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Tampa, FL Overview Tampa’s economic recovery has been choppy, but continues to progress. In the 12 months ending in October of 2012, the metro economy was on pace to add 19,300 net new jobs, approximately 10,000 of which are office-using. Key sectors, such as professional and business services, information technology, and financial services are all expanding and have been adding jobs in 2012. However, the fiscal cliff would be a major stumbling block to a continuing recovery. Federal spending accounts for 23% of Tampa’s economy, giving it significant exposure to the sequestration cuts. Moreover, tax increases would also take a bite out of consumer spending in the local economy. If the U.S. does go over the cliff, we estimate that Tampa will experience a mild recession in the first half of 2013, and 5,200 jobs will be cut.
Sequestration Cuts
LOW RISK
HIGH RISK
Tax Increases
LOW RISK
HIGH RISK
FISCAL POLICY IMPACT SCENARIOS 2013 Forecast Fiscal Cliff
SCENARIOS
Most Probable
(30% probability)
(70% probability)
0.5%
3.0%
-5,200
11,900
9.4%
9.0%
-26,000
500,000
Economic Gross Metro Product (GMP) Job Growth Unemployment Rate
Office Net Absorption (SF) Vacancy
20.7%
19.9%
Rents – Avg. Asking
$19.93
$20.22
Rents – Annual Growth
-0.4%
1.0%
Methodology explained on page 38
Outlook The most probable scenario is that policymakers will reach an agreement to avert the fiscal cliff and Tampa’s fundamentals should continue to strengthen. Its office sector has been slowly absorbing space since 2011. Tampa’s office vacancy rate is down 110 bps from its recessionary peak. Even more encouraging, the metro’s housing market is making an impressive comeback. The months’ supply of single-family homes on the market has declined from 22 months in 2008 to just 3.8 months in the latest reading in 2012 (November). Housing is poised to be a major economic driver for the local economy going forward. Upside mostly outweighs the downside risks, and thus we expect Tampa’s economy to create nearly 12,000 net new jobs in 2013, which will translate into 500,000 SF of office space demand.
TAX EXPOSURE & INCOME Rank Total Households (mil.) % > $200k Income
1.1
#9
2.9%
#29
Source: Census Bureau, CPS Survey
FEDERAL GOVERNMENT STATISTICS Federal Employment
23,000
% of Total Workforce
2.0%
Government Private Occupied Space (SF)
1,026,000
% of Total Inventory
1.7%
Demand (avg.annual gross leasing from Gov’t, SF)
54,000
Source: GSA, BLS, Cassidy Turley Research
IMPACT OF FEDERAL PROCUREMENT SPENDING
TOTAL GMP = $114 BILLION
23% Federal Spending as % of GMP Rank #7 out of 30 markets
Non-Federal portion of GMP Total Federal Spending
$2.5
3.0%
$2.0
2.5%
Federal Salaries, Grants, Insurance Procurement Contracts
2.0%
$1.5
1.5% $1.0
$86.9
$26.8
1.0%
$0.5 $23.6
0.5%
$3.2
$0.0
0.0% Department of Defense
Non-Defense
Procurement Contracts ($ bil.) Source: Consolidated Federal Funds Report, 2010, $ Bil.
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Combined % of GMP Total - % of GMP
Source: Consolidated Federal Funds Report, 2010
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