Tampa's Bright Outlook
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Tampa’s Bright Outlook Multifamily Report Fall 2018 Rent Growth Accelerates Despite Heavy Supply Migrant Millennials Fuel Apartment Demand Property Values Climb to Cycle High TAMPA MULTIFAMILY Market Analysis Demand Keeps Up With Surging Supply Fall 2018 Population and employment gains fuel multifamily demand in Tampa–St. Contacts Petersburg, where low housing costs, a tax-friendly environment and a high Paul Fiorilla quality of life continue to attract new residents and businesses. Associate Director of Research Leisure and hospitality led employment growth by far, adding 14,100 jobs. [email protected] Tourism revenue hit a new record in Hillsborough County in the year ending (800) 866-1124 x5764 in September, which will likely continue as new hotel projects come online, Jack Kern including the 519-key JW Marriott within the 9 million-square-foot Water Director of Research and Publications Street Tampa. Employment gains were also significant in education and [email protected] health services (7,800 jobs) and trade, transportation and utilities (4,300), (800) 866-1124 x2444 which is thriving following increased trade through the Panama Canal. Author Multifamily deliveries hit a cycle peak in 2017, when roughly 5,400 units were Adriana Pop completed, and continued at a strong pace in 2018. However, occupancy Senior Associate Editor in stabilized properties recorded just a slight decrease of 20 basis points year-over-year, to 95.6% as of August, indicating strong apartment demand. Rent growth remained above the national average, at 5.2% as of September, while the average price per unit rose to a cycle peak of $142,655. As the metro’s population is projected to grow at a faster pace than the nation through 2020, we expect positive net absorption and above- average rent growth to continue in the foreseeable future. Recent Tampa Transactions Camden Pier District The Cove City: St. Petersburg, Fla. City: Tampa, Fla. Buyer: Camden Property Trust Buyer: Gamma Real Estate Purchase Price: $126 MM Purchase Price: $97 MM Price per Unit: $352,793 Price per Unit: $140,058 Avana Westchase Fusion 1560 City: Tampa, Fla. City: St. Petersburg, Fla. Buyer: Greystar Buyer: TH Real Estate Purchase Price: $82 MM Purchase Price: $81 MM Price per Unit: $205,000 Price per Unit: $249,538 On the cover: Photo by Sean Pavone/iStockphoto.com 2 Transactions: Price Per Unit (Tampa) $160,000 $140,000 Transactions: Price Per Unit (Tampa) $120,000 $160,000 $100,000 $140,000 $80,000 $120,000 $60,000 $100,000 $40,000 0 1 2 3 4 5 6 7 8 $80,000 1 1 1 1 01 01 01 20 20 2 201 20 2 2 201 20 $60,000 $40,000 National Tampa 0 1 2 3 4 5 6 7 8 1 1 1 1 01 01 01 20 20 2 201 20 2 2 201 20 0 1 2 3 4 5 6 7 8 1 1 01 01 01 01 01 01 2 20 2 20 2 201 2 2 2 National Tampa 0 1 2 3 4 5 6 7 8 1 1 01 01 01 01 01 01 Employment Growth: YoY 6mo-avg (Tampa) 2 20 2 20 2 201 2 2 2 4.0% Employment Growth: YoY 6mo-avg (Tampa) 3.5% 4.0% 3.0% 3.5% 2.5% 3.0% 2.0% 2.5% 1.5% 2.0% 6 7 7 8 8 -1 -16 -17 1 -1 -17 -1 1 -18 n r- n r- ct a ct a 1.5% Jul O J Ap Jul O J Ap Jul 6 7 7 8 8 -1 -16 -17 1 -1 -17 -1 1 -18 n Nationalr- Tampa n r- ct a ct a Jul O J Ap Jul O J Ap Jul Supply: Percentage of Stock (Tampa) National Tampa 3.0% Supply: Percentage of Stock (Tampa) 2.5% 3.0% 2.0% 2.5% 1.5% 2.0% 1.0% 1.5% 0.5% 1.0% 0.0% 0.5% 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD 0.0% National Tampa 2010 2011 2012 2013 2014 2015 2016 2017 2018 YTD Supply: Development Pipeline as of Sep 2018 (Tampa) National Tampa Supply: Development Pipeline as of Sep 2018 (Tampa) 6,974 Units 8,756 Units 6,974 Units 8,756 Units 25,511 Units Rent Trends 25,511 Units Rents in Tampa rose 5.2% year-over-year as of September, outpacing the 3.0% national rate. The metro’s average rent stoodPlanned at $1,230,Prospective below theUnder $1,412 Construction national figure. Following a supply surge of roughly 5,400 units in 2017, which continued at a strong pace in 2018, occupancy in stabilized properties onlyTransactions: saw a slight Total Volume decrease (Tampa) Planned of 20 basisProspective points year-over-year,Under Construction to 95.6% as of August. $2,500 120 Rents in the working-class Renter-by-Necessity segment rose 5.5% to $1,044, while Lifestyle rates Transactions: Total Volume (Tampa) increased 4.7% to $1,440. Population gains, boosted by out-of-state Millennial migrants, should100 $2,000 continue$2,500 supporting apartment demand, along with employment growth and household formation.120 80 Despite$1,500 a relatively low cost of single-family homes, which is putting a limit on rental demand, 100Tampa’s $2,000 multifamily market is expected to remain steady over the coming years, as its population increase60 is 80 $1,000 projected$1,500 to continue to outpace the nation, generating positive net absorption and rent growth. 