Bernard Croghan says the office space business is a reflection of the overall economy.
And like the economy, the office vacancy rates has been high.
The vacancy rate has been so high, that Croghan has decided to close his ComCenters office complex near downtown Bradenton.
“Essentially, we’re doing what the whole market is doing — we downsized,” Croghan said. “We had more product than we needed.”
First-quarter figures show Manatee County’s office space market is stuck in the doldrums.
The data from Grubb & Ellis Commercial Florida show Manatee County’s office space vacancy rate at 13.2 percent.
That vacancy rate is slightly higher than the 12.2 percent reported during the fourth quarter of last year, but far worse than the 7.9 percent Grubb & Ellis reported for Manatee County at the beginning of 2008.
Croghan acknowledged that the Bradenton ComCenters at 100 Third Ave. W., which offered about 40 office spaces for rent, as well as virtual offices and meeting rooms that small businesses could lease on an as-needed basis, had location problems.
“Especially the office space demand, we were never able to get much higher than 50 to 60 percent occupancy in there in two and half years,” Croghan said. “We just decided that downtown demographics didn’t support it and it was time to lease and sell the balance.”
But of the overall market, Croghan says, “It’s not good.”
Croghan says his ComCenters on State Road 70 and in Lakewood Ranch have been doing better. The fact that he offers virtual office space for small businesses has helped him buck the trend, he said.
“I think we are rightly positioned in that we have options for people who are trying to downsize,” he said. “Overall, I would say that the office market is not good and I believe it’s going to be that way for a long time.”
Tom Kennedy, vice president of Grubb & Ellis Commercial Florida, said Manatee County’s office vacancy rate is indicative of the rest of the region. In fact, it’s a little better than the 16.8 average vacancy rate for the Tampa Bay region, which ranges from Tampa to Sarasota.
Sarasota’s office vacancy rate was 12.1 percent, just below Manatee’s and much higher than the 7.2 percent it logged in the first quarter of last year.
Kennedy said many businesses were closing during the fourth quarter of last year as the economic crisis continued to widen.
“We were seeing a lot of businesses just shut their doors and walk away,” Kennedy said. “That’s sort of leveled off now, I think.”
The fact that Manatee County’s numbers didn’t get extremely worse from the end of 2008 to the first quarter of this year, may be an indication that things are stabilizing, Kennedy said.
“A lot of places were shutting down quick,” Kennedy said. “That’s sort of leveled off now I think.”
Joe Hembree, broker-owner of Hembree and Associates commercial real estate in Sarasota, said the Grubb & Ellis vacancy rates sound fairly accurate.
“There are not investors, there is no real expansion and most of what we’re seeing is downsizing,” Hembree said. “The better buildings are holding their own, but they’re having to be competitive.”
Hembree said there are some signs that things might be improving and he has received more inquiries about office space recently.
“There are some companies expanding like different medical companies that are moving up,” Hembree said. “There aren’t a lot of those, but there are a few. We still have the populations moving here and we still have the elderly to take care of. I’m cautiously optimistic. It is a tough market, but we’re working our way through it.”
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