Tampa Commercial Real Estate | Florida Commercial Property

Tampa-St Petersburg

• Cap rates in the Tampa-St. Petersburg area are, on average, higher (0.32 percentage points) than that of the state, and range from 8.5% (Apartments) to 16.4% (Condo Conversion).

• Cap rates increased over the past quarter across most property types, with the largest changes occurring in Condo Conversion (+6.92% change) and Free Standing Retail (+0.74% change).

• Cap rate outlooks indicate that rates are expected to either remain the same across most property types in the next quarter. The strongest indication of a cap rate increase occurs in Flex Space.

• Required yields for Tampa-St. Petersburg are higher, on average, than that of the state, 13.62% compared to 12.75% statewide.

• Required yields are highest for Condo Conversion at 19.1% and lowest for Free Standing Retail at 11.6%.

• Required yields decreased across all but two property types last quarter. The largest shifts in required yields occurred in Condo Conversion (-3.31% change) and Warehouse and Distribution (-2.18% change).

• The investment outlook is mixed across property types, with the most positive outlook occurring in Warehouse and Distribution and Neighborhood Centers.

• The outlook for Land Development appears to be neutral to negative for all land classifications.

• Future occupancy rates are expected to be the same or decrease over the next quarter for the majority of property types. The strongest indications of occupancy rate decreases occur in Strip Centers and Large Retail.

• Rental rates are expected to increase slower than inflation across almost all property types over the next quarter.

• Future absorption rate expectations are neutral for both Condominium Development and Single Family.

• Future price increases are expected to occur at a rate that is slower than inflation for both Single Family and Condominium Development.

Click here for  the entire report from the Bergstrom Center for Real Estate Studies.

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Source: Tampa Bay Business Journal and Marcus & Millichap

Moderating fundamentals, tighter underwriting and rising cap rates have kept many investors on the sidelines, the report said.

Retail sales have fallen sharply due to a decline in employment, states the report. Specifically, a loss of 33,000 jobs in the Tampa Bay area in the first nine months of the year is cited for a 6 percent decline in retail sales.

For Complete Story on Tampa’s Retail Real Estate Market (3rd Quarter)

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Source: Richmond Times Dispatch

Exerpts from the above referenced article:

“….But commercial real estate can’t seem to shake its perception as “the next shoe to drop.”

If value write-downs by the country’s two largest pension funds are any indication, the other shoe has already dropped.

California Public Employees’ Retirement System (CalPERS) wrote its real estate holdings down by 35.8 percent as of March 31. The California State Teachers’ Retirement System (CalSTRS) wrote down its holdings by 43 percent for the fiscal year that ended June 30.

The combination of huge real estate value decreases with the surge in the stock market leaves both pension funds under-allocated for real estate.

Translation: Even though CalPERS and CalSTRS just absorbed enormous losses in real estate, they now need to focus on making new real estate acquisitions at a time when many buyers are on the sidelines.”

“…This trend should actually help increase the volume of real estate transactions at a time when investment sales are absolutely anemic.”

“….One industry insider coined the phrase, “a rolling loan gathers no loss,” which aptly describes current banking protocol where it makes more sense to extend loans rather than push borrowers into default at maturity.”

Commentary:  We have heard overwhelmingly from the press that commercial real estate is doomed.   I found the above referenced article contrarian to current popular opinion.    Not mentioned in this article, is the billions of dollars that are stacking up on the sidelines from vulture funds planning on buying prized assets at pennies on the dollar, which could potential prevent the bottom dropping out of the market, as many predict will happen.  Commercial real estate investment may still end up becoming a financial  apocalypse, but there will be forces acting in the opposite direction of the predicted collapse.  One thing that I have learned over my career in financial services and real estate is that when the majority predicts a certain outcome to a situation, rarely does the prediction actually play out as planned.

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