Tampa’s Westshore submarket has been steadily transforming into a vibrant live-work-play community over the last decade. Already the largest commercial office market in the state of Florida, Westshore continues to grow with several new projects, not only in office, but also in retail, multifamily and mixed-use.
At this year’s annual Westshore Development Forum hosted by the Westshore Alliance, local real estate experts convened to provide insight on what’s in store for this booming submarket. Cushman & Wakefield’s Paula Buffa, Senior Director specializing in office leasing, moderated the event, while Patrick Berman, Managing Director specializing in retail investment sales, gave an update on retail. Here are some of their takeaways from the event:
New Retailers are Entering the Market, Despite Limited Inventory
The Westshore market is home to 35 shopping centers comprising over 6 million square feet of retail space. With a vacancy rate of just 1.8 percent, Westshore is the tightest and most desirable retail submarket in the Tampa Bay area. Not surprisingly, rents are on the rise, having increased by 3 percent year over year since the first quarter of 2017, and are currently the highest in the market.
While there is a limited supply of vacant retail space in Westshore, several big box closures have created opportunity for in-demand retailers to enter the market. Publix, for example, plans to demolish a vacant Sports Authority box on Kennedy Boulevard to build one of its grocery stores. If plans are approved by the County, the store will fill a significant need for grocery in this area.
In terms of new development, one project to keep an eye on is Midtown Tampa, a planned 1.8 million-square-foot mixed-used development, which will include 240,000 square feet of retail and 750,000 square feet of office. Situated on North Dale Mabry Highway, bordering Interstate 275, the project is designed to bridge a gap between the Westshore District and Tampa’s downtown. Whole Foods has already signed on as the anchor tenant, with plans to move from its nearby location at Walter’s Crossings by fall 2020. We should expect additional retail tenants to be announced soon.
Strong Demand for Office is Driving Leasing Activity and New Development
The Westshore District has 12.75 million square feet of commercial office and space, and counting. Major corporations continue to reaffirm their confidence in the Westshore area by expanding within or relocating to the submarket. With few large blocks of space available in the market, these moves have spurred the development of two major Westshore office projects.
As one example, PwC will occupy 167,000 square feet in MetWest III, which is currently under construction within the MetWest mixed-use development on Boy Scout Boulevard. Other notable leases include Greenway Healthcare’s expansion to 101,000 square feet at Corporate Center IV, BayCare’s 73,500-square-foot lease at Concourse Center III, Surgery Partners’ new 62,174-square-foot lease at Memorial Center I, and HDR’s relocation within Westshore to a 30,000-square-foot space at Urban Centre One.
Westshore has the highest average office rental rates in the Tampa Bay area, with Class A asking rents averaging $33 per square foot and several buildings with asking rates between $35-$38 per square foot. That’s up from $31 per square foot year-over-year. Investors are no doubt realizing the value of the Westshore’s office market, and as a result, transaction activity has been steady.
Most recently, Urban Centre, the two-tower office complex at the intersection of Westshore and Kennedy boulevards, sold to Starwood Capital Group for more than $143 million, or $261 per square foot. As more major office assets trade hands, Westshore rents could continue to climb under new ownership.
In the coming months, we’ll be awaiting the announcement of additional tenants at MetWest III as well as at Midtown Tampa, where there are plans for three office buildings totaling up 750,000 square feet.
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