Tampa’s office market has seen little to no new development in recent years despite low vacancy rates, rising rents and healthy job growth.
Several interconnected factors contribute to this:
– Rental rates for existing Class A office space are about 20% lower than what developers require to justify new construction.
– Office users’ uncertainty over space needs makes them hesitant to pre-lease space in an undeveloped building.
– Lenders have tightened underwriting requirements for developers to secure financing for new office properties.
– New technology, condensed office spaces, and more flexible work environments allow tenants to improve the utility of their current spaces.