TAMPA BAY MULTIFAMILY REAL ESTATE FUNDAMENTALS

June 2023

The Tampa multifamily real estate market is undergoing a transformative phase, characterized by sustainable and enduring economic changes. This significant shift has been brought about by the impact of rising interest rates, leading to decreased investment activity throughout the overall market. Specifically, the first quarter of 2023 saw the lowest transaction volume in the past decade, totaling around $160 million.

Furthermore, property prices in Tampa are still on the rise, driven by increasing Net Operating Incomes (NOI) and declining capitalization rates across the board. This trend shows that property owners are asking for a higher price per dollar of property income compared to the previous year.

Thesedevelopments

highlightamaturingmarketthatprioritizesstability,presentinginvestorswiththe opportunitytomakeinformedandprudentlong-terminvestmentdecisions.

Market Performance

Keydriversofasoundmultifamilyrealestatemarketinclude:astrongjob market,athrivingeconomy,abusiness-friendlyenvironment,andabalanced supplyofaffordablehousing

The Greater Tampa area enjoys a business-friendly environment with low taxes and incentives, attracting many 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 outstanding 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 show steady annual growth at 4.4%, Overall, the Tampa Bay multifamily market presents exceptional potential and stands strong among national real estate markets.

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.

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.

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,measuringassetvalueinthemultifamilymarketiscrucialforinvestors,lenders, andstakeholdersasitsuppliesaquantitativeandqualitativeassessmentofaproperty's worth.Ithelpsdecision-making,riskmanagement,andportfoliooptimizationinthe dynamicrealestateindustry.

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.

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 participants in every transaction.

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 sizable part 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.