The overall vacancy rate in the Tampa Bay office market increased to a six-year high of 13.4%, while absorption remained negative for the fifth consecutive quarter adding over 1.2M square feet (SF) of space back to the market. Although negative in many aspects, the current market conditions have some core areas that showed encouraging signs year-to-date. For example, of the businesses that collectively signed over 200,000 SF of Class A space in the Tampa CBD submarket this year, approximately 10% were expansion, almost 30% were renewals, and close to 60% of the tenants were new-to-market. As a result, these occupancies had a positive impact on market absorption. In addition, the St. Petersburg CBD submarket experienced favorable conditions, with vacancy trending to an all-time low of 4.6% and asking rental rates increasing for the seventh consecutive quarter.
As the market started a readjustment period, investment sales remained slow, as many investors and owners took a wait-and-see approach to market performance. These pauses caused investment sales to decline 21.9% year-over-year, approximately 25 transactions during the year, compared to the decrease in sales activity of over 46% since 2017. However, despite the reduction in deal completion, the average price per square foot increased by more than 16.7% over four years.