3QREPORTHOTELPANHANDLEFLORIDAMARKET2022 SpringHill Suites Panama City Beach: 2021 Sale Represented by Berkadia
The Florida Panhandle is comprised of 43,000 hotel rooms across beach resort destinations Destin, Panama City Beach, and Pensacola along with the state capitol, Tallahassee in the northwest section of Florida. The market achieved the second-highest RevPAR increase from 2019-2021 in the state behind the Florida Keys and has maintained its strong performance through 2022. The Panhandle levered its greatest asset, award-winning beaches, to grow July 2022 TTM RevPAR by 7.1% year-over-year and 12.8% over year-end 2019 levels. The Florida Panhandle epitomizes what it means to be a highly accessible, drive-to destination. The South’s largest cities of Atlanta, Nashville, Dallas, Birmingham, and New Orleans make up some of the Panhandle’s primary out-of-state feeder markets. MARKET OVERVIEW FLORIDA PANHANDLE TOP FEEDER MARKETS 2011 - 2021 POPULATION GROWTH % PROJ. 2021 - 2026 POPULATION GROWTH % POPULATION2021 2026PROJECTEDPOPULATION PROJECTEDGAIN/LOSSPOPULATION ATLANTA 13.38% 4.25% 4,392,919 4,579,780 186,860 CINCINNATI 5.24% 1.58% 2,239,169 2,274,599 35,430 DALLAS / FORT WORTH 18.24% 5.89% 6,793,941 7,193,861 399,920 HOUSTON 17.97% 7.19% 6,014,156 6,446,343 432,187 NASHVILLE 20.16% 5.08% 2,044,037 2,147,890 103,853 AVERAGE* 15.00% 4.80% 21,484,222 22,642,473 Source:1,158,251GreenStreet*Averages based on total population growth Source: CoStar TTM as of July 2022 $98 TTM REVPAR 43,000 ROOMS 63% TTM OCCUPANCY $155 TTM ADR 2 BERKADIA FLORIDA PANHANDLE MARKET REPORT 2022
PENSACOLA 68% 71% 68% $148 $144 $118 $101 $103 $80
TALLAHASSEE 61% 57% 68% $114 $104 $110 $70 $60 $75
OTHER - FLORIDA PANHANDLE 58% 60% 60% $106 $102 $94 $62 $61 $56
PANAMA CITY 64% 67% 71% $173 $182 $161 $111 $121 $114
SUBMARKET
OCCUPANCY ADR REVPAR
FORT WALTON BEACH 62% 64% 62% $198 $201 $157 $122 $128 $97
The Panhandle’s economy is barbelled by tourism and the military, and is home to Eglin Air Force Base (AFB), Tyndall AFB, and Naval Air Station Pensacola, which are among the nation’s most prominent defense facilities. Regional leadership recognizes the importance of a diversified economy, and as a result, the Panhandle is attracting skilled labor in other industries, including scientific research and development, aerospace engineering, and defense system development. To support this growth, infrastructure investments include airport expansion projects, destination sports venues, amphitheaters, new public beach access ways, and bike/ pedestrian pathways to enhance the lifestyle proposition the market can offer new residents.
TTM July '22 2021 2019 TTM July '22 2021 2019 TTM July '22 2021 2019
FLORIDA PANHANDLE MSA 63% 64% 66% $155 $156 $132 $98 $100 $87
Source: Smith Travel Research
FLORIDA PANHANDLE SUBMARKET PERFORMANCE
$104 $110 $113 $119 $126 $132 $119 $156 $155$62 $66 $69 $74 $83 $87 $61 $100 $98 59% 60% 62% 63% 66% 66% 52% 64% 63% 80%60%40%20%0%$200$160$120$80$40$0 2014 2015 2016 2017 2018 2019 2020 2021 TTM2022July (%)OccupancyRevPAR/ADR Florida Panhandle Lodging Performance ADR RevPAR Occupancy FLORIDA PANHANDLE LODGING PERFORMANCE FLORIDA PANHANDLE MARKET REPORT 2022 BERKADIA 3
• 52%: Walton County (Miramar Beach, Santa Rosa Beach, DeFuniak Springs) population growth since 2010
TRAVELER’S CHOICE 2022 BEST BEACHES IN THE U.S. RANKINGS
• Destin is a Top Three Summer Destination Nationwide for check-in dates in June, July, and August 2022 (Vacasa.com)
• 12.8% RevPAR Increase: July 2022 TTM vs. YE 2019
• 17.6% ADR Increase: July 2022 TTM vs. YE 2019
• 23%: Okaloosa County (Destin, Fort Walton Beach) population growth since 2010
Panama#21CityBeachPensacola#11Beach Henderson#14BeachStatePark 4 BERKADIA FLORIDA PANHANDLE MARKET REPORT 2022
MARKET HIGHLIGHTS
• In 2021, 7.5M tourists traveled to Destin, totaling $736M in tourist spending, 28% more than 2019.
