CEO Andrew Wright predicts the region’s staggering population growth will provide significant opportunity for investors and occupiers
Franklin Street is pleased to share its 2021 Economic Outlook Report for the Tampa Bay market. The detailed report takes a look at how Florida and Tampa Bay’s diverse economic and real estate sectors compare to the rest of the country, while offering key insights for the year ahead. Here are seven key takeaways from the report:
1. The big picture for Florida and Tampa Bay is population growth.
Over 1,060 people move to the state a day and a staggering 387,479 people moved to Florida from April 2019 to April 2020. Florida’s population is growing almost three times as fast as the national average and Tampa Bay specifically is growing at a rate 20% higher than the state average. Florida is the fifth fastest-growing state in the country, preceded by Idaho at No. 1, then Utah, Washington, and Nevada.
“Of particular note is the size of Florida’s population compared to the states that are growing faster than ours,” says Franklin Street CEO Andrew Wright, “It’s one thing for Idaho to grow by 4% on 1.8 million, but it’s an entirely different thing for Florida to be growing at over 3.2 percent on a population of almost 22 million. In terms of both size and growth rate, no other state aside from Texas is even comparable.”
2. There’s no better place than the I-4 Corridor.
Breaking the state’s population growth down by county, the two largest counties with the two largest growth rates are both within Florida’s “I-4 Corridor,” the region connecting Tampa Bay to Orlando via Interstate 4. Wright says this bodes well for Tampa Bay’s future. “There’s no place I’d rather be in the world, as someone who is involved in real estate, than the I-4 corridor.”
3. Strong homes sales signal a healthy market.
Home sales are another positive indicator for Tampa Bay’s future. Absorption is up across the spectrum, especially within the $200,000 to $500,000 range, and new homes are being bought faster than they can be built. With construction rates up, putting constraints on new construction, new home supply is expected to remain limited, creating a seller’s market.
“These home sales are a signal that population growth is going to keep accelerating and more and more people are going to continue moving here,” says Wright. “Tampa Bay homebuilders have a bright future going into 2021.”
Although homes prices are up, the tight inventory paired with record-low interest rates has created strong demand from buyers.
4. Multifamily remains top investment sector.
On the commercial side, multifamily continues to be the best-performing asset class for investment. Franklin Street expects the number of multifamily sales to slow in 2021, but the total dollar volume to increase as investor appetite rebounds. Rent growth and new development will likely slow, but steady population growth and the need for affordable housing, especially with home prices on the rise, will continue to fuel demand for apartments both from renters and investors.
5. Office vacancies could lead to favorable terms for tenants.
Tampa Bay’s office market saw rents flatten in 2020, while vacancies rose for the first time in five years. This is happening at a time when Tampa Bay is adding a few million square feet of new office product, while more sublease space is also becoming available. These factors are likely to create an oversupply in the near term, which could present opportunities for tenants to secure more attractive lease terms.
6. Retail properties will look different.
Retail, which was already under attack by ecommerce, suffered another hard blow from COVID-19 in 2020. As bankruptcies and foreclosures continue, landlords will look for creative ways to re-tenant buildings, likely with some non-retail uses. Similarly, developer will look for ways to repurpose older malls and shopping centers into mixed-use projects. Medical use in retail, aka “medtail” will also be a notable trend this year.
7. Tampa Bay will see no shortage of opportunities in 2021.
Overall, Franklin Street predicts 2021 will be turbulent, yet full of opportunity as the market rebounds and investors regain confidence.
“Tampa Bay’s rapidly expanding population combined with strong GDP growth, record low interest rates and limited inventory due to supply constraints are a perfect recipe for economic recovery and success in 2021,” Wright says, “There’s going to be a lot of opportunity here in 2021 for the real estate space.”
Download Franklin Street’s full 2021 Economic Outlook report here.