What to watch in Tampa Bay’s industrial market in 2025
New development, rent growth and strength of the sub-50,000-square-foot market poised to impact fundamentals
The Tampa Bay industrial market enters 2025 in a much better position than most other major industrial markets nationwide. The region is maintaining a leasing volume of roughly 15% to 20% above pre-pandemic norms.
A recent supply wave has caused vacancies to rise here but to a much lesser extent than some of its Florida counterparts. Overall, Tampa Bay’s industrial vacancy rate is up 100 basis points compared to this time last year to 5.7%. In comparison, Orlando’s is up 250 basis points year over year, to 7.0%.
Industrial demand has remained very strong in Tampa Bay, recording just over 2.3 million square feet of absorption in 2024. While absorption is down from the truly historic levels seen in 2021 through 2022, current levels are in line with the 2015 to 2019 annual average.
That consistent level of demand has kept developers bullish on the market, and some are getting creative in order to find land positions, according to Peter Cecora, senior managing director with JLL.
“There are a few office buildings currently under contract to industrial developers in the core of the Tampa market. I believe we will see more of that going forward,” says Cecora. Should these transactions close, it would accelerate a trend that started when Richland Captial Holdings Investments purchased 6700 Lakeview Drive in April 2023 for just under $11 million.
The developer demolished the existing 187,000-square-foot office building and will start construction on two industrial buildings in Lakeview Industrial Park, totaling 300,000 square feet in the coming quarters.
Those buildings, as well as many others in the pipeline set to break ground, are between 100,000 and 200,000 square feet—a size range that better aligns with where tenant demand is today. “I have seen several developers shift their site plan to 200,000 square feet and smaller rearload buildings. The 50,000 square feet and under market is red hot right now, and developers are adapting to fit that need,” adds Cecora.
Tampa Bay continues to see strong activity for tenants needing under 50,000 square feet, a sector that has long been the backbone of the market. Over 450 new leases were executed in 2024 in the sub-50,000 size tranche, up from 340 in 2022 when leasing activity hit an all-time high of 14.6 million square feet.
The increase in new supply, especially in areas like east Tampa, has prompted landlords to raise asking rents. “Previously, there was a $2 to $3 difference in rental rates between east Tampa and the airport submarket or in Pinellas County. However, this gap has significantly narrowed. Landlords in east Tampa are now successfully securing leases with rates in the low teens, which has substantially reduced the rent disparity between east Tampa and the other core Tampa submarkets,” adds Cecora.
East Tampa has seen one of the steepest increases in rent over the past five years, up nearly 70%, and is now averaging $12.70 per square foot on a triple net basis. Land in the core of the Tampa market is trading for over $500,000 per acre, up to nearly $1 million in some cases. With such a high land basis, rents on new construction will need to be in the low-to-mid-teens for the development to pencil.
Rent growth has cooled in recent quarters, up just 5% year over year. In comparison, rent growth peaked at 15% in 2022. However, Tampa still far outpaces the national average for rent growth, 2.2%, a trend that will likely continue over the course of 2025.
(CoStar Analytics | By Michelle Rumore)
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