By Brandy McAdams, a principal with NAI Skyway National Partners
The current Florida and Tampa commercial and retail real estate climate remain dramatically different from what many other sections of the country are experiencing, starting with a 20-30% increase in year-to-year retail sales and vacancy rates consistently dropping below the 10% level across the board. We owe this to many different factors, including the nearly 1,000 new residents entering the Florida marketplace daily, the relative affordability of Florida, no state income tax and the unparalleled climate.
The Covid effect, in Tampa, either was a gut punch into change or a launch for businesses in our post-pandemic marketplace. Businesses that downsized were able to benefit from the active sublease market. The companies that have waited patiently for some breathing room to pounce, finally got an opportunity for an address in their desired location. The major misconception among many investors and tenants, looking to make an entry into the commercial and retail real estate market was that there would be plentiful options to choose from in selecting a location or a “deal” waiting for them…..this is, and was not, necessarily the case. There was a backlog prior to Covid for office, retail and industrial space. Some transactions had temporary delays, but most major deals were inked. If you and your company find the space or the dirt that your company needs, get it, don’t wait.
After speaking with many of our tenants, several mentioned they were forced to restructure their businesses during Covid, decisions that should have been made years ago, while others are trying to keep up with record sales while managing limited labor/staffing issues and supply chain issues,. From the small business owner to the CEO, Tampa met the Covid / Post-Covid, Delta Variant challenge as Florida always does in any storm, with tenacity and speed to market. With many new companies and entrepreneurs seeking to relocate into our business and family-friendly city, what’s next?
Retail Vacancies have declined nationally, and the Tampa MSA Market ranks with other competing cities for retail acquisitions. The scare of the Delta Variant put businesses on edge. However, it did not slow high consumer demand, especially in the restaurant and retail industry. The anti-social and social are all spending. Office vacancy rates are on the decline, as 60% of new leases being signed are businesses entering our market. New construction projects, such as Skycenter and Midtown, contributed to an increase in the Westshore Business District office market, with 1.4 million square feet of new office leasing in the Westshore District alone. Tenants will be actively occupying space in these major projects over the next few months. The demand for Industrial Space keeps climbing, as vacancy rates remain situated well below 5%.
Overall, the Tampa commercial real estate market is responding well to the Florida migration. Consumers are supporting local in their “hood” and want retail /restaurants close by for their day-to-day needs. We are not just talking fast food, as the demand for self -care services and foodie places with a unique vibe are reigning supreme in the current marketplace.
The steady migration of new businesses, and new residents, has Tampa still playing catch up to other growth cities like Dallas, Texas & Atlanta, Georgia, with housing, construction and development. Given the population increases, and the limited inventory of space, I expect construction to heat up, yet again, in Southwest Florida to meet consumer and residential demand. Dallas has over 600,000 square feet of new retail space in construction as of Q3, compared to Tampa, where we are tracking between 30,000-50,000 square feet. Florida’s growth curve continues and a slow down or peak does not seem likely anytime soon. If anything, we are possibly at a peak that may plateau, sticking around for years to come. Tampa looks to be a little behind with keeping up with delivery to support the demand, which simply means we keep growing. It is good news as our Great City is progressive versus over-developed and stalled.
Suburbs and commuter tertiary neighborhoods are becoming full-on stand-alone communities. As developers invest in these markets as an active playground, these trade areas are becoming more affluent with higher income earners and young professionals seeking out the quality-of-life Florida offers. The median age in Tampa is now 35, 10 years ago average age groups were mid-40’s. From urban to suburban, retiree or young family, there is a place for all of us to plug in or play. Open beaches, outdoor lifestyle venues such as Armature Works, Sparkman’s Wharf and the new St. Pete Pier are tracking record visits. Tampanians, say hello to your new neighbors whether they have a Northern, Southern or Mid-West accent, they have bought in and invested. They are your new customer, employee, vendor or, better yet, a fun happy hour companion.
Brandy McAdams, a principal with NAI Skyway National Partners, and 18-year Tampa resident, is responsible for overseeing the day-to-day activities of the retail division for SWFL. NAI Skyway National Partners is aligned with Hiffman National, a Chicago-headquartered property management and project services company.
NAI Skyway National Partners, a full-service commercial real estate brokerage firm servicing the Gulf Coast and Southwest sections of Florida.
Sources: National Association of Realtors Q3 Market Updates, Co Star, Westshore Alliance, Visit Tampa Bay, NAI Global Market Research
