Interview: Andrew Wright, CEO

Tenant factor

The pandemic is favoring office tenants as landlords work to retain them, at least in the short term

Andrew Wright

CEO & Managing Partner – Franklin Street

Has the pandemic influenced the market to be more favorable to tenants in terms of retaining them? That is correct. There are a couple of factors there. In the next 12 to 24 months, there are a couple of things that will converge. One is that you have a lot of new supply being delivered, at a high cost per foot and high rent per foot. That’s being delivered, probably, at the worst possible time because you have all these businesses that are thinking about downsizing, not looking at spending top dollar in a pretty space Downtown.

The second part of that, in the short term, is that people will be looking for expense savings. There has been a large spike in subleased space. A lot of companies are putting their offices on the market, thinking about subleasing. There’s a lot of subleasing coming online, a lot of new product coming online, so the supply side of that dynamic is very much going to make it a tenant environment for the foreseeable future, at least from an office market perspective.

How has industrial space fared in the region? You can’t talk about Tampa without talking about population growth. People continue to move here more than anywhere else in the country. You look at people, especially from New York and California, and I think Florida is going to be a net beneficiary. From weather to political climate, from taxes to environment, there are a number of things that work in our favor and you are already seeing that in the housing market.

The single-family market has been very strong during the pandemic. Florida is the No. 1 destination for one-way trips. That’s going to continue and that drives the overall gross regional product (GRP) and activity. That’s the starting point. Why is there a strong industrial market? Because there are a lot of people coming here.

The second half of that equation is people’s buying patterns and trends. More and more they want convenience and if I can conveniently and costeffectively have something delivered to my home, versus driving somewhere to walk into a crowded store and wait in line, that is a global trend that is not going to slow down at all. The industrial market is underserved for the current population, let alone that future growth. There’s been a frenzy to build new or renovate those last-mile industrial spaces. That and multifamily have been the best performing products by far in this pandemic. The pandemic is really driving that industrial business.

I would say that if the United States is the best country in the world, and within the United States the Southeast, and within the Southeast, the I-4 corridor could literally be the best investment corridor in the entire world.