southwest florida office market report q4 '09 · q4 q1 * overall vacancy 17.6% direct vacancy 17.2%...
TRANSCRIPT
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Market Overview
OFFICE | FOURTH QUARTER | 2 009
SOUTHWEST FLORIDA
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MARKET INDICATORS
SW FLORIDA INVENTORY 20,478,877 Sq. Ft.
Q4 Q1*
OVERALL VACANCY
17.6% �� ��
DIRECT VACANCY
17.2% �� ��
ABSORPTION
(6,202) s.f. � � CONSTRUCTION
232,860 s.f. � � NEW SUPPLY
0 s.f. � � OVERALL DIRECT AVG. LEASE RATE $17.38
� � CLASS A DIRECT AVG. LEASE RATE $21.27
� � *Projected, relative to prior period Note: Directional arrows compare current quarter to previous quarter
historically adjusted figures.
O F F I C E | F O U R T H Q U A R T E R | 2 0 0 9 Rough Start with an Optimistic Finish
Throughout 2008 and into the first half of 2009, the office market in southwest Florida was hit hard
with increasing vacancy and thinning demand. As the year progressed, the market began to show
signs of stabilization between tenant demand and market availability. During the second half of
2009, the market experienced 76 percent more leasing transactions as compared to the first half of
the year. As a direct result, the vacancy level remained stable in the third and fourth quarter.
Investment activity remained slow throughout the year and will likely stay at the current level for the
first part of 2010. However, with property values still declining relative to historically high vacancy,
activity in the investment market should increase later in the year.
ADP, one of the largest providers of payroll-related services, recently released their National
Employment report showing the decline in nonfarm private employment was the smallest since
March 2008. After prolonged increases in the local and national unemployment rate, this is favorable
news for the office market which is dependent on job growth to initiate subsequent growth in the
commercial real estate market. Local businesses in the Ft Myers / Cape Coral MSA are shedding
fewer jobs each month, pointing to a potential turnaround in 2010.
The overall southwest Florida office market is currently experiencing a 17.6 percent vacancy rate with
Class 'A' space noticeably higher at 22.6 percent. During the fourth quarter, a minimal amount of
negative net absorption occurred, adding just over 6,000 square feet of available space to the market
surplus. There are currently nine buildings with a total of 232,860 square feet of space under
construction in the overall market. Until the excess supply is absorbed, the construction pipeline is
not expected to significantly increase in the coming year. There were no projects that completed
construction during the fourth quarter, holding the year-to-date completion total at 393,756 square
feet. With asking rental rates currently averaging $17.38 per square foot full service, down $2.06
over the past year, existing tenants have taken advantage of current conditions. Tenants are choosing
to upgrade space, lower occupancy costs, downsize or a combination of all three. In some instances,
free rent is being offered by landlords in lieu of tenant improvement dollars as readily available cash
is minimal. Class A asking rates have followed the same trend, down $2.56 over the past year to the
current average of $21.27. The forecasted market conditions are expected to remain comparable to
current levels throughout 2010. As the market continues to define the bottom, tenants will remain
in the driver's seat and landlords will likely continue to feel pressure from tenants to decrease rental
rates on renewals and new leases.
COLLIERS ARNOLD | 1
PROVIDED BY:
Trends • Overall leasing activity increased by approximately 76 percent during the second
half of 2009 over the first half of the year.
• The forecasted market conditions are expected to remain comparable to current levels throughout 2010.
• Asking rental rates are down $2.06 since the start of the year to the current average
of $17.38 per square foot full service.
C O L L I E R S A R N O L D | S O U T H W E S T F L O R I D A
Insights on the Market
Jim Garinger, CCIM, SIOR [email protected]
Andrew Falde, CCIM [email protected]
239.418.0300 x222 www.jimgaringer.com
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2009 | FOURTH QUARTER REPORT | OFFICE | SOUTHWEST FLORIDA
OVERALL OFFICE MARKET STATISTICS RENTAL RATES BY BUILDING CLASS
UNEMPLOYMENT SNAPSHOT
FLORIDA CONSUMER CONFIDENCE INDEX NATIONAL GDP
2 | COLLIERS ARNOLD
2.1
5.4
1.4 1.2
3.2
2.1
(2.7)
(0.7)
3.0
0.1
2.2
(0.7)
(6.4)
(5.4)
1.5
3.6
(8.0)
(6.0)
(4.0)
(2.0)
0.0
2.0
4.0
6.0
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2005 2006 2007 2008 2009
Quarter & Year
Perc
en
t C
han
ge
National GDP
67 66
6265
72 7169
6771 72 72
69 69
50
60
70
80
90
100
110
Dec. Jan. Feb. Mar. Apr. May Jun. July Aug. Sept. Oct. Nov. Dec.
