Tampa Bay continues to experience strong economic, job and population growth into 2018. With an increasingly business friendly environment, further growth is anticipated as Tampa continues to attract companies from around the country. All of this growth is driving demand for new construction in virtually every sector of commercial real estate, which has contributed to an active land market.
My quarterly report on the Tampa Bay land market combines insight from economic and real estate journals, data from our Florida Research Team, and insight I’ve gathered from conferences, seminars and other meetings over the last quarter. Below are some of the highlights:
Rental sites continue to be very active, especially in the suburbs. Rental townhomes and single family projects have started contracting and closing on sites. For-sale townhomes and condominiums are under contract or construction in urban and suburban submarkets, and are gaining momentum. There are 5,204 multifamily units expected to deliver in 2018, compared to 4,646 in 2017.
2. Single Family
Quarterly new home starts are up by more 12 percent year over year. Builders and developers are closing and making offers on A and B locations. The new housing start level is now 105 percent of the 20-year moving average, and we expect the market to continue to expand in 2018. Aside from a large scale economic event, the greatest risk to the market is interest rates and affordability.
A total of 22 retail buildings with 424,835 square feet of retail space were delivered to the market in the first quarter, with 1.7 million square feet still under construction at the end of the quarter. Most retail land activity involves grocery, as well as outparcels and unanchored strip centers.
New-to-market and local developers continue to contract and close land positions in Tampa, south Pasco County, Lakeland, Plant City and Manatee/Lakewood Ranch. Spec buildings are getting larger, some up to 500,000+ square feet, and there is an increasing demand for last mile sites as the eCommerce trend grows.
The most active players in the office market are users and/or build-to-suit developments. Medical office building (MOBs) construction by providers continues to be active. We could see three to four new office buildings move dirt this year.
I’m still predicting the overall Tampa Bay land cycle has five to six years left, with solid growth for the next three years. Population growth and job gains are the main drivers. The only headwind the market is currently facing are rising construction and labor costs, which are rising faster than rents in most sectors.
For further insight, download the full Cushman & Wakefield Q1 2018 Tampa Bay Area Land Report here.
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