Around 4 million people are expected to move to Florida between 2030 and 2035. Walton County is projected to gain the 4th most new residents out of any county in the State of Florida over this period. (University of Florida Bureau of Economic and Business Research)
• Panama City Beach recorded its busiest March on record in 2022 generating almost $2.9 million in tourism development tax revenue, $400,000 more than March 2021, which previously held the title.
• 2.0% Unemployment Rate: Crestview-Fort Walton Beach-Destin, FL (May 2022, U.S. Bureau of Labor Statistics)
ATTRACTIVE GROWTH IN HIGHLY SKILLED AND OFFICEDWELLING JOBS BOLSTER HOTEL FUNDAMENTALS
-Assuming outsized office employment growth remains the norm, hotels near existing and planned office hubs stand to benefit.
Best Western Fort Walton Beachfront
Hilton Garden Inn Destin Miramar Beach
Employment in the Panhandle is increasing at a rate of 3.0% YoY, or a gain of about 20,000 jobs.
o Fort Walton Beach is currently home to two Boeing facilities employing more than 500 individuals.
FLORIDA PANHANDLE MARKET REPORT 2022 BERKADIA 5
Office-using employment has increased at an average annual rate of 3.3% over the past decade—more than a full percentage point per year above the national average. (CoStar)
Between 2015 and 2020, the Crestview-Fort Walton Beach-Destin metro area ranked third nationally for employment growth in hightech industries, climbing 39.4%, or 2,399 jobs, compared to 8.9% nationwide. This growth is led by surging employment in the scientific research and development services industries, which reported 77.7% job growth during this period. The average salary for these jobs is $185,011. (The Capitolist, March 2022)
In Q1 of 2022, the Okaloosa Economic Development Council announced Boeing Global Services is embarking on a $2.5 million, 20,000-square foot expansion to the company’s existing facility in Fort Walton Beach.
CORPORATE RELOCATIONS ATTRACT 630 JOBS TOTALING $145 MILLION IN CAPITAL INVESTMENT TO THE PANHANDLE
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Central Moloney, an Arkansas-based manufacturer that distributes electrical transformers, is relocating to Panama City adjacent to the Northwest Florida Beaches International Airport creating 200 jobs with a capital investment of $25 million.
FedEx is building a 251,000 SF regional headquarters in Panama City that is scheduled to open at the beginning of 2023. The project will create more than 200 jobs with a capital investment of $55 million.
Southern Sky Aviation, an Alabama-based aircraft maintenance company, is planning to build a terminal for private and corporate airplanes at the Northwest Florida Beaches International Airport. The facility is scheduled to open at the end of 2023 and will create about 30 jobs with a capital investment of $20 million.
Resia, a Miami-based real estate company that develops, builds, and manages multifamily communities is developing a facility scheduled to open at the beginning of 2024 at the VentureCrossings Enterprise Centre. It will create about 200 jobs with a capital investment of $45 million.
FLORIDA PANHANDLE MARKET REPORT 2022 BERKADIA 7
8 BERKADIA FLORIDA PANHANDLE MARKET REPORT 2022
Eglin Air Force Base
• The Largest Air Force Base in the World: Eglin Air Force Base covers 640 square miles in Okaloosa and neighboring counties.
• $2.0B: 2020 fiscal year federal spending on military personnel in Okaloosa County
o Federal government spending on defense personnel was higher in Okaloosa County than any other county in Florida.
MILITARY PROVIDES THE PANHANDLE WITH A RESILIENT, STABLE DEMAND BASE
Top Defense Personnel Spending Locations
• $1.8B: 2020 fiscal year, Department of Defense (DoD) spending on defense contracts in Okaloosa County, 4th-highest level of military contract spending in Florida. (Office of Local Defense Community Cooperation)
RECENT DEPARTMENT OF DEFENSE CONTRACT AWARDS
• $13.9M: Contract for work at a U.S. Marine Corps facility in North Carolina awarded to Reasor-Asturian JV LLC, a joint-venture construction contractor in Pensacola.
