Office and Industrial Sectors - Winter 2016

The office market in 2015, meanwhile, was one dominated by largely lateral moves, as businesses sought more or “better” space. And while activity and shrinking blocks of larger spaces are generally considered a sign of economic health, downtown class A vacancy rates continue to hover around an uncomfortable 12%, a sign that few new businesses are entering the market. Still, there were a few investment-grade sales that occurred regionally in 2015, such as the $37 million acquisition of the four-building Gateway Professional Center in Sarasota County – a transaction Harshman & Co. helped facilitate.

The area’s industrial market, however, has shown more improvement. Although the Great Recession caused bank-owned properties and distressed sales to flood the market, a steady stream of activity since 2012 has whittled down the supply of industrial buildings, especially so-called “flex” space that can be used by a variety of businesses and often contains a mix of both office and industrial space.

Three years ago, industrial sales ranged from $30 per square foot to $45 per square foot, because of the abundance of space available. Lenders were in possession of many properties and demand lagged. Today, industrial properties are selling for close to $70 per square foot – a number that is significant because it is close to replacement costs.