2008 2009
Month and Year
Co
nsu
mer
Co
nfi
den
ce
In
de
x
Consumer Confidence Index Benchmark Level
17.6%17.6%17.5%
15.3%
13.9%
(400)
(300)
(200)
(100)
0
100
200
300
Q4 '09Q3 '09Q2 '09Q1 '09Q4 '08
Sq
ua
re F
ee
t (I
n T
ho
us
an
ds
)
8%
10%
12%
14%
16%
18%
20%
22%
24%
Va
ca
nc
y
Completions Net Absorption Overall Vacancy Class A Vacancy
$10.00
$12.00
$14.00
$16.00
$18.00
$20.00
$22.00
$24.00
$26.00
Q4 '09Q3 '09Q2 '09Q1 '09Q4 '08
Askin
g R
ate
s
Class A Avg Lease Rate Overall Avg Lease Rate
Unemployment Rate
2
4
6
8
10
12
14
16
No
v-0
9
Ma
y-0
9
No
v-0
8
Ma
y-0
8
No
v-0
7
Ma
y-0
7
No
v-0
6
Ma
y-0
6
No
v-0
5
Ma
y-0
5
No
v-0
4
Un
em
plo
ym
en
t R
ate
(%
)
F lorida SW F lo rida M SA USA
The local unemployment rate for the Southwest Florida metropolitan
area increased to 13.9 percent in the month of November 2009 from
the previous month’s unemployment rate of 13.7 percent. This time
period one year ago, the unemployment rate was at 9.8 percent.
More than 20,000 jobs have been lost in the area since November
2008. The state of Florida rate was 11.5 percent in November
2009. This compares to the United States rate of 10.0 percent.
Source: Bureau of Economic and Business Research Source: Bureau of Economic Analysis – U.S. Department of Commerce
Source: Florida Research and Economic Database
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SUBMARKET TRENDS
FORT MYERS
CAPE CORAL / N. FT. MYERS
LEHIGH CHARLOTTE COUNTY
BONITA / ESTERO
NAPLES
COLLIERS ARNOLD | 3
SUBMARKET OVERVIEW
The vacancy trend lines observed in the graphs above hint towards the beginning of some stability in the market. More
than half of the submarkets are experiencing positive
absorption and flat or declining vacancy rates during the
fourth quarter. The two submarkets that observed negative
absorption were Charlotte County and Fort Myers, however,
both experienced only slight negative absorption and had little
effect on vacancy rates.
The Fort Myers submarket, the largest submarket in southwest
Florida, posted the lowest vacancy rate in the local office
market. Approximately 14.7 percent of the 8.5 million square
feet in the market is presently vacant. The current level is up
2.7 percent since the start of the year. More than 123,000
agdfdffdfdsd
square feet of office space is under construction in the Fort Myers submarket, up slightly from the third quarter. One 21,000 square
foot class ‘A’ building, located at 1130 1st Street on Fort Myers
Beach began construction during the fourth quarter.
The Naples submarket averaged a 20.1 percent vacancy rate at the
end of the year. Net absorption remained positive, although
minimal during fourth quarter, following two consecutive quarters
of negative absorption. Two buildings remain under construction,
with the majority of the activity found within the 53,000 square
foot American Momentum Center, located at 8625 Tamiami Trail
North. Landlords within the Naples submarket are asking the
highest rental rates on average at $21.67 per square foot with Class
'A' space averaging $25.00 per square foot full service.
