The commercial real estate market in St. Petersburg, Florida, is experiencing a significant growth trend. This vibrant hub of activity in Pinellas County has attracted many new businesses to the region in recent years, thanks to its diverse range of available retail, office, and warehouse properties. Its location near Tampa Bay and major highways and ports has only added to its popularity as a prime destination for commercial development. With strong demand for available properties and a highly competitive market, St. Petersburg has become an attractive location for developers and investors alike. From modern suburban industrial parks to historic downtown and infill projects, there are many options for developers to choose from.
With accolades such as being named one of the “Best Cities to Live” by Travel and Leisure and “Best Cities for Female Entrepreneurs” by Inc., St. Petersburg offers a high quality of life and a talented workforce. In short, the thriving business climate in St. Petersburg makes it an ideal location for businesses seeking to establish themselves in Florida’s booming commercial real estate market.
St. Pete Office Market
St. Petersburg office market has experienced negative net absorption, indicating weaker demand for office space compared to nationwide trends. Absorption rate refers to the rate at which available space in a particular real estate market is leased or sold during a given period. A negative net absorption rate means that more space has become available than has been leased or sold, while a positive net absorption rate means the opposite. In this case, a negative net absorption rate of 8% over the past 12 months indicates a slower rate of leasing or sales compared to the previous year’s positive net absorption rate of 4.55%. Despite these challenging market conditions, rent prices in the area increased faster than nationwide, with a 3.7% growth rate in Q4 2022 compared to a 5.3% growth rate in Q4 2021. The market rent per square foot in Q4 2022 was $27, which is $1 higher than the national average. This suggests that there is still a demand for office space in the area, albeit at a slower pace than the previous year. Despite the slower absorption rate, the St. Petersburg office market has managed to maintain a lower vacancy rate of 8.9% compared to the national vacancy rate of 11.1%.
In summary, the St. Petersburg office market has undergone negative net absorption with slower absorption rates, but rental prices have grown faster than the national average. The lower vacancy rate suggests that the market is still robust and could see an uptick in demand as the economy recovers
Source: Costar
St. Pete Retail Market
The retail market in the St. Petersburg area is experiencing a surge in demand, with net absorption SF at 34% in Q4 2022, indicating a faster absorption rate than the nationwide average. This rise in demand has also led to an increase in rental prices, with a 12-month market rent growth of 5.2%, surpassing the nationwide rate. The average market rent/SF is at $15, reflecting a $1 increase from the previous year’s rate of $14. The lower vacancy rate of 2.4% in Q4 2022 indicates a healthier retail market, which further highlights the strength of the retail market in the region.
Retailers who are looking to expand their operations or establish a new business in the area may face higher rental costs than the national average. This is balanced by the faster absorption rates, which allow retailers to start generating revenue more quickly than in other markets with slower absorption rates.
In summary, The retail market in St. Petersburg area is performing well, with healthy demand, increasing rental prices, and a lower vacancy rate. As such, it provides a favorable environment for retailers to set up shop and expand their businesses.
Source: Costar
St. Pete Industrial Market
The industrial real estate market in St. Petersburg has seen a slower absorption of industrial space compared to the nationwide trend. In the fourth quarter of 2022, the net absorption of square footage dropped by 80%, which was a significant decrease compared to the positive net absorption of 25% in square feet in the same quarter of the previous year.
The slower absorption of industrial space has resulted in a higher vacancy rate of 4.3%, which is higher than the national average. As a result, rents have increased at a slower rate than the nationwide trend, with a 12-month market rent growth of 6.2% in the fourth quarter of 2022, compared to 7.3% in the same quarter of the previous year. The average market rent per square foot was $7, which was higher than the national average, but the slower growth rate shows a weakening demand for industrial space in the area. Investors and developers should keep an eye on the trends and take a cautious approach to investing in this market.
In summary, the industrial real estate market in St. Petersburg has slower absorption of industrial space than the national trend. The vacancy rate is 4.3%, higher than the national average, leading to a slower growth rate of rents, with a 12-month market rent growth of 6.2% in the fourth quarter of 2022. Investors and developers should be cautious in investing in this market.
Source: Costar
For more information on the Tampa Industrial Market, click here to access the latest report.
Conclusion
St. Petersburg is a thriving hub for commercial real estate with various properties to offer. Despite negative net absorption in the office market, rental prices have grown faster than the national average, indicating a resilient market with lower vacancy rates. The retail market is performing well with healthy demand and increasing rental prices, providing a favorable environment for retailers. The industrial market is facing challenges due to slower absorption and higher vacancy rates, requiring cautious investment. St. Petersburg’s commercial real estate market offers a diverse range of options for developers and businesses in Florida.
