Tampa-St. Petersburg Office Investment Forecast
Improving Office Fundamentals and Robust Economic Growth Lure Investors to Tampa-St. Petersburg
Strong employment growth underpins office demand. Large blocks of sublet availability coming on the market coupled with the biggest supply wave in 12 years resulted in a modest uptick in vacancy last year. However, leasing activity surged over the second half and that momentum will likely carry over into this year. Net absorption totaled nearly 1.1 million square feet during the third quarter of 2021, the largest three-month total since 2007. Robust job growth in traditional office-using sectors spearheaded demand and projections suggest a similar pace of job gains this year. Additionally, in-migration is expected to accelerate and Florida recently reduced the sales tax on commercial leases, making business costs even more affordable. This bodes well for future office demand as the metro's growing talent pool and affordability foster additional corporate relocations to the region. Furthermore, development activity will slow significantly this year, with less than 200,000 square feet of speculative space scheduled to deliver. Limited supply pressure and elevated demand for office space will allow for metrowide vacancy to contract on an annual basis for the first time since 2018.