At the 2022 Trends in Real Estate Conference, Lightning owner and commercial real estate developer, Jeff Vinik, sat down with Cathie Wood of ARK Investment Management to discuss the effects of inflation in Tampa.
Jeff Vinik has been spearheading development in the city for years, as he has turned Water Street into a vibrant community. The Water Street project encompasses over 70 acres of waterfront property in the downtown area of Tampa. The multi-phase project first took shape in 2013 and has only grown in scale since, adding more residential, retail, and restaurant space to Tampa Bay.
At the conference Vinik discussed the current situation on his hands in Tampa’s Water Street District as he heads into Phase 2 of his project. He notes the impact that inflation has had on his plans due to the rising cost of living that has increased dramatically since the project began.
The rise in material, labor and land cost have impacted the budget for Phase 2 and will force them to rent and sell at higher price points than originally planned. Cathie Wood notes that the price of building materials is set to fall once the supply chain cycle steadies. She explains that people tend to over purchase items when they get spooked by crises, like the Russia-Ukraine war or covid, but it will settle shortly. Both Vinik and Wood agreed that the inflation we are seeing today cannot last and will be resolved by innovation and enticing higher wages.
The value of using a Commercial Real Estate agent with local knowledge increases during times of rising inflation. During periods of high inflation, rental rates are likely to rise, and affordable property is at a premium. Buyers have less purchasing power, preventing them from expanding. For the investor, the shorter the lease period, the faster rents can be adjusted to keep up with rising costs. Inflation also impacts the ROI of an investor making it all but impossible to project what their true cash flow will be on the investment.
Overall, inflation is impacting the Tampa Bay commercial real estate market by forcing business to downsize due to the rise in rent and expenses. As more businesses move to the Tampa area there has been a decrease in affordable office spaces available resulting in even higher rent prices. The current inflation rate in is Tampa 10.2%, one of the highest in the country.
https://stpetecatalyst.com/part-2-vinik-wood-talk-real-estate-and-the-impacts-of-inflation/
Photo by bueller006 via Flickr
The impact of inflation on the real estate market and the development of Tampa’s Water Street
At the 2022 Trends in Real Estate Conference, Lightning owner and commercial real estate developer, Jeff Vinik, sat down with Cathie Wood of ARK Investment Management to discuss the effects of inflation in Tampa.
Jeff Vinik has been spearheading development in the city for years, as he has turned Water Street into a vibrant community. The Water Street project encompasses over 70 acres of waterfront property in the downtown area of Tampa. The multi-phase project first took shape in 2013 and has only grown in scale since, adding more residential, retail, and restaurant space to Tampa Bay.
At the conference Vinik discussed the current situation on his hands in Tampa’s Water Street District as he heads into Phase 2 of his project. He notes the impact that inflation has had on his plans due to the rising cost of living that has increased dramatically since the project began.
The rise in material, labor and land cost have impacted the budget for Phase 2 and will force them to rent and sell at higher price points than originally planned. Cathie Wood notes that the price of building materials is set to fall once the supply chain cycle steadies. She explains that people tend to over purchase items when they get spooked by crises, like the Russia-Ukraine war or covid, but it will settle shortly. Both Vinik and Wood agreed that the inflation we are seeing today cannot last and will be resolved by innovation and enticing higher wages.
The value of using a Commercial Real Estate agent with local knowledge increases during times of rising inflation. During periods of high inflation, rental rates are likely to rise, and affordable property is at a premium. Buyers have less purchasing power, preventing them from expanding. For the investor, the shorter the lease period, the faster rents can be adjusted to keep up with rising costs. Inflation also impacts the ROI of an investor making it all but impossible to project what their true cash flow will be on the investment.
Overall, inflation is impacting the Tampa Bay commercial real estate market by forcing business to downsize due to the rise in rent and expenses. As more businesses move to the Tampa area there has been a decrease in affordable office spaces available resulting in even higher rent prices. The current inflation rate in is Tampa 10.2%, one of the highest in the country.
https://stpetecatalyst.com/part-2-vinik-wood-talk-real-estate-and-the-impacts-of-inflation/
Photo by bueller006 via Flickr