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COMPLETIONS, ABSORPTION AND VACANCY RATES
INDUSTRIAL RESEARCH REPORTTAMPA BAY FLORIDA
Tampa Bay Florida
Mega Projects Drive AbsorptionEXECUTIVE SUMMARY
Activity in Tampa Bay’s industrial market increased significantly during the third quarter, largely helped along by two 1-million-square-foot Amazon build to suits in Hillsborough and Polk Counties. In addition to these two headline deals for our region, we added another million square feet of absorption, providing the best showing for our market since the recession. Furthermore, investor demand was robust, coming from all types of buyers in Florida, out of state and internationally.
In Polk County, construction was completed on a 1.1-million-square-foot distribution center at 1760 County Line Road that is 100% leased to Amazon. Also in Polk County, a new 175,000-square-foot speculative building is under construction at Interstate Commerce Park fronting I-4.
ABSORPTION &COMPLETIONS
The Tampa Bay industrial market posted over 3.3 million square feet of positive absorption during the Q3 of 2014. In addition, over 2.1 million square feet of new industrial product was completed.
MARKET INDICATORS
Q3 2014 Q4 2014*
VACANCY
NET ABSORPTION
CONSTRUCTION
FLEX RENTAL RATE
INDUSTRIAL RENTAL RATE
Q3 2014 | INDUSTRIAL/FLEX
OVERALL INDUSTRIAL/FLEX MARKETSUMMARY STATISTICS, Q3 2014
CURRENT VACANCY RATE: 8.9%
PREV. QTR. VACANCY RATE: 9.6%
YEAR AGO VACANCY RATE: 9.9%
CURRENT NET ABSORPTION: 3,316,519 sf
UNDER CONSTRUCTION: 328,600 sf
CURRENT AVG. ASKING RATE: $4.28/NNN
PREV. QTR. AVG. ASKING RATE: $4.32/NNN
YEAR AGO AVG. ASKING RATE: $4.36/NNN
Tampa Bay Florida
Relative to prior period. Note: Arrows compare current
quarter to the previous quarter historically adjusted figures.
All data in this report include non-owner occupied buildings
10,000 square feet and greater.
www.colliers.com/tampabay
*Projected
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HIGHLIGHTED TRANSACTIONS
•In Tampa Bay’s largest industrial investment sale, Cabot Properties Inc. purchased a 196,800-square-foot warehouse in the Airport submarket for $12,560,568. Cleo Corp sold the property, located at 5025 W Knollwood Street in Tampa, for $63.82 per square foot. A 15 year lease with FedEx is in place.
•Bhatia Properties Ltd. sold an industrial warehouse at 2407 Police Center Dr. in Plant City for $8.5 million. ATCO Rubber Products Inc. purchased the 109,223-square-foot Class B warehouse for $77.82 per square foot.
• In the largest new industrial lease in Tampa Bay, Star Distribution signed a 104,000-square-foot lease at the Lakeland Industrial Center.
Updated May 2012
VACANCY AND ABSORPTION
As predicted, the increase in activity within Tampa Bay’s industrial market resulted in a higher closed transaction volume. Overall, a net of more than 3.3 million square feet was absorbed (including Amazon deals) with the total vacancy dipping to 8.9%.
The Polk County submarket experienced the most net absorption: 1.3 million square feet absorbed. In Pinellas County, the increase in overall industrial activity resulted in reduced inventory of available space; however this has not translated to an increase in rental rates and/or sale prices. The North Pinellas submarket continues to have the lowest total vacancy, 4.1%, and also commands the highest asking rental rate, $6.38 per square foot.
MARKET ACTIVITY
Tampa Bay’s industrial market saw increased activity with construction, data centers, defense, aerospace and higher-end electronics tenants. There was also more interest from manufacturers than there has been in the past several years.
Pinellas County increased activity in the 40,000- to 100,000-square-foot size buildings driven by technology demands for new equipment, more efficient production lines and improved layouts.
As the economy continued to improve, large businesses sought space to expand. One factor driving that increased interest was Amazon selecting the Tampa Bay area as the location of two distribution centers, which acts as an endorsement for Tampa Bay’s ability to accommodate large, international companies.
