorption during the second quarter alongside no new supply deliveries. Vacancy ended the quarter at 9.5%, down 20 basis points from the quarter before, same as four quarters prior.
Rent growth has been erratic through recent quarters but positive most recently. At $4.82 psf and $4.34 psf, asking and effective average warehouse/distribution sector rents were up 0.6% and 0.7% for the period and were up 0.6% and 0.9% since year-end. While July followed with a return of negative net absorption, at 86,000 square feet, and a 10-point increase in the vacancy rate, Reis expects a substantial positive total over the remainder of the year. For all industrial space, meanwhile, Cushman & Wakefield counts second quarter vacancy at 7.1%, down 50 basis points for the period, down 170 year-over-year in what this source describes as “a much more significant” decrease.
Construction is minimal. No competitive warehouse/distribution projects have completed here since at least 2010. Reis reports only one project currently underway: the 33,635-square-foot Aubrey’s Organics Warehouse broke ground in September 2012 at Linebaugh Avenue and Nixon Road, Tampa. Completion is scheduled for next March. The current warehouse/distribution vacancy rate, meanwhile, is relatively low by national norms (the second quarter U.S. warehouse/distribution rate was 320 basis points higher than Tampa’s). According to Jones Lang LaSalle, an associated
shortage of quality large blocks of space is emerging, which could prove an incentive to additional construction (see Special Real Estate Factors for Jones Lang LaSalle’s commentary). At the same time, however, Jones Lang Lasalle points to indecisiveness on the part of tenants as a result of economic uncertainty.
“With rental rates throughout the market continuing to allow tenants the chance to upgrade and/or expand their current space to newer, higher quality space at a minimal increase in cost, Cushman and Wakefield expects the Tampa industrial market will experience further improvement in vacancy, leasing activity and positive absorption in the second half of 2012,” states this source. Reis expects a rough balance of supply and demand to prevail over the remainder of the year. The market should gain additional momentum in 2013.