REAL ESTATE OVERVIEW
Market voices: Transformation
Brian Katz CEO & Founder – Katz Capital
The fact that real estate pricing in Tampa is still relatively attractive versus other markets, I believe insulates Tampa Bay to a degree from real estate sector cycles and general market cycles. This is the opposite of South Florida where there tends to be more dependency on these market cycles. When the South Florida market is hot, there is tons of money pouring in and prices push up. Although it’s increasingly on investors’ radar, Tampa Bay still has a lower modulation in these cycle waves. The big concern is that asset values keep rising. If we look at real estate development in the region, land values are up, labor costs are up and material prices are up. That means to achieve the same return for the amount of risk an investor is taking, you have to raise the exit price. This is going to be one constraint that Tampa Bay is going to face, and will have to figure out how to navigate.
( ) the same period; Tampa is the fastest-growing city in Florida; its population is rapidly expanding, fueling the need for additional housing; the cost of living is low relative to the U.S. average; Tampa is ethnically and culturally diverse; and the region has appealing weather that means it will always be in demand. Commercial performance The Tampa Bay commercial real estate market finished 2019 favorably, with overall asking rents increasing significantly year-over-year by 5.6%, finishing at $27.54 per square foot. Class A rents fared particularly well, closing out the year up 6.4% YOY to $31.47 per square foot. This marks the third-consecutive quarter that Class A rents in Tampa remained above $30 per square foot. The high, and steadily increasing, asking rents on commercial property in Tampa are driven by consistently high demand among tenants. However, the commercial vacancy rate, which finished at 13.8% in Q4 2019, was inflated by the completion of new construction and a few high-profile move-outs, which resulted in negative net absorption of 325,000 square feet, the first occurrence of negative net absorption in the region since 2010. One of the most active areas for new direct and subleases was the I-75 Corridor submarket, which finished the year at 21.1% vacancy and served as a significant contributor to the overall market’s high vacancy rate. Conversely, the central business district closed out Q4 2019 with a vacancy rate of 9.8%, the fifth-straight quarter with a rate below 11%. An additional 1.3 million square feet of office 60 | Invest: Tampa Bay 2020 | REAL ESTATE
Mike Griffin
Senior Vice President & Market Leader Savills
space is under construction throughout Tampa Bay, including the Water Street Tampa development, which will likely impact the vacancy rate in 2020. Many also see the growth of e-commerce as a key market disruptor but that balance will be key in the near term. “We are seeing a blend of both online retail presence and brick and mortar, and that is a trend that we will continue to see for the next two to four years. Retail is going through an evolution, and that is not necessarily a negative thing. We will see significant changes over the next few years.” said Cindy Schooler, managing partner and market leader for Orlando and Tampa at SRS Real Estate Partners. Co-working spaces are another area of growth that is reshaping how business is done in the area. “While there is some resistance from more traditional business owners, for millennials, who are the workforce’s new generation, sharing is the name of the game. Uber and Airbnb are but two examples that show we are leaning toward a culture of sharing. To grow sustainably, the first thing to consider is membership loyalty and to build it as a two-way street. We support our clients with flexibility based on their needs and how their business venture is evolving. Co-working spaces are primarily for entrepreneurs and smaller businesses, however large corporations find it attractive to utilize a coworking space and will often utilize our services.,” said Seidy Sleiman, general manager of Pipeline Workspaces. Residential market The residential housing market in the Tampa-St. (
Besides continued rental rate increases and new development, one important factor is what’s happening around the University of South Florida in the Uptown area of Tampa. A lot of great things are happening there. The mall located in Uptown is the last piece of the pie and I would say, for the next 12 months, that is what I’m most excited about. I am focused on helping make that transformation occur because once that’s happened, there will be a greater connection to the growth that is happening north of there, with all the development opportunities between Interstate 275 and USF, the transit connection possibilities and the integration with USF, Moffitt, AdventHealth and the VA. I’ve never been more optimistic in my 18 years of working in this market. All the pieces are in the right place.
There are several exciting real estate trends happening in our area. The Water Street & Channelside District is completely changing our skyline and will improve how we live, work and play in Downtown Tampa. This exciting urban development has become a mecca for those who enjoy the perks of condo living along the river and for healthcare, thanks to USF Health’s medical school being in the center of it all. Seminole Heights & Tampa Heights have seen a surge in home values due to its proximity to downtown, its hip neighborhood charm and the advent of Armature Works. Soon the new 52 acre Westshore Marina District on Westshore Blvd near Gandy will be complete and will provide a fresh, contemporary community for waterfront living, shopping, dining and recreation.
Andrew Wright
CEO & Managing Partner Franklin Street
Mary Jane Rickles
Founder Live Well Team of Tampa Bay – Keller Williams
One of the ways that the growth in this region could be limited is if our infrastructure and local government are not able to keep up with the needs of the growing community. For example, we have seen transportation tax initiatives shut down time and time again over a 40-year-period. That being said, there has been a significant effort here locally. We saw that recently, when Hillsborough County voted in a 1% sales tax, which will be really transformative for the region. As we are hitting peak growth in this region, addressing transportation has now come to the forefront. We also have seen initiatives like the Florida Department of Transportation funding the $1.4-million-dollar infrastructure improvement over the I-275 West Shore interchange, the redevelopment of the Howard Franklin Bridge, and the concept of bus rapid transit and a multimodal hub station. As we start to see more of these types of initiatives, it will support more growth all around them.
) www.capitalanalyticsassociates.com
| 61