Tampa Trends: Where are the Young Professionals and What Does it Mean for Residential Development?
By: Jason D. Quick, Esq.
The “young professionals,” an oft sought after demographic by many municipalities and companies, is commonly defined as a group of young adults, aged 24-34, with a Bachelor’s degree or higher. The current batch of young professionals are a subset of the Millennial generation, a generation that, for the most part, grew up in suburban single family homes with their Baby Boomer parents. The Millennials were hit particularly hard by the economic downturn in the late 2000’s, as evidenced by the fact that their salaries dropped by almost double the amount of the general workforce. (Smith, 1). The economic reality of the last several years has produced a mobile generation that is willing to follow opportunity. So, where are they going? Historically, Tampa has not been a common answer.
Several publications produce lists of top destinations for young professionals using various methodologies. Popular ratings are published by Forbes, Kiplinger, MoneyUnder30, The Atlantic, and others. The surveys use slightly different methodologies to determine ratings, but the common metrics include: median income for young adults, job growth, percentage of young adults in the population, cost of living, and unemployment rate (see Appendix). Several metro areas routinely rank near the top of the various surveys, including: Raleigh/Chapel Hill, NC; Houston, TX; Austin, TX; Washington, D.C.; Seattle, WA; San Francisco, CA; Boulder, CO; and Salt Lake City, UT. By contrast, the major Florida markets typically rank in the middle to the bottom of the survey results.
What factors are holding Tampa back from being regarded as a destination for young professionals? First, the population of the Tampa-St. Petersburg metro area skews older than many of the more highly ranked areas. According to 2012 estimates from the U.S. Census, the median age of Hillsborough County, where Tampa lies, is 36, which is slightly older than that of the top areas on the list. With a median age of approximately 46, Pinellas County, the location of St. Petersburg, has a significantly higher median age than the top destinations. Second, of the Forbes top 200 big companies to work for and top 400 small companies to work for, only one, Sykes Enterprises, is located in the Tampa metro area. More generally, only three Fortune 500 companies are headquartered in the Tampa metro area. Third, the service-based economy of the Tampa metro area was hit particularly hard by the recession of the late 2000’s and the salary to cost of living ratio is lower than in most of the other top areas.
Given the historical factors that have given Tampa a reputation as undesirable to young professionals, the pertinent question for real estate professionals is what does the future hold for this group in Tampa? Notwithstanding Tampa’s checkered past with this demographic, the population metrics point to an increase in the number of young professionals that will reside in the Tampa metro area. For example, unemployment rates for Hillsborough and Pinellas counties have fallen to approximately 7% as of July 2013, as stated by the Bureau of Labor Statistics. This figure is lower than the national rate and is down from a high of over 12% in 2010. Job growth was more than 2% year over year from 2012 through 2013 according to Forbes.com. Additionally, according to Census data, Hillsborough County grew at almost 4% from 2010 through 2012, more than double the growth rate for the United States, and the percentage of 25-34 year olds held steady. Moreover, there has been a more than 1% increase in population aged 20-24, potential future young professionals if they choose to stay in the Tampa metro area. Strong population and job growth are the historic bellwethers for increasing real estate demand.
Additionally, there is evidence that desirable employers will continue expanding in the Tampa metro area due to the favorable business climate. Michael Sasso of the Tampa Tribune recently reported that HealthPlan Services, a company that serves health insurers, recently announced that it will add 1,000 jobs in Tampa. Shortly after that announcement, Mr. Sasso also reported that USAA, a large national insurer, announced that it will be adding over 1,250 jobs to its North Tampa office. Additionally, the Tampa Times recently wrote that Amazon has plans for a new distribution warehouse in Hillsborough County with over 1,000 jobs. Besides traditional employment, Forbes.com recently ranked Tampa as one of the Top 10 cities for young entrepreneurs based on the good availability of capital, low cost of living, and favorable business policies of the area in a ranking authored by Meghan Casserly. Due to their comfort with technology and skepticism of large, traditional employers after the recent recession, entrepreneurial opportunity is likely to play a large part in attracting young professionals over the next decade.
Assuming the favorable demographic and employment trends for the Tampa metro area continue, the questions residential developers must answer are: Where will these new young professionals want to live and what opportunities will there be for urban infill development? So far, research and surveys have shown that Millennials have a much less favorable opinion of car ownership and commuting than their suburb-dwelling parents, the Baby Boomers. (Naughton 3). Rather, they are more likely to want to live in “real” metropolitan areas where they can take public transportation, bike, walk, and use car-sharing services and experience more of a sense of community than can be experienced holed up in a suburban bunker. (Pendall 5). The effect of the urban-dwelling Millennials is particularly evident across the Tampa region in areas such as Channelside, Downtown, Hyde Park, West Shore, and downtown St. Petersburg.
What factors are at play in determining where future growth will be in urban areas with a growing young professional population? Clearly, access to real public transportation is one criteria, something that the Tampa metro area is lacking, but is working to improve. Availability of urban core areas with a reasonable cost of living is something that Tampa does have in spades. Moreover, Tampa does have some quality public schools, which offer a significant savings over private school for those “aging” Millennials that start to have children (over age 30). Another ingredient Millennials seek is an active nightlife scene, with bars, restaurants, live music, something that South Tampa has in abundance. Having coffee shops, gyms and yoga studios, and public spaces, like parks, in walking distance is also important. Finally, a short commute to work is a priority to the car-shunning young professionals of today.