Tampa Bay’s industrial flex market remained relatively inactive, with the average asking rental rate
increasing slightly, to $7.60. Overall, the Tampa Bay industrial market rental rates held steady from the second to third quarter. Concessions tightened with many landlords offering less free rent. In addition, tenant improvement allowances averaged to 50 cents per square foot.
USER AND INVESTMENT SALES
Investment demand for industrial space continues to be high; however, there is little quality product. Many developers have land inventory for speculative industrial development. There were opportunities for small, local opportunistic investors for properties listed at $5 million or less. Our experts predict REITs and institutional investors looking to clear their books will result in new listings and closings of flex and industrial properties during 2015.
NEW DEVELOPMENT
EastGroup Properties has begun construction at Madison Distribution Center on a 59,000- and 68,000-square-foot-buildings with 30,000 square feet preleased. Cabot Crosstown, a 150,000- square-foot building, is expected to be delivered in the fourth quarter. Construction continued on a new 80,600-square-foot warehouse at 1605 Turkey Creek in Plant City. In Pinellas County, Regent Properties has a 60,000-square-foot project on Belcher Road across from Interlaken that is now permitted. Regent is talking to prospective tenants and will break ground once a lease is signed. Aspyre Properties has begun construction of a 175,000-square-foot building within Interstate Commerce Park located on S. Frontage Road in Lakeland; delivery is expected in the first quarter of 2015.
The Tampa Bay MSA unemployment rate posted 6.8 percent in August 2014, which represents a 0.5 percent decrease from August 2013. The State of Florida rate ended the month of August at 6.3 percent, while the national rate posted 6.1 percent.
Source: US Bureau of Labor Statistics
UNEMPLOYMENT TRENDS
TRANSACTION UPDATE
SALES ACTIVITY
PROPERTY ADDRESS PROPERTY TYPE BUYER NAME SIZE (SF) SALES PRICE SUBMARKET/CITY
5025 W Knollwood St Warehouse Cabot Properties, Inc. 196,800 $12,560,569 ($63.82/sf) Westshore / Airport
2407 Police Center Dr Warehouse ATCO Rubber Products, Inc. 109,223 $8,500,000 ($77.82/sf) Plant City
12645 N 49th St Warehouse Forty Ninth Street Real Estate 29,218 $1,675,000 ($57.33/sf) South Pinellas
LEASING ACTIVITY
PROPERTY ADDRESS PROPERTY TYPE TENANT NAME SIZE (SF) LEASE TYPE SUBMARKET
8110 Anderson Rd Warehouse First Class Moving 55,352 New Westshore / Airport
1883 Massaro Blvd Warehouse Bailey Industrial 47,293 New East Side Tampa
206 Kelsey Ln Warehouse TeleCommunication Systems, Inc. 45,600 Renewal East Side Tampa
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Florida Tampa MSA USA
P. 2 | COLLIERS INTERNATIONAL TAMPA BAY FLORIDA
RESEARCH REPORT | Q3 2014 | INDUSTRIAL/FLEX | COLLIERS INTERNATIONAL TAMPA BAY FLORIDA
UPDATE SUBMARKET COMPARISONS
SUBMARKET BREAKDOWN
Sbmrkt & Prop. Type Bldgs. Total Inventory
S.F.Direct Vac.
% Total Vac. % Net Absorp. Current Qtr. S.F.
Net Absorp. YTD S.F.
New Completions
S.F.
