Market Performance.
Keydriversofasoundmultifamilyrealestatemarketinclude:astrongjobmarket, athrivingeconomy,abusiness-friendlyenvironment,abalancedsupplyof affordablehousing.
The Greater Tampa area enjoys a business-friendly environment with low taxes and incentives, attracting numerous corporations and fueling job growth. Tampa Bay has a diverse economy with a strong base in healthcare, finance, and tourism.
Tampa is home to 20 corporate headquarters, including five Fortune 500 companies, and hosts over 500 foreign-owned companies from 40 nations This diversity supplies stability and resilience to the local economy, which can be a significant advantage for real estate investors.
Tampa's multifamily market has shown remarkable resilience and outperforms many national markets, receiving help from a remarkable employment growth rate of 4.7%, surpassing the national average and rivaling cities like Orlando and Miami. This robust job growth has led to a significant population increase of over 412,000 residents in the past decade, driving the demand for multifamily housing.
Additionally, Tampa's multifamily market leads the nation in permits and property prices. With an annual growth rate of 160% in multifamily permits, the market has a robust pipeline of new construction projects, while property prices continue to exhibit steady annual growth at 4.4%, Overall, the Tampa Bay multifamily market presents exceptional potential and stands strong among national real estate markets.
Our Mission
We approach every transaction as a collaborative process. We focus on three core dimensions: market knowledge, transparency, Integration, and collaboration as showed by the many roles involved in every transaction.
As a result of the earlier factors Tampa Bay 's rental market has traditionally experienced steady growth, with strong demand for multifamily properties. This trend has resulted in continuous increases in rental rates, high occupancy levels, and higher property values
Summary
Finally, due to its ever-changing demographic, Tampa Bay has traditionally experienced a shortage of affordable housing, a common issue in many big cities in Florida. This has been recognized as an opportunity for real estate investors to address the demand by developing multifamily properties that offer affordable rental, while attracting current population migration from more expensive areas such as Miami and Orlando.
FIGURE 1 FREDDIE MAC APARTMENT INDEX
The Tampa Bay Submarkets.
Introduction
Real estate markets are primarily local due to the unique nature of the real estate assets. This holds true with The Tampa Bay Multifamily market. Therefore, in measuring the potential of a multifamily real estate business, it's important to analyze various indicators for the specific submarket. Those Indicators include asset value, inventory units, under construction units, absorption units, vacancy rate, market rent, rent growth, sale price per unit, sale volume, and cap rate. By evaluating each indicator individually and considering their interrelationships, investors can gain insights into the potential of the submarket.
The Tampa Bay multifamily real estate market is divided into thirteen submarkets, each with its own unique characteristics and investment potential. Seven of those submarkets are a part of Hillsborough County, the fourth-most populous county in Florida, three submarkets are in Pinellas County, which is considered one of the wealthiest counties in Centra Florida, and lastly, two submarkets are in Pasco and Hernando counties
Asset Value.
Overall, measuring asset value in the multifamily market is crucial for investors, lenders, and stakeholders as it supplies a quantitative and qualitative assessment of a property's worth. It helps decision-making, risk management, and portfolio optimization in the dynamic real estate industry.
In terms of Asset Value, five of those submarkets account for close to 60% of the total Tampa Bay Submarket asset value. Higher asset values write down a robust and potentially lucrative market for multifamily real estate investment.
Central Pinellas, Southeast Tampa, North Tampa, Downtown Tampa, and Pasco County appear to be the most prominent submarkets in terms of dollars invested with a total of 32.3 billion dollars.
Our Approach
We approach every transaction as a collaborative process. We focus on three core dimensions: market knowledge, transparency, Integration, and collaboration as showed by the many roles involved in every transaction.
FIGURE 2 ASSET VALUE IN BILLION
Inventory Units
Measuring inventory units in a multifamily market is crucial for investors as it provides valuable insights into supply and demand dynamics, market trends, rental market dynamics, risk assessment, competitive analysis, and portfolio management.
As of June 2023, the Tampa Bay Market features a total inventory of 215,720 existing rental units. Notably, a significant portion of this inventory is consistent with asset value distribution. Approximately 60% is concentrated within five prominent submarkets: Central Pinellas, Southeast Tampa, North Tampa, Downtown Tampa, and Pasco County.
A high concentration of rental units in a multifamily real estate market suggests strong demand, a desirable location, as well as an established rental market. However, investors should be prepared for increased competition and evaluate the potential for future growth and portfolio diversification within the submarket.
Under construction units
If new construction leads to an over-supply of units, it can result in low asking rates due to competition and potential challenges for investors. Conversely, if new construction aligns with or slightly lags demand, it will support a healthy balance and potential for growth. Assessing this balance is crucial in understanding the impact on the multifamily market.
As reported by Costar Group inc. The Tampa Multifamily market has experienced a significant influx of new supply, with 6,700 units completed in the past year and an additional 19,000 units currently under construction. The ongoing construction represents a 9.0% increase in existing inventory, well above the national average of 5.6%. As a result, the market vacancy rate is expected to further increase to around 9% in the next two years, according to CoStar's forecast.
While it's true that the supply of new units in the Tampa multifamily market has outpaced demand in the second quarter of 2023, it's reassuring to know that new construction capital is wisely being distributed to submarkets with the highest potential. Specifically, Pasco County, Southeast Tampa, South Pinellas, and North Tampa are receiving significant attention, which is clear indication of the direction of Tampa's multifamily market expansion
12 Month Absorption Units
The 12 Month Absorption Units metric calculates the net change in occupied units during a 12month period, considering both new leases and units becoming vacant. A positive absorption writes down that more units were leased than vacated, showing a healthy demand and a potentially strong market. Conversely, a negative absorption suggests that more units became vacant than were leased, saying weaker demand or potential oversupply
As shown on graph above, while some submarkets such as Southeast Tampa and Pasco County show strong positive absorption rates indicating healthy demand and leasing activity, other rates such as North Tampa and Northwest Tampa show negative absorption, suggesting higher vacancies or a slower leasing pace. It's important to analyze these absorption rates alongside other factors such as inventory units, under construction units, and asset values to gain a comprehensive understanding of each submarket's multifamily market dynamics
Rent Growth
Overall, rent growth is an essential metric in the multifamily real estate market as it reflects the interplay between supply, demand, and market dynamics. It influences investment decisions, property performance, and market competitiveness, providing valuable insights for stakeholders in the multifamily industry.
Rent growth in Tampa's submarkets varies, with 70% of the submarkets experiencing exceptionally positive rent growth, this is the case of East Tampa, North Tampa, and South Pinellas, while others have seen modest declines such is the case of Southeast Tampa, and North Pinellas the rest of the r submarkets had minimal changes in rental prices. It's important to consider factors such as vacancy rates, asset value, and overall market conditions to get a comprehensive understanding of the rental market in each submarket
