Tampa’s industrial market has been on a roll, with a strong pace of growth over the past few years. The market boasts impressive leasing activity, historic rates of net absorption, and robust rent growth. It’s not just the market’s fundamentals that are impressive; Tampa’s strategic location provides a logistical advantage that neighboring Orlando cannot match. With the Eastern edge of the market situated along Central Florida‘s pivotal Interstate 4 corridor, Tampa enjoys excellent connectivity to a major distribution hub in Lakeland, as well as to the fast-growing Orlando area. The market’s immediate access to the growing Ocala area and points to the North via Interstate 75 further enhances its strategic location. Despite 6.4 million SF of new industrial space delivered over the past year, development activity remains robust, with 3.6 million SF of new industrial space under construction. Investment sales activity has also been substantial, with 520 industrial properties trading hands for a total of $1.4 billion in transaction volume over the last year.
Leasing
The Tampa commercial real estate market boasts a 4.4% industrial vacancy rate, which, surprisingly, is among the highest in Florida but still in line with the national benchmark. Despite the growing construction pipeline, strong tenant demand is expected to keep vacancy tight in the range of 4% to 5%. Logistics has the largest RBA, but highest vacancy. Specialized industrial have the smallest RBA, but lowest vacancy. According to CoStar, the Tampa real estate market has the potential for investment due to high future supply. Additionally, Flex has the highest rent and availability, the Market has a high net absorption rate and is currently under construction, and Logistics has the highest delivery square footage.
The dominant East Hillsborough/Plant City Submarket experienced almost 2 million square feet of total space absorption in the last year, and logistics firms have made up an increasingly larger portion of recent tenant demand. Due to the greater availability of land and the proximity to interstates 4 and 75, companies have been expanding in the East Hillsborough/Plant City and East Side submarkets in particular. Tampa’s location allows for quick and efficient distribution of goods throughout Florida, which has driven steady industrial demand in the commercial real estate Tampa market.
Rent
The demand for distribution space continues to rise, resulting in a 12.3% increase in industrial rents in Tampa over the last 12 months. The average asking rent is now $10.95/SF, a growth of almost 30% since the beginning of the pandemic and 30% over the past five years. Despite a wave of new supply, which had not been pre-leased, rent growth remained steady even during pandemic-related uncertainty. The market has had little trouble absorbing speculative supply over the past three years, resulting in a positive outlook for newly delivered properties’ rent growth. Landlords are in a strong position for deal negotiations, with some inserting more aggressive rent escalation clauses in new leases. Rent growth is expected to remain in the range of 9% to 11% through the end of 2023, reflecting the strength of the overall industrial market.
Sales
The high demand for industrial properties among tenants has led to an increased demand for industrial land for sale. As a result, there is a limited amount of industrial land available for purchase in many areas. Investors are actively seeking well-positioned distribution properties, which has driven rents higher and attracted attention from developers. The I-4 Corridor in Florida is an attractive secondary market for warehouse tenants due to its central location within the state and strong demographics. There will continue to be pressure on rents and availability of warehouse space as the market (particularly infill) is land-constrained.
In May of 2022, PNC Realty Investors acquired the recently completed Home Depot distribution center at 7075 US Hwy 41 S Gibsonton, FL. The center measures 402,156 square feet and was sold for $103 million ($256/SF). The property has rail access, which is an important component of the supply chain. The facility is class A and was completed in 2021 by Seefried Properties. It is fully occupied by Home Depot, making it one of the largest stand-alone transactions in recent quarters.
Duke Realty Corporation concluded the sale of a crucial 112,000-square-foot distribution facility in Tampa Regional Industrial Park in March 2022. The facility is newly constructed, class A, and fully leased by Amazon for last-mile delivery. AGS Properties Corp., a Florida-based company, purchased the facility for an astounding $55.6 million ($497/SF).
Conclusion
Tampa’s industrial real estate market has been thriving due to strong growth and strategic location. The area has good connectivity to Orlando and a major distribution hub in Lakeland. Despite 6.4 million SF of new industrial space being delivered, development activity remains strong, with 3.6 million SF under construction. Tampa’s industrial vacancy rate is 4.4%, and demand for distribution space is rising, resulting in a 12.3% increase in rents over the last 12 months. The market easily absorbs new supply, resulting in a positive outlook for rent growth. Tenant demand is expected to remain strong, keeping vacancy low and rent growth between 9-11% until the end of 2023. Investment sales have been substantial with $1.4 billion in transaction volume for 520 industrial properties. Tampa’s industrial real estate market is expected to continue growing with increased demand and favorable investment environment.
Interested in learning more about the commercial real estate market in St. Petersburg? Check out our report on the St. Petersburg Commercial Real Estate Market. Discover the latest trends and insights into the city’s industrial, office, and retail sectors. Click now to learn more!