40 60 All submarkets$500 saw year-over-year rent increases. Growth was led by Mullis City (10.0% to an average $1,000 20 of $1,076), Gandy/Ballast Point (9.8% to $1,362) and Wellswood (9.6% to $1,047). The average40 rate in $0 0 Hyde Park/Davis$500 Island, which commands the metro’s highest rents, rose 4.1% to $1,984. In Downtown 20 Tampa/Ybor City,2009 Downtown 2010 St. 2011 Petersburg 2012 and 2013 Land 2014O’Lakes/Odessa, 2015 2016 which 2017 had a 2018 total of more than 3,500 units$0 underway as of September,Volume rents in Millions were up 5.5%,Number of0.7% Properties and 3.2%, respectively. 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Tampa vs. National Rent Growth (Sequential 3 Month, Year-Over-Year) Rent: YoY vs National (Tampa) Volume in Millions Number of Properties 6.0% Rent: YoY vs National (Tampa) 6.0% 4.0% 4.0% 2.0% 2.0% 0.0% 0.0% National Tampa Source: YardiMatrix Rent: Lifestyle vs RBN (Tampa) National Tampa 8.0% Tampa Rent Growth by Asset Class (Sequential 3 Month, Year-Over-Year) Rent: Lifestyle vs RBN (Tampa) 8.0%6.0% 4.0% 6.0% 2.0% 4.0% 0.0% 2.0% 0.0% Lifestyle Renter-by-Necessity Lifestyle Renter-by-Necessity Source: YardiMatrix Tampa Multifamily | Fall 2018 3 Economic Snapshot Tampa added 35,600 jobs over the 12 months ending in July, a 2.4% year-over-year increase, outpacing the 1.9% national average. The unemployment rate stood at 3.8%, lower than the 3.9% national average and slightly higher than the state’s 3.7%, which hit an 11-year low in July. Leisure and hospitality led employment growth by far, adding 14,100 jobs. Tourism revenue hit a new high in Hillsborough County in the 12 months ending in September with the collection of $33.8 million in Tourist Development Tax, up 10.8% year-over-year and nearly 60% over the last five years, according to Visit Tampa Bay. And despite a modestTransactions: guestroom Price Per Unit (Tampa) supply increase of just 4%, hotel revenues grew 8.5% to more than $718 million. New$160,000 projects include a 519-key JW Marriott within the $3 billion, 9 $140,000 million-square-foot Water Street Tampa;$120,000 a dual-branded Hampton Inn by Hilton & Home2 Suites in the Channel district; and the $1.5 billion Seminole$100,000 Hard Rock Hotel expansion. $80,000 $60,000 Education and health services added 7,800 jobs, followed by trade, transportation and utilities $40,000 0 1 2 3 4 5 6 7 8 1 1 1 1 (4,300). Port Manatee, which generates more than01 $2.3 billion01 01 in annual economic impact for the 20 20 2 201 20 2 2 201 20 community, supports additional jobs due to increased trade through the expanded Panama Canal. National Tampa Office-using employment has also been significant in recent years, boosting demand for space and 0 1 2 3 4 5 6 7 8 1 1 bolstering01 rent01 growth.01 01 01 01 2 20 2 20 2 201 2 2 2 Tampa vs. National Employment Growth (Year-Over-Year) Employment Growth: YoY 6mo-avg (Tampa) 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 6 7 7 8 8 -1 -16 -17 1 -1 -17 -1 1 -18 n r- n r- ct a ct a Jul O J Ap Jul O J Ap Jul National Tampa Sources: YardiMatrix, Bureau of Labor Statistics (not seasonally adjusted) Supply: Percentage of Stock (Tampa) 3.0% Tampa Employment Growth by Sector (Year-Over-Year) 2.5% Current Employment Year Change Code2.0% Employment Sector (000) % Share Employment % 70 Leisure and Hospitality 190 12.2% 14,100 8.0% 1.5% 65 Education and Health Services 242 15.5% 7,800 3.3% 1.0% 40 Trade, Transportation and Utilities 307 19.7% 4,300 1.4% 150.5%Mining, Logging and Construction 91 5.8% 3,900 4.5% 550.0%Financial Activities 128 8.2% 3,100 2.5% 30 Manufacturing2010 2011 2012 201387 2014 20155.6% 2016 2017 3,000 2018 YTD 3.6% 80 Other Services National 52 Tampa 3.3% 1,000 1.9% 60 Professional and Business Services 266 17.1% 400 0.2% Supply:50 DevelopmentInformation Pipeline as of Sep 2018 (Tