Market voices: Developing for

William Bertolero

Partner Vision Properties

Overall, in southeastern Florida, from Miami to West Palm, there has been a lot of high-profile relocations. Southeast Florida is more built out so the opportunity for land is much scarcer, pushing up cost. The cost of being able to relocate will weed people out because the expense of that area is much higher. On the I-4 Corridor from Orlando to Tampa, there is much more opportunity for companies to build out. The area is continuing to grow, and connectivity is becoming much easier. From what I have already seen, I think Pasco County will grow as well because there is still the convenience of beaches, downtown and great connectivity, not to mention the spending power and increased quality of life relative to the more built-out areas.

The vision is to create resources to fully develop an urban innovation community out of what has been referred to as the University Area for many years. The “Area” has grown to be much more than that, and is truly meant to be a vibrant and nationally-recognized, innovation community. We have made key advancements in the midst of a tough year. The innovation community has been growing organically for the last 50 years and for the past decade the Innovation Partnership has been guiding the growth by providing direction, planning and resources to fully realize this community’s potential. Christopher Bowen

Chief Development Strategist RD Management

Nick Haines

CEO The Bromley Companies

Previously, Tampa as a business center attracted regional or back-office uses for larger corporations. However, I think that has and is changing quickly. Employers will be increasingly less tied to a traditional corporate center and will be able to follow talent in a more flexible way. I think you see that in recent moves by companies like Blackstone and Goldman Sachs, which are opening larger hubs in Florida. Companies are beginning to realize that Tampa provides a great lifestyle and accessibility to a large, well-educated population. Tampa also is building up a tech base, especially in cybersecurity.

There has always been opportunity for redevelopment on the Pinellas beaches but, in many cases, the communities have not been so supportive of modifying their small-town character. The other areas of development are quite well known, with a lot of focus on Downtown Tampa and Downtown St. Pete. Westshore continues to be the largest office market in the region, but it may be getting a little dated, which could create redevelopment opportunities. If the Brightline train is brought to Tampa as anticipated, that is a tremendous opportunity to see some high-density development around that terminal. Jay Miller

President J Square Developers

( ) has become more stringent, leaders in the pressure on rates. However, rates could double and industry say. “Long-term interest rates are at historic they would still work for the real estate sector,” he said. lows and there is more capital readily available for Other professionals did not experience changes in commercial and multifamily real estate than at any deal financing throughout this time. “I haven’t seen any time in the past,” NorthMarq Capital Managing significant changes in financing,” Domres Real Estate Partner Bob Hernandez told Broker/Owner Marty Domres told Invest:. “However, underwriting Invest:. “The developers I deal has become more restrictive and the lenders have become more Interest rates with receive their money from REITs, which are very stable. As selective in the transactions could double and long as the property meets the they pursue. This has led to lower leverage, requiring more they would still requirements of the REIT, the financing is typically awarded, equity for most transactions,” he said. The low interest rate work for the real whether it’s a question of zoning or location,” Domres said. environment may potentially lead to some overbuilding but estate sector. COVID’s disruptive force exacerbated concerns for industry industry professionals will adjust accordingly, Hernandez said. Bob Hernandez NorthMarq Capital leaders especially related to rent collection and asset management. “Low rates could lead to some Government intervention via over-building. However, information is disseminated stimulus measures and Paycheck Protection Program so quickly that any softening in market conditions will (PPP) loans have been instrumental in helping ease be detected and capital will pull back in the location or market concerns throughout the pandemic. Industry sector. In addition, I don’t think there will be a backlash leaders placed a keen focus on asset management during from a regulatory standpoint, other than upward this cycle. For example, Cardinal Point Management

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began 2020 with an $85 million dollar multifamily asset sale of The Slade at Channelside with a few other deals in transit prior to March of that year. The group paused its deal flow and shifted to asset management once the pandemic settled in the market, Williams said:. “Initially, we were very concerned about collections and cash flow, so we are very pleased to report that the year ended better than we expected,” he said. “The government programs helped a lot and did the crucial job of supporting the economy. We have tenants that are very small businesses that do not have the working capital or balance sheets to weather the shutdown that occurred. Across all classes, our collections were at about 97-98% over the shutdown, which was a big relief for us. When the PPP program rolled out, we started to see the light at the end of the tunnel and now with the vaccine program rolling out, we are optimistic. In Florida, we’ve been fortunate that we have not experienced lockdowns to the extent others have. We’re looking for opportunities in 2021,” Williams said.

Industrial and I-4 Corridor For those looking for opportunities all signs point to Tampa Bay’s industrial market and particularly the region’s I-4 Corridor, a well-known interstate in Central Florida connecting the Orlando and Tampa Bay markets. Similar to the housing market, high demand, rising rent prices, not enough inventory and waiting lists characterize the local industrial sector.

“We are out of space,” John Burpee & Associates CEO John Burpee told Invest: in January when asked about the state of the industrial market. “We are managing roughly about 600,000 square feet of industrial space. We only have 2,000 square feet of vacant space. We have a waiting list on most of the properties that we manage. Rents have increased 25-40% across the board on industrial space. We’re seeing rents from a year to two years ago that were $6 per square foot now well into the $8-$10 per sq. ft. range. The dynamics of the market have changed but its requirements have not,” Burpee said.

According to Colliers International, last year the Tampa Bay market registered a record number of new industrial deliveries. Over 5.8 million square feet of new industrial product was delivered to the market, the brokerage noted in its 4Q20 industrial report. For 2021, there are just under 3 million square feet of new industrial construction underway in the market, Colliers International noted. Institutional and private investors are continuously flocking to this asset class as investment activity saw record levels in 2020. “In 2020, sales volume surpassed $1 billion in transactions for industrial and flex product, second only to 2019 levels when the market transacted over $1.1 billion in volume. During the fourth quarter alone, nearly 50% of the year’s sales volume occurred, resulting in $495 million and over 6 million square feet of industrial product trading hands,” the brokerage wrote in its report. Unlike in the office sector, concessions in the industrial space are buoyed by the current demand of this asset class, Colliers International pointed out.

Much of this demand can be attributed to changing consumer habits and expectations. “Industrial surged and continues to be on fire for a number of reasons, including supply chain, the need to distribute to our growing population, and e-commerce growth. Consumption has not changed in 2020, it has just shifted,” Fortress Commercial Real Estate Managing Broker Kostas Stoilas told Invest:. Irrespective of the asset class, growth is headed east as land availability is increasingly harder to find along the coast. “Everything is going east: Lakewood Ranch, Plant City, Lakeland, Wesley Chapel, to name a few. We are running out of land along the coastlines, between the coasts and the interstates. It is a case study on what to do next,” Stoilas said. “Land is running scarce so you either redevelop old buildings because you want to be infill or you ( )