Under Construc. S.F. Avg. Direct Asking Rate NNN
Airport
Industrial 350 11,418,186 5.2% 5.3% 72,755 -21,433 0 0 $4.51
Flex 159 5,031,069 13.4% 13.6% 8,908 45,824 0 0 $8.62
Overall 509 16,449,255 7.7% 7.8% 81,663 24,391 0 0 $5.61
East Side Tampa
Industrial 879 43,336,713 10.1% 10.1% 495,256 745,113 0 188,000 $4.34
Flex 142 4,916,808 16.7% 16.7% 22,881 -11,960 0 0 $9.27
Overall 1,021 48,253,521 10.8% 10.8% 518,137 733,153 0 188,000 $4.99
Polk County
Industrial 696 45,834,068 9.7% 9.9% 1,304,613 2,164,737 1,000,000 0 $3.74
Flex 48 2,026,293 11.6% 11.6% 20,500 25,530 0 0 $4.10
Overall 744 47,860,361 9.8% 10.0% 1,325,113 2,190,267 1,000,000 0 $3.75
North Pinellas
Industrial 360 8,635,928 3.3% 3.3% 42,763 89,883 0 0 $5.52
Flex 71 2,058,829 7.6% 7.6% 3,153 17,763 0 0 $4.50
Overall 431 10,694,757 4.1% 4.1% 45,916 107,646 0 0 $6.38
Gateway
Industrial 945 30,868,392 6.9% 6.9% 68,290 244,339 0 60,000 $4.85
Flex 169 5,748,039 16.3% 17.2% 20,089 9,367 0 0 $5.70
Overall 1,114 36,616,431 8.4% 8.5% 88,379 253,706 0 60,000 $5.07
South Pinellas
Industrial 376 10,650,201 5.0% 5.0% 48,217 126,066 0 0 $4.24
Flex 33 1,014,112 32.3% 32.3% -3,955 -17,423 0 0 $5.02
Overall 409 11,664,313 7.4% 7.4% 44,262 108,643 0 0 $4.31
TAMPA BAY OVERALL MARKET
Qtr. & Year Bldgs. Total Inventory S.F.
Direct Vac. % Total Vac. % Net Absorp.
Current Qtr. S.F.Net Absorp.
YTD S.F.
New Completions
S.F.
Under Construc. S.F.
Industrial (Non-Flex) Avg. Direct
Asking Rate NNN
Flex Avg. Direct Asking
Rate NNN
2014 3Q 4,864 200,072,372 8.8% 8.9% 3,316,519 4,644,894 2,100,000 328,600 $4.28 $7.60
2014 2Q 4,858 197,838,040 9.4% 9.5% 681,694 1,328,375 50,400 2,390,600 $4.32 $7.46
2014 1Q 4,857 197,787,640 9.7% 9.8% 646,681 646,681 411,531 2,231,000 $4.31 $7.29
2013 4Q 4,854 197,277,491 9.8% 9.9% 33,910 864,344 0 1,560,549 $4.35 $7.25
2013 3Q 4,854 197,277,491 9.8% 9.9% 267,449 830,434 0 1,560,549 $4.36 $7.25
2013 2Q 4,853 197,194,291 9.8% 10.0% -34,766 562,985 152,500 1,619,383 $4.22 $7.26
2013 1Q 4,852 197,041,791 9.7% 9.9% 597,751 597,751 245,681 721,483 $4.23 $7.48
2012 4Q 4,849 196,879,310 9.9% 10.2% 629,070 904,143 12,160 245,681 $4.10 $7.70
2012 3Q 4,848 196,867,150 10.1% 10.5% 382,017 275,073 0 174,641 $4.10 $8.31
RESEARCH REPORT | Q3 2014 | INDUSTRIAL/FLEX | COLLIERS INTERNATIONAL TAMPA BAY FLORIDA
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Copyright @ 2014 Colliers International
The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
This report includes owner and non-owner occupied space 10,000 square feet and greater. Directional arrows compare current quarter to previous quarter numbers. Arrows show change when there is a 10 cent or more change in lease rate or 0.5 percent or more change in vacancy rate. Due to continual updates and refinements in the historical database, some of the data in this report may not match data published in previous quarters. Sources: Costar Property, Real Capital Analytics and Colliers International Tampa Bay Florida.
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SUBMARKET MAP
Dee Seymour, MCR, CCIM, SIORManaging Director, Industrial
Services
Edward Miller, CCIM, SIORManaging Director, Principal,
Industrial Services
Mark McKellManaging Director, Industrial
Services
Pat Marzulli, CCIM, SIORDirector, Industrial Services
Jan Boltres, CCIMManaging Director, Industrial
Services
Mary Clare Codd, SIORDirector, Industrial and Office
Services
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Services
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Sales
John JacksonIndustrial Services
RESEARCH REPORT | Q3 2014 | INDUSTRIAL/FLEX | COLLIERS INTERNATIONAL TAMPA BAY FLORIDA