• $12.3M: Contract awarded to EMR Inc., a Niceville construction contractor, to design and construct an entry control facility for privately owned vehicles at Patrick Space Force Base in Florida’s Brevard County. (U.S. Department of Defense, May 2022)
• The Air Force is halfway through its five-year initiative to move hypersonic missile research and development to Northwest Florida bringing 2,000 new families to the area. (Northwest Florida Daily News)
• 79,000: Defense industry jobs in Okaloosa County.
FLORIDA PANHANDLE MARKET REPORT 2022 BERKADIA 9
• $95M: Contract for electronic security work awarded to Williams Electric Co. Inc., an electrical contractor in Fort Walton Beach.
Henderson Beach Resort & Spa
THE PANHANDLE IS A REGIONAL SPORTS DESTINATION
Publix Sports Park
• The Publix Sports Park, built in 2019, represents an impactful new demand generator for sports tourism in Panama City Beach. The facility has already contributed $170.4M of economic impact in its first year of operations.
• A new $2 million skatepark in the Publix Sports Park recently broke ground and will deliver in spring of 2023.
• As of July 2022, the complex has events booked on 50 of the 52 weekends in 2022. Some of these events include:
o Grand Slam World Series of Baseball: 210 teams will attend the tournament attracting roughly 11,970 total attendees.
Publix Sports Park - Panama City Beach, FL
• In 2019, the park hosted 80,000 visitors and was responsible for the booking of 120,000 local hotel rooms.
o United States Fastpitch Association: Yearly event that brings in roughly $16 million for PCB.
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Recently Approved, $41M Indoor Sports Complex - Panama City Beach, FL
Morgan Sports Complex - Destin, FL
FLORIDA PANHANDLE MARKET REPORT 2022 BERKADIA 11
• The Morgan Sports Complex features four softball fields, two baseball fields, and three soccer fields located across the street from Destin’s beaches. Prior to the pandemic, the facility hosted 175,000 participants and 15-20 tournaments per year, generating $4M of direct annual revenue for the City of Destin.
Morgan Sports Complex
• With its ability to generate shoulder and off-season visitation through sports tournaments and technical conferences, this facility will help strengthen and diversify the local economy.
• The new, 112,000 SF indoor sports facility will be the third major athletic facility in the Panama City Beach area. Groundbreaking is expected towards the end of 2022 and construction will take about 18 months.
Rendering of New PCB Athletic Facility
• The venue hosts the United States Specialty Sports Association (USSSA) Global World Series, which draws as many as 100 teams from across the U.S. each summer.
12 BERKADIA FLORIDA PANHANDLE MARKET REPORT 2022 NEW HOTEL CONSTRUCTION IN THE FLORIDA PANHANDLE The highly active construction pipeline currently includes 2,700 hotel rooms representing a 6.3% expansion of the existing hotel inventory. In the past three years, 28 projects containing roughly 3,100 rooms delivered to Panhandle markets exemplifying the growing demand base. FLORIDA PANHANDLE HOTEL SUPPLY PIPELINE PROPERTY NAME CITY # KEYS STATUS EST. DELIVERY DATE 1 Homewood Suites Panama City Beach Panama City Beach 131 OPEN MAR 2022 2 Homewood Suites Destin Destin 95 OPEN MAY 2022 3 Embassy Suites Panama City Beach Pier Park Panama City Beach 255 UNDER CONSTRUCTION 2022/Q3 4 Hilton Garden Inn Pensacola Downtown Pensacola 102 UNDER CONSTRUCTION 2022/Q3 5 Hyatt Place Panama City Beach/Beachfront Panama City Beach 224 UNDER CONSTRUCTION 2022/Q3 6 Margaritaville Beach Cottage Resort Panama City Beach 201 UNDER CONSTRUCTION 2022/Q4 7 TownePlace Suites Pensacola Pensacola 112 UNDER CONSTRUCTION 2022/Q4 8 Hotel Indigo Panama City Marina Panama City 124 UNDER CONSTRUCTION 2023/Q1 9 Tru by Hilton Destin Destin 117 UNDER CONSTRUCTION 2023/Q1 10 Staybridge Suites Pensacola Pensacola 100 UNDER CONSTRUCTION 2023/Q2 11 Home2 Suites Santa Rosa Beach Santa Rosa Beach 107 UNDER CONSTRUCTION 2023/Q3 12 Fairfield Inn & Suites Resort Pensacola Beach Pensacola Beach 209 UNDER CONSTRUCTION 2023/Q4
