RIGHT PLACE, RIGHT TIME Northwest Florida’s Booming Commercial Real Estate Sector By Justin Beck, President, Beck Partners
The wheels were first set in motion several years ago, as our community made pivotal decisions to invest in ourselves, our quality of life and our infrastructure. Community parks, enhanced walkability and pro-business governments are just a few examples of the infrastructure improvements made over the past several years. Make no mistake, the job isn’t done; but given societal and economic forces that have shifted in the last two years, Northwest Florida has proven itself to be in the right place at the right time.
IN MY SEVENTEEN YEARS working in the Northwest Florida real estate industry, there has never been a time where so much demand has been met with so little supply across so many different property types. Furthermore, with record amounts of capital, investors are seeking outlets to invest at unprecedented levels.
nationally recognized authority on real estate information), rental rates have increased more than 14 percent within the past year in the Pensacola metropolitan statistical area and 16 percent in the Destin and Fort Walton Beach markets. All the while, absorption rates are approaching 1,000 units on a 12-month average.
At the forefront of this growth is housing. Typically, all other sectors of real estate (industrial, retail or office) follow housing growth, whether that housing is rental apartments or single-family residential. Since there’s been so much reported on singlefamily residential, we’ll focus on multifamily apartments. According to Costar data (a
The industrial sector has followed multifamily trends, the darling of the real estate sector, closely. While Northwest Florida isn’t known as a logistical hub, we have benefited greatly from the need for “last mile” industrial space. Furthermore, due to significant growth in the construction industry, suppliers’ and contractors’ space demand has
18 | NWFL’s Business Climate
increased significantly. Unlike many larger markets that have benefitted from consistent, measurable industrial demand, the Northwest Florida market has had spotty demand over the years. This situation has meant that our area has never had significant speculative development, meaning developers rarely build a building without it already being pre-leased to a tenant. The result is mind-boggling occupancy rates. The occupancy rate across northwest Florida for industrial space is currently at 97 percent. A healthy market would typically be anything above 90 percent. While much has been made about the work-from-home phenomena as a result of
the pandemic, Northwest Florida has once again bucked the national trend. In larger urban markets, demand for office space continues to lag compared to typical rates as large employers have been slow to bring workers back to the office, and in many cases, employers have downsized their office space needs. Once again, Northwest Florida’s lack of speculative development has proved beneficial, and has also been buoyed by pro-business decisions made by political leaders. Office vacancy rates have, therefore, hovered right around 4 percent for our market, indicating a very strong demand. Retail has been the surprise winner in a post-COVID-19
