Highlights from Report:
Results of the second quarter survey indicate that the Florida commercial real estate market continues to
stabilize near or at the bottom. However, given the significant uncertainty that continues to hang over the general economy and particularly the state economy, most respondents believe we will hover along the bottom for the next several quarters.
Tampa-St. Petersburg
- Cap rates in the Tampa-St. Petersburg area are, on average, equal to that of the state, and range from 8.0% (Apartments) to 12.2% (Condo Conversion).
- Cap rate changes were mixed over the past quarter across property types, with the largest changes occurring in Warehouse (-0.47% change) and Flex Space (+0.42% change).
- Cap rate outlooks indicate that rates are expected to remain stabile across most property types in the next quarter.
- Required yields for Tampa-St. Petersburg are slightly higher, on average, than that of the state, 12.54% compared to 12.51% statewide.
- Required yields are highest for Condo Conversion at 20.4% and lowest for Office: Class A at 10.7%.
- Required yields increased across most property types last quarter. The largest shifts in required yields occurred in Condo Conversions (+3.44% change) and Free Standing Retail (+1.93% change). The largest decline occurred in Retail – Large (-0.85% change).
- The investment outlook is neutral to positive across property types, with the most positive outlook occurring in Apartments and the most negative outlook is in Condo Conversions.
- The outlook for Land Development appears to be neutral to negative for all land classifications with the exception of Land with Residential Entitlements which has an outlook of neutral to positive.
- Future occupancy is expected to remain stable for all property types except Free Standing Retail which is expected to decline further.
- Rental rates are expected to increase slower than inflation across almost all property types over the next quarter.
Comments: Certainly from our perspective, the market is stabilizing. A relatively new occurrence is the emergence of the national and region retailers back to the market. Doing deals? Hmmmmm, not so much, but they do seem to be out sniffing the periphery of the market and testing what types of deals can be had. This is a stark contrast to the same period last year, in which national and regional retailers were noticeably absent from our market and what little activity there was in the market involved primarily local-based, single location tenants seeking better deals or taking advantage of reduced rents by upgrading space.
While the office market appears to be stabilizing, high unemployment in the Greater Tampa Area will continue to be a drag. Sub-lease offerings continue to weigh on the market, though new sublease offerings appear to have slowed to a trickle. Displaced attorneys tend to be the most active in small spaces in the Downtown Central Business District (CBC). Space that is close to the court house and or caters to the legal profession can be successful in attracting tenants. Landlords must be open minded and creative in their efforts to attract tenants. It is our understanding that there is a substantially sized sublease space in the CBC that will come off the market shortly. Expect further word in the near term.
Though not a scientific study, tracked in-bound, unsolicited requests in to our office from potential tenants/buyers seeking assistance with site location have increased noticeably this year compared to last. It should be noted however, before landlords become too excited that the market is set to take off, that it would be near impossible for there to be less representation requests than 2009, which was a shockingly poor year. We are cautiously optimistic moving forward, along with some teeth gnashing over longer term effects that the BP oil spill might have in our market. All things considered, we have escaped relatively unharmed in the Greater Tampa Area, although hotel operators would probably strongly disagree. Activity has increased and buyer/tenants are beginning to dip their toes in the market. In the mean time, we will keep our fingers crossed and hope there is some carry through.
UF Bergstrom Center Q2 Market Report – Florida Commercial Real Estate Continues to Stabilize
Highlights from Report:
Comments: Certainly from our perspective, the market is stabilizing. A relatively new occurrence is the emergence of the national and region retailers back to the market. Doing deals? Hmmmmm, not so much, but they do seem to be out sniffing the periphery of the market and testing what types of deals can be had. This is a stark contrast to the same period last year, in which national and regional retailers were noticeably absent from our market and what little activity there was in the market involved primarily local-based, single location tenants seeking better deals or taking advantage of reduced rents by upgrading space.
While the office market appears to be stabilizing, high unemployment in the Greater Tampa Area will continue to be a drag. Sub-lease offerings continue to weigh on the market, though new sublease offerings appear to have slowed to a trickle. Displaced attorneys tend to be the most active in small spaces in the Downtown Central Business District (CBC). Space that is close to the court house and or caters to the legal profession can be successful in attracting tenants. Landlords must be open minded and creative in their efforts to attract tenants. It is our understanding that there is a substantially sized sublease space in the CBC that will come off the market shortly. Expect further word in the near term.
Though not a scientific study, tracked in-bound, unsolicited requests in to our office from potential tenants/buyers seeking assistance with site location have increased noticeably this year compared to last. It should be noted however, before landlords become too excited that the market is set to take off, that it would be near impossible for there to be less representation requests than 2009, which was a shockingly poor year. We are cautiously optimistic moving forward, along with some teeth gnashing over longer term effects that the BP oil spill might have in our market. All things considered, we have escaped relatively unharmed in the Greater Tampa Area, although hotel operators would probably strongly disagree. Activity has increased and buyer/tenants are beginning to dip their toes in the market. In the mean time, we will keep our fingers crossed and hope there is some carry through.