Tampa Bay
CAPITAL MARKETS 2014 RECAP
EXECUTIVE OVERVIEW 2014 started slow on the sales side in the first half of the year, which was surprising coming off of 2013 where office market fundamentals improved significantly, but transaction volume was down almost 40% over the previous year. Fortunately, the second half of 2014 provided sales volume not seen in the Tampa Bay office market since the peak of 2007, recording 17 of the 24 sales done last year.
2014 CAPITAL MARKET TRENDS
2H 2014
1H 2014
40%
71+29+H 71%
2014 started slow on the sales side in the first half of the year, which was a little surprising coming off of a 2013 where office market fundamentals improved significantly, but transaction volume was down almost 40% over the previous year.
At the mid-point of 2014, if you would have annualized the sales volume that had occurred in the first half of the year to arrive at an estimate for how 2014 would end, the total sales volume would have fallen just shy of 2013 levels. Fortunately, the second half of 2014 produced sales volume that we have not seen in the Tampa Bay Office Market since the peak of 2007, recording 17 of the 24 total sales.
“Fortunately, the second half of 2014 produced sales volume that we have not seen in the Tampa Bay Office Market since the peak of 2007, recording 17 of the 24 total sales.”
RISE OF THE CBD
33+67+H 8 Out Of 24
8 of 24 sales occurred in CBD submarkets throughout the Tampa Bay MSA. Sizable transactions in Tampa’s CBD included the following:
19 MM SF
From only four sales ...
“Increased investor enthusiasm for CBD office properties + a perception in the market of a migration back to the core, pushed pricing on several of these transactions well past expectation.”
$312 MM in total sales...
36% ...representing 36% of sales in the Tampa Bay MSA in 2014.
BUYER & SELLER PROFILE
Private equity forms dominated the market as buyers and sellers in 2014, capturing almost all of the year’s transactions.
The last few years were characterized by the institutional sector selling to the private sector. 2014 saw a new trend with Private sellers selling to other Private Equity sellers.
The continued favorable debt market + an institutional segment that has remained mostly on the sidelines for new office investments in Tampa Bay for the past few years, fueled opportunity for a growing and sophisticated private sector to compete on the majority of opportunities presented in 2014.
2015 TAMPA BAY CAPITAL MARKETS’ OUTLOOK
Anticipated Trends For 2015 Investment activity and sale activity in Tampa will continue to improve in 2015, due to the following factors: Declining unemployment rate Steadily improving office market fundamentals Continued favorable debt market
Improving market conditions
We now have a number of benchmark sales to facilitate investor sale / buy decisions and evidence of improving space market fundamentals. This will lead to more transaction activity in 2015, continuing the momentum we saw at the end of 2014.
Pricing is officially heating up with many offerings seeing increasing investor competition, resulting in pricing not seen since the peak of the market back in 2005 to 2007. A large portion of the institutional investor audience will remain on the sidelines as it relates to office investments in the Tampa Bay market. With the trends heading in the right direction, it may not be too long before we see more of the institutional sector that is tired of competing in major markets for razor thin returns, venture back into Tampa Bay, making it even more competitive for the growing private sector.
For More Information Please Contact: Paul Carr Senior Managing Director, Capital Markets 813-498-6835 paul.carr@dtz.com
Rick Colon Vice President, Capital Markets 813-349-8551 rick.colon@dtz.com
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