FLORIDA PANHANDLE MARKET REPORT 2022 BERKADIA 13 NOTABLE FLORIDA PANHANDLE HOTEL TRANSACTIONS PAST 12 MONTHS PROPERTY NAME SALEDATE KEYS# BUILT/RENOYEAR PRICESALE PERPRICEKEY BUYER SELLER Hilton Garden Inn Destin Miramar Beach Mar-22 111 2020 $31,000,000 $279,279 Chatham Lodging Trust InterMountain Management Best Western Fort Walton Beachfront Feb-22 100 1998 $23,600,000 $236,000 OTO Development Ft. Walton Beach Hotel Group The Henderson Beach Resort & Spa Dec-21 170 2016 $112,500,000 $661,765 DiamondRock Hospitality Dunavant Enterprises SpringHill Suites Panama City Beach Beachfront Nov-21 200 2018/2019 $85,500,000 $427,500 OTO Development Peachtree Hotel Group Henderson Park Inn Aug-21 37 1992/2000 $27,500,000 $743,243 DiamondRock Hospitality Dunavant Enterprises SpringHill Suites by Marriott Navarre Beach* Jun-21 161 2017 $54,000,000 $335,404 KSL Capital Partners Peachtree Hotel Group *Hotel is on a ground lease with 99 years remaining. 699 1,640 2,380 2,222 2,7651.7% 4.0% 5.7% 5.2% 6.4% 10.0%8.0%6.0%4.0%2.0%0.0%3,0002,4001,8001,2006002018 2019 2020 2021 JulyTTM2022 InventoryRoomsTotalof%ConstructionUnderRooms Florida Panhandle Lodging Construction Rooms Under Construction % of Total Rooms Inventory
• This year, VPS inked a joint venture agreement through 2063 with Eglin AFB where the airport can utilize space on Eglin’s property allowing for the daily “cap” on commercial flights to be increased exponentially.
• YTD June 2022 passenger traffic is up 20.6% over same period 2019.
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1,673,226 1,998,763 2,132,6832,500,0002,000,0001,500,0001,000,000500,0002019 2021 June 2022 TTM PassengersAnnual DESTIN-FORT WALTON BEACH AIRPORT PASSENGERS (VPS)
Destin-Fort Walton Beach Airport (VPS)
• The record growth at VPS is also attributed to the addition of Southwest, which began serving the airport in May of 2021 and is now offering direct flights to Chicago, Nashville, Dallas, and Baltimore, which are major target markets for the City of Destin.
• A new additional terminal is under construction and will be completed this year, and soon visitors will be able to use a new state-of-the-art baggage handling system. Eight hundred parking spaces have also been added to the airport.
• Named the Fastest-Growing Airport in 2018 by Bloomberg, the Destin-Fort Walton Beach Airport totaled two million passengers in 2021, nearly tripling the number of total passengers recorded in 2015.
MAJOR AIRPORTS
opened a 143-key
ECP and is underway with the 3,500 unit Latitude Margaritaville Watersound community adjacent to ECP located along State Road 79 near its intersection with State Road 388. 1,275,488 1,598,492 1,610,0012,000,0001,500,0001,000,000500,0002019 2021 June 2022 TTM PassengersAnnual NORTHWEST FLORIDA BEACHES INTERNATIONAL AIRPORT PASSENGERS (ECP)
the #4 spot on Simple Flying’s 2021 list of airports
FLORIDA PANHANDLE MARKET REPORT 2022 BERKADIA 15 Northwest Florida Beaches International Airport (ECP)
• ECP landed in U.S. over of A $5.8 expansion was completed in adding In 2021, the St. Joe Company Hilton Garden Inn at
the summer
million, 7,000 SF terminal
•
YTD June 2022 passenger traffic is up 24.1% over same period 2019.
the
that have grown the most — with a 2021 capacity increase of 58.2%
two gates and about 250 more seats, providing additional room for growth. •
2019. •
2020
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FLORIDA PANHANDLE HOTEL MARKET REPORT 3Q 2022