SOUTHWEST FLORIDA | OFFICE | FOURTH QUARTER REPORT | 2009
(200)
(150)
(100)
(50)
0
50
100
150
200
Q4 '09Q3 '09Q2 '09Q1 '09Q4 '08
Sq
uare
Feet
(In
Th
ou
san
ds)
0%
2%
4%
6%
8%
10%
12%
14%
16%
Vacan
cy
Completions Net Absorption Overall Vacancy
(40)
(30)
(20)
(10)
0
10
20
30
40
50
60
Q4 '09Q3 '09Q2 '09Q1 '09Q4 '08
Sq
uare
Feet
(In
Th
ou
san
ds)
0%
5%
10%
15%
20%
25%
30%
Vacan
cy
Completions Net Absorption Overall Vacancy
(60)
(40)
(20)
0
20
40
60
Q4 '09Q3 '09Q2 '09Q1 '09Q4 '08
Sq
uare
Feet
(In
Th
ou
san
ds)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
Vacan
cy
Completions Net Absorption Overall Vacancy
(10)
0
10
20
30
40
50
Q4 '09Q3 '09Q2 '09Q1 '09Q4 '08
Sq
uare
Feet
(In
Th
ou
san
ds)
0%
5%
10%
15%
20%
25%
Vacan
cy
Completions Net Absorption Overall Vacancy
(15)
(10)
(5)
0
5
10
15
20
25
30
35
40
Q4 '09Q3 '09Q2 '09Q1 '09Q4 '08
Sq
uare
Feet
(In
Th
ou
san
ds)
0%
5%
10%
15%
20%
25%
30%
35%
Vacan
cy
Completions Net Absorption Overall Vacancy
(200)
(150)
(100)
(50)
0
50
100
150
200
Q4 '09Q3 '09Q2 '09Q1 '09Q4 '08
Sq
uare
Feet
(In
Th
ou
san
ds)
0%
5%
10%
15%
20%
25%
Vacan
cy
Completions Net Absorption Overall Vacancy
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SOUTHWEST FLORIDA MARKET STATISTICS
SOUTHWEST FLORIDA | OFFICE | FOURTH QUARTER REPORT | 2009
4 | COLLIERS ARNOLD
Sbmrkt & Prop.
Type Bldgs.
Total Inventory
S.F. Direct Vac. %
Total Vac. %
Net Absorp. Current Qtr. S.F.
Net Absorp.
YTD S.F.
New Completions
S.F.
Under Construc.
S.F. Avg. Direct Asking Rate
Full Service
HIGHLIGHTED SOUTHWEST FLORIDA SUBMARKETS
Charlotte County
A 2 72,062 52.7% 52.7% 0 -2,000 0 0 $19.58
B , C 88 1,649,699 17.2% 17.5% -21,880 -81,206 0 0 $15.50
Overall 90 1,721,761 18.7% 18.9% (21,880) (83,206) 0 0 $16.11
Cape Coral / N. Ft. Myers
A 4 143,465 45.6% 47.4% 0 1,640 0 0 $19.26
B , C 61 1,182,627 18.4% 18.4% 6,930 21,072 0 0 $16.03
Overall 65 1,326,092 21.3% 21.5% 6,930 22,712 0 0 $16.87
Lehigh
A - - - - - - - - -
B , C 9 194,089 16.0% 16.0% 9,024 48,978 0 0 $16.93
Overall 9 194,089 16.0% 16.0% 9,024 48,978 0 0 $16.93
Fort Myers
A 25 1,433,406 17.0% 17.5% -5,503 57,412 0 21,000 $18.28
B , C 305 7,135,207 13.9% 14.2% -17,589 -279,207 0 102,896 $13.49
Overall 330 8,568,613 14.4% 14.7% (23,092) (221,795) 0 123,896 $14.52
Bonita / Estero
A 7 342,112 13.5% 13.5% -918 2,979 0 0 $17.41
B , C 69 1,669,792 23.2% 23.3% 19,170 42,916 0 21,964 $16.45
Overall 76 2,011,904 21.5% 21.7% 18,252 45,895 0 21,964 $16.53
Naples
A 27 1,480,408 22.9% 25.8% -27,212 -53,929 0 53,000 $25.00
B , C 205 4,805,429 18.1% 18.4% 29,114 -184,237 0 34,000 $20.29
Overall 232 6,285,837 19.2% 20.1% 1,902 (238,166) 0 87,000 $21.67
Qtr. & Year Bldgs.
Total Inventory
S.F. Direct Vac. %
Total Vac. %
Net Absorp. Current Qtr. S.F.
Net Absorp.
YTD S.F.
New Completions
S.F.
Under Construc.
S.F.
Overall Avg.
Direct Asking
Rate F.S.
Class A Avg.
Direct Asking
Rate F.S.
