Executive Summary
The Southwest Florida market unemployment rate hit 3.1%, falling 140 basis points (bps) year-over-year (YOY), on the addition of 24,341 jobs, for a job growth rate of 3.9%. In addition, office landlords benefited from steady employment gains in office-using sectors, which positively impacted demand, especially in professional & business services, financial activities, and information services, which accounted for 7,400 jobs added to the market over the last year. Tenant interest for quality office space remained very active, although absorption trended negative for the first time after being positive for five consecutive quarters. Direct vacancy continued to drop to historical levels, especially for Class B and Class C space, which recorded a vacancy rate of 4.8%.Leasing momentum was modest but active enough to push the office market toward recovery mode. There remains steady interest in smaller-sized space requirements, especially from information, finance, technology and insurance groups seeking 2,000 – 6,000 sq. ft. In addition, the organic growth of existing tenants in the market continued to be the catalyst for filling vacant space and retaining existing space. Office investment activity experienced a decrease at the start of 2022, although the average asset price sold was 13.9% higher than in 2021. The investment sales pipeline is expected to increase throughout 2022. Looking ahead this year, office vacancy is forecasted to inch downward over the next three quarters, while limited new construction should keep the market stable throughout the rest of the year.
