Tenants In Control Locally

Pretty accurate, I must say. I did a 7k sf industrial deal recently in the $2.xx/ft range. This was a gross lease, too. Not much under construction, either.

Tenant’s market set to continue in Sarasota

Karen Temmen, Colliers Arnold

Tenants today have the opportunity to lease space with owner concessions and rates never seen in the Sarasota market before. Landlords are doing whatever it takes to keep tenants in place to provide the flow of rental income.

While some tenants are renewing short-term, some of those signing for longer periods have made unheard-of deals that have allowed them to position their companies for future needs. Many tenants are “reaching out” to their landlords to renegotiate current terms. Incentives have included one or more of the following: lower rates, free rent, moving allowances, additional tenant improvement dollars, or buyouts of existing lease terms.

The Sarasota/Bradenton/Manatee local unemployment rate rose to 10.8% in February and will likely continue to rise, which will put additional pressure on landlords to retain and attract new tenants. Comparatively, the Tampa Bay MSA unemployment rate is 10.2%, with a 9.4% Florida rate and a national unemployment rate of 8.9%.

Colliers Arnold projects vacancy rates to continue to rise, exerting downward pressure on lease rates. New construction has slowed significantly and will continue to diminish through 2009. Some building owners are now advertising lease rates as “negotiable,” and as a result many brokers feel asking rate averages may not be a clear snapshot of true market conditions. Landlords continue to remain aggressive in terms of attracting new tenants. However, negotiations are now taking longer and deal cycles have slowed. The current tenant’s market will likely continue into 2010.

Office

The first quarter 2009 overall vacancy rate for the Sarasota/Manatee office market measured 11.9%. This was relatively unchanged from the 12% rate from Q4 2008. However, the year-ago rate of for Q1 2008 was 8.3%. Class A vacancy was 16.6% for Q1 2009.

Net absorption for the first quarter totaled 80,240sf. The overall direct asking rate average was $21.60 psf, nearly unchanged from Q4 2008. However, the year-ago rate for Q1 2008 was $22.39 psf. The Class A asking average direct rate measured $25.19 psf for Q1 2009.

Three new office buildings were completed in the first quarter that totaled 58,938sf. 91% of this new supply was pre-leased or pre-sold before completion. No office buildings are currently under construction.

Industrial

The first quarter 2009 overall vacancy rate was 8.5% for the Sarasota/Manatee industrial/flex market. This was relatively unchanged from the 8.2% rate from Q4 2008. However, the year-ago rate of for Q1 2008 was 5.6%. Net absorption for the first quarter totaled 31,033sf.

The industrial direct asking rate average was $6.43 psf, nearly unchanged from Q4 2008. The flex building direct average asking rate was $9.64, down significantly from $10.56 for Q4 2008.

Two new industrial buildings were completed in the first quarter which totaled 140,767. 100% was pre-leased or pre-sold. The largest was the 123,367sf FedEx ground facility at 3015 Buckeye Road. No industrial or flex buildings are currently under construction.