SOUTHWEST FLORIDA OVERALL MARKET
2009 4Q 817 20,478,877 17.2% 17.6% -6,202 -417,785 0 232,860 $17.38 $21.27
2009 3Q 817 20,478,877 17.2% 17.6% 137,185 -411,583 192,869 211,860 $18.75 $22.69
2009 2Q 811 20,286,008 17.0% 17.5% -349,353 -548,768 82,018 404,729 $19.11 $23.41
2009 1Q 806 20,165,778 14.8% 15.3% -199,415 -199,415 118,869 454,995 $19.44 $23.83
2008 4Q 802 20,085,121 13.4% 13.9% 193,442 14,663 268,914 446,756 $19.59 $23.90
2008 3Q 789 19,762,332 12.9% 13.5% 16,468 -178,779 167,949 550,556 $19.76 $24.38
2008 2Q 784 19,594,383 12.3% 12.9% 30,759 -195,247 153,374 615,716 $19.81 $24.06
2008 1Q 778 19,395,987 11.4% 12.1% -226,006 -226,006 426,434 756,169 $20.14 $24.54
2007 4Q 763 19,020,450 8.6% 9.2% 51,998 295,903 92,063 766,887 $21.24 $25.69
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COLLIERS ARNOLD | 5
This Colliers Arnold market report includes owner and non-owner occupied office space 10,000 s.f. and greater in Charlotte, Lee and Collier Counties. Directional arrows compare current quarter numbers to previous quarter numbers. Arrows show change when there is a 10 cent or more change in lease rate
or 0.5% or more change in vacancy rate. Due to continual updates and refinements in the historical database, some of the data in this report may not match data published in previous reports. Sources: CoStar Property and Colliers Arnold. Colliers Arnold is a member firm of Colliers International - a worldwide
affiliation of independently owned and operated companies with over 293 offices throughout more than 61 countries. Questions should be directed to the Colliers Arnold Research Department at 407.843.1723 or by e-mail: [email protected]. Information contained herein has been obtained from
sources deemed reliable but not guaranteed. No representation is made as to the accuracy thereof. Data as of 1/07/2010.
SALES ACTIVITY
BLDG NAME/ PROPERTY ADDRESS
PROPERTY CLASS
BUYER NAME SIZE (SF)
SALES PRICE
SALES PRICE/SF
SUBMARKET
Palm Professional Terrace 7001-7051 Cypress Terrace
C NYFL Commercial
Holdings 33,621 $2,250,000 $66.92 FORT MYERS
11928 Fairway Lakes Drive B Nmar Holdings Llc 4,098 $390,000 $95.17 FORT MYERS
13281 Mcgregor Blvd. B
13281 Mcgregor Boulevard Llc
3,520 $625,000 $177.56 FORT MYERS
3937 South Access Road B ACC McCall II 5,840 $360,000 $61.64 CHARLOTTE
15550 McGrego Blvd. C
15550 Mcgregor Boulevard Llc
10,079 $948,300 $94.09 FORT MYERS
LEASING ACTIVITY
BLDG NAME/ PROPERTY ADDRESS
PROPERTY CLASS
TENANT NAME SIZE (SF) LEASE TYPE
SUBMARKET
3900 Broadway B Turning Point
Counseling LAC 13,736
NEW/ DIRECT
FORT MYERS
15751 San Carlos Blvd. B Suitor &
Associates, Inc. 3,210
NEW/ DIRECT
FORT MYERS
6326 Presidential Court B First Federal Advisors
2,790 NEW/
DIRECT FORT MYERS
11600 Adelmo Lane B LeeSar 22,000 NEW/
DIRECT FORT MYERS
13461 Parker Commons Blvd A Precious Life
Ministries, Inc. 2,426
NEW/ DIRECT
FORT MYERS
FOURTH QUARTER 2009 TRANSACTION HIGHLIGHTS
FOR OTHER LOCAL REPORTS VISIT – http://www.jimgaringer.com
FOR NATIONAL REPORTS VISIT – http://www.colliers.com/Corporate/MarketReports/
SOUTHWEST FLORIDA OFFICE HIGHLIGHTED SUBMARKETS
Jim Garinger Team
COLLIERS ARNOLD www.colliersarnold.com 4 OFFICES THROUGHOUT FLORIDA TAMPA (813) 221-2290 ORLANDO (407) 843-1723 CLEARWATER (727) 442-7184 FT MYERS (239) 418-0300 OUR SERVICES: BROKERAGE – SALES & LEASING TENANT REPRESENTATION PROPERTY MANAGEMENT VALUATION & ADVISORY CONSTRUCTION MANAGEMENT RECEIVERSHIPS RESEARCH & GIS COLLIERS INTERNATIONAL www.colliers.com 294 OFFICES IN 61 COUNTRIES ON 6 CONTINENTS USA 94 CANADA 22 LATIN AMERICA 17 ASIA PACIFIC 64 EMEA 97
SOUTHWEST FLORIDA | OFFICE | FOURTH QUARTER REPORT | 2009
BROKERAGE Jim Garinger, CCIM, SIOR [email protected]
Andrew Falde, CCIM [email protected] MARKETING Jennifer Diorio [email protected]
ADMINISTRATION Peggy Garinger [email protected]