Tampa’s regional economy remained solid entering 2017 as various companies added jobs while the area remained one of the most affordable in the U.S. It ranks second most affordable among the large metro areas in Florida. It ranks prominently in the top 20 metro regions for economic growth, confirming that gains experienced in the last few years are sustainable and will continue to be so in the near future.
The Tampa Bay area is also one of the most active emerging markets for industrial real estate according to a recent industry report. In a listing of hottest industrial markets, Tampa industrial commercial real estate ranked 10th in terms of total value of net leases, which is up significantly up from its 28th place ranking in the previous year. A real estate market this dynamic can mean major changes for property owners, buyers, existing tenants and potential lessees.
Trends in Tampa Industrial Commercial Real Estate Prices
In the first quarter of 2017, the median asking price for industrial space in Tampa Bay increased by 3.0 percent based on per-square-foot price comparisons from three months prior. This is significantly higher than statewide numbers for this sector, which showed an improvement of 1.4 percent for the same period. On a year-over-year basis, median prices for Tampa Metro industrial properties rose 11.5 percent for the quarter. For a better perspective, consider price differentiation in the sprawling Tampa area: Median price for inner city sites were recorded at $77.86 per square foot, county-wide prices were placed at $73.67 and $68.25 for the entire Tampa Metro area, which includes Hillsborough, Pinellas and Pasco counties.
Demand for Tampa Industrial Real Estate
The critical factors bolstering the industrial market include Tampa’s location along the busy Interstate 4 and Interstate 75 corridors, the opening of Amazon’s massive campuses and major upgrades in the Port of Tampa facilities. Supply of industrial space for sale dropped 1.3 percent compared to the previous quarter or 8.2 percent compared to year-over-year dollar-value figures. In terms of number of listings for industrial properties for sale, the Tampa Metro area saw a 1 percent increase compared to the most recent quarter although the change represented a drop of 12.1 percent based on year-over-year numbers.
Adding pressure to a red-hot market, interest in this sector rose by 29.5 percent as measured by the number of profile views of industrial property listings in the first quarter of 2017 compared to the previous quarter. On a year-over-year basis, demand jumped by 47.4 percent when measured by the number of profile views.
Industrial Property Leasing in Tampa
Rental rates for industrial space in the Tampa Metro area were definitely on the rise in the early part of 2017, and understandably so due to declining inventory of available properties. Rent per square foot increased 3.0 percent in the Tampa Metro area based on a quarterly comparison and 5.3 percent on a year-over-year comparison. Median rent for Tampa industrial commercial real estate was placed at $6.80 per square foot with inner city sites bringing in $7.16 per square foot. These figures are under the statewide median of $8.24 per square foot.
Available spaces for lease based on number of spaces available for lease dropped 3.1 percent based on quarterly comparisons or 5.3 percent based on annual figures. However, in terms of square footage available for lease, the industrial sector saw a slight rise of 4.5 percent more than the previous quarter. Nonetheless, square footage available for lease was still 7.6 percent lower on a year-over-year basis.
Net absorption, the change in volume of occupied space in a defined time period, was strong for both leasable industrial space and properties for sale. The market absorbed 1,002,587 square feet of industrial space with vacancy for this sector recorded at 6.1 percent. Spaces that are at least 40,000 to 80,000 square foot saw the most demand especially in the eastern section of the county. Businesses involved in construction, construction-related activities and third party logistics were among the most active lessees.