Tampa Bay’s robust growth driving strong investor demand for commercial real estate

Real Estate Quarterly

Tampa Bay will continue to flourish as we approach the next decade. We are one of the fastest growing major metropolitan areas in the nation, with dynamic companies representing some of today’s hottest industries. Our increasingly diversified economy is generating jobs, and in turn supporting the phenomenal expansion in the commercial real estate sector.

Office

►Year-to-date (YTD) sale transactions included nearly 40 properties totaling over $660 million in value.

►Cap rates for Class A assets are as low as 5.75 percent in the central business district and 6 percent for suburban.

►Private capital accounted for over 85 percent of sales YTD, which is double the amount of private capital sales recorded through year-end 2018.

►As buyers who bought in 2014-2015 look to divest after a traditional five to seven-year hold, the market should see increased activity.

Hospitality

►YTD, 18 hotels with over 2,900 rooms traded with a value of nearly $500 million.

►The hospitality sector saw an influx of institutional capital in 2019, which was a complete 180 degree turn from 2018.

►2018 saw the marque sale of The Vinoy Renaissance Hotel in St. Petersburg to Tampa Bay Buccaneer’s owner Bryan Glazer, for $185 million. 

►As of June 2019, hotel occupancies remained stable at 75 percent, with RevPar at approximately $81.

Self-Storage

►Tampa Bay had almost 30 self-storage facilities trade since 2016 with a total value of approximately $200 million.

►Private capital has accounted for 50 percent of buyers in recent years.

►Cap rates for self-storage assets in the local market typically range from 5.25-5.75 percent, with top-tier assets at 5 percent.

Senior Housing

►The Tampa Bay area has a robust inventory of senior housing facilities with 445 communities with over 14,750 licensed beds.

►There were approximately 50 trades for senior housing with a transaction value over $575 million and representing 7,550 units in the last year.

►Best-in-class assets are trading at cap rates below 6 percent.

Student Housing

►Since 2016 the Tampa Bay market has seen 10 student housing complexes trade with a transaction value over $275 million.

►The Tampa Bay market has approximately 140,000 college students, and 60 student housing communities, totaling 10,250 units.

►Third-quarter average asking rents per unit were $2,175, up 3.0 percent YOY.

Retail

►YTD sales volume for retail assets, including single-tenant net-leased assets (STNL), totaled over $775 million, nearly double compared to a year ago.

►Average retail cap rates compressed 50 basis points in 12 months to 6.7 percent, marking the 11th consecutive quarter at or below 7.0 percent. Some STNL assets are achieving cap rates in the 5 percent range.

►Private capital was the largest investor in the retail sector due to reliable income streams and favorable tax treatment in 1031 exchanges.

Industrial

►YTD industrial sales volume totaled approximately $610, a 56.0 percent YOY increase.

►Cap rates for industrial product are exceptionally low, ranging from 4.75 percent -5 percent for top-tier assets.

►The average price per square foot (psf) rose 19.0 percent YOY to $75 psf on heightened demand by REITs, which acquired $150 million in industrial product YTD.

►Tampa Bay’s industrial market attracted a diverse buyer composition as real estate investment trusts and institutional capital accounts for more than 40 percent in 2019.

Multifamily

►Tampa Bay’s multifamily market boasted over $2.5 billion in sales volume through Q3.

►Cap rates for multifamily remain the lowest of any sector due to robust investor interest. The average cap rate decreased 50 basis points YOY to 5.4 percent, with core-located, value-add assets as low as 4 percent.

►The average per unit price rose to $160,000 in Q3, for a three-year increase of 21.9 percent.

►The luxury 500 Harbour Island recently sold for over $440,000 per unit, the highest per unit price in Tampa Bay’s history. ♦

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