This opportunity for new urban multi-family development has not gone unnoticed. In August, ABC Action News reported that the Tampa City Council approved a 36-story, 380-unit condominium tower in downtown overlooking the Hillsborough River. Additionally, according to company executives, MetLife has plans for a large new apartment building on the corner of its MetWest property in West Shore. Additionally, Mill Creek Residential Trust, a multi-family REIT, has two large apartment projects currently under construction in urban St. Petersburg. Unlike in decades past, it appears that much of the new growth opportunities in the Tampa-St. Petersburg metro area will take place in existing urban areas.
Key market factors to consider when performing analysis for residential development will continue to include the classic markers, such as job and population growth. However, while those factors tell the story of general demand in a region, residential developers would do well to consider the desires and characteristics of the new generation of young professionals. Due to the historic lack of attention to this group in the Tampa metro area, there is great opportunity for creating urban infill multi-family developments. The reasonable cost of living in the area, exciting nightlife, and favorable job situation all mean that revitalization of neglected urban areas, long ignored by Baby Boomers and Generation X, is now realistic. The real New Tampa might just be the old one, if the job opportunities continue to come.
About the Guest Author:
Jason Quick is a native of Southwest Florida and graduate of UCF and the Wake Forest University School of Law. He is currently a Master of Science in Real Estate candidate at the University of Florida and resides in Tampa, Florida with his wife, Jillian. After spending several years as an attorney with a federal agency in Raleigh, NC and Philadelphia, PA, Jason made the decision to return to Florida and pursue his passion for real estate as a full-time career. His interests include leasing and brokerage as well as residential development. Jason can be reached by email at email@example.com.
Smith, Elliot B. “American Dream Fades for Generation Y Professionals,” Bloomberg.com, http://www.bloomberg.com/news/2012-12-21/american-dream-fades-for-generation-y-professionals.html. 21 Dec. 2012.
Sasso, Michael. “Gov. Scott announces insurer to add 1,000 jobs in Tampa,” The Tampa Tribune, http://tbo.com/news/business/governor-plans-jobs-announcement-in-tampa-today-20130918/. 18 Sept. 2013.
Sasso, Michael. “USAA to add 1,200-plus jobs in Hillsborough,” The Tampa Tribune, http://tbo.com/news/business/usaa-to-add-1200-plus-jobs-in-hillsborough-20131105/. 5 Nov. 2013.
Thurston, Susan; Varian, Bill. “Amazon bringing 1,000 jobs, new distribution center to Hillsborough,” Tampa Bay Times, http://www.tampabay.com/news/business/retail/amazon-bringing-1000-jobs-new-distribution-center-to-hillsborough/2146471. 10 Oct. 2013.
Casserly, Meghan. “Where Are New York And San Francisco On The Top 10 Cities For Young Entrepreneurs?,” Forbes.com, http://www.forbes.com/sites/meghancasserly/2013/04/29/where-are-new-york-and-san-francisco-on-the-top-10-cities-for-young-entrepreneurs/. 29 April 2013.
Naughton, Keith. “Boomers Replace Their Children as No. 1 Market for Autos,” Bloomberg.com, http://www.bloomberg.com/news/2013-08-05/automania-strikes-boomers-supplanting-kids-as-buyers.html. 5 Aug. 2013.
Pendall, Rolf. “The Next Big Question Facing Cities: Will Millennials Stay?,” The Atlantic, http://www.theatlanticcities.com/jobs-and-economy/2012/09/next-big-question-facing-cities-will-millennials-stay/3229/. 11 Sept. 2012.
Hobson, Alex. “Tampa City Council approves 36-story downtown high-rise,” ABC News, http://www.abcactionnews.com/dpp/news/region_tampa/tampa-city-council-approves-36-story-downtown-high-rise. 8 Aug. 2013.
Brennan, Morgan. “America’s Best Cities for Young Professionals,” Forbes.com, http://www.forbes.com/sites/morganbrennan/2011/07/12/americas-best-cities-for-young-professionals/. 12 July 2011.
Florida, Richard. “America’s Top 25 Cities for Recent College Graduates,” The Atlantic, http://www.theatlantic.com/national/archive/2011/05/americas-top-25-cities-for-recent-college-graduates/238972/#slide25. 19 May 2011.
Rapacon, Stacy. “10 Great Cities for Young Adults,” Kiplinger.com, http://www.kiplinger.com/slideshow/real-estate/T000-S001-10-great-cities-for-young-adults-slide-show/. 1 April 2013.
Carlozo, Lou. “The Best 20 Cities in America to be Young, Broke, and Single,” Moneyunder30.com, http://www.moneyunder30.com/best-cities-young-broke-single-8800#UifVt3qDKw9lLqXz.01. 17 June 2013.
Contact us at 813.514.1070 for more information on Sales and Leasing Commercial Property in Greater Tampa Area