Source: CoStar
Tampa Commercial Real Estate Industrial Report
Tampa’s industrial market has been on a roll, with a strong pace of growth over the past few years. The market boasts impressive leasing activity, historic rates of net absorption, and robust rent growth. It’s not just the market’s fundamentals that are impressive; Tampa’s strategic location provides a logistical advantage that neighboring Orlando cannot match. With the Eastern edge of the market situated along Central Florida‘s pivotal Interstate 4 corridor, Tampa enjoys excellent connectivity to a major distribution hub in Lakeland, as well as to the fast-growing Orlando area. The market’s immediate access to the growing Ocala area and points to the North via Interstate 75 further enhances its strategic location. Despite 6.4 million SF of new industrial space delivered over the past year, development activity remains robust, with 3.6 million SF of new industrial space under construction. Investment sales activity has also been substantial, with 520 industrial properties trading hands for a total of $1.4 billion in transaction volume over the last year.
Leasing
The Tampa commercial real estate market boasts a 4.4% industrial vacancy rate, which, surprisingly, is among the highest in Florida but still in line with the national benchmark. Despite the growing construction pipeline, strong tenant demand is expected to keep vacancy tight in the range of 4% to 5%. Logistics has the largest RBA, but highest vacancy. Specialized industrial have the smallest RBA, but lowest vacancy. According to CoStar, the Tampa real estate market has the potential for investment due to high future supply. Additionally, Flex has the highest rent and availability, the Market has a high net absorption rate and is currently under construction, and Logistics has the highest delivery square footage.
The dominant East Hillsborough/Plant City Submarket experienced almost 2 million square feet of total space absorption in the last year, and logistics firms have made up an increasingly larger portion of recent tenant demand. Due to the greater availability of land and the proximity to interstates 4 and 75, companies have been expanding in the East Hillsborough/Plant City and East Side submarkets in particular. Tampa’s location allows for quick and efficient distribution of goods throughout Florida, which has driven steady industrial demand in the commercial real estate Tampa market.
Rent
The demand for distribution space continues to rise, resulting in a 12.3% increase in industrial rents in Tampa over the last 12 months. The average asking rent is now $10.95/SF, a growth of almost 30% since the beginning of the pandemic and 30% over the past five years. Despite a wave of new supply, which had not been pre-leased, rent growth remained steady even during pandemic-related uncertainty. The market has had little trouble absorbing speculative supply over the past three years, resulting in a positive outlook for newly delivered properties’ rent growth. Landlords are in a strong position for deal negotiations, with some inserting more aggressive rent escalation clauses in new leases. Rent growth is expected to remain in the range of 9% to 11% through the end of 2023, reflecting the strength of the overall industrial market.
Sales
The high demand for industrial properties among tenants has led to an increased demand for industrial land for sale. As a result, there is a limited amount of industrial land available for purchase in many areas. Investors are actively seeking well-positioned distribution properties, which has driven rents higher and attracted attention from developers. The I-4 Corridor in Florida is an attractive secondary market for warehouse tenants due to its central location within the state and strong demographics. There will continue to be pressure on rents and availability of warehouse space as the market (particularly infill) is land-constrained.
In May of 2022, PNC Realty Investors acquired the recently completed Home Depot distribution center at 7075 US Hwy 41 S Gibsonton, FL. The center measures 402,156 square feet and was sold for $103 million ($256/SF). The property has rail access, which is an important component of the supply chain. The facility is class A and was completed in 2021 by Seefried Properties. It is fully occupied by Home Depot, making it one of the largest stand-alone transactions in recent quarters.
Duke Realty Corporation concluded the sale of a crucial 112,000-square-foot distribution facility in Tampa Regional Industrial Park in March 2022. The facility is newly constructed, class A, and fully leased by Amazon for last-mile delivery. AGS Properties Corp., a Florida-based company, purchased the facility for an astounding $55.6 million ($497/SF).
Conclusion
Tampa’s industrial real estate market has been thriving due to strong growth and strategic location. The area has good connectivity to Orlando and a major distribution hub in Lakeland. Despite 6.4 million SF of new industrial space being delivered, development activity remains strong, with 3.6 million SF under construction. Tampa’s industrial vacancy rate is 4.4%, and demand for distribution space is rising, resulting in a 12.3% increase in rents over the last 12 months. The market easily absorbs new supply, resulting in a positive outlook for rent growth. Tenant demand is expected to remain strong, keeping vacancy low and rent growth between 9-11% until the end of 2023. Investment sales have been substantial with $1.4 billion in transaction volume for 520 industrial properties. Tampa’s industrial real estate market is expected to continue growing with increased demand and favorable investment environment.
Interested in learning more about the commercial real estate market in St. Petersburg? Check out our report on the St. Petersburg Commercial Real Estate Market. Discover the latest trends and insights into the city’s industrial, office, and retail sectors. Click now to learn more!
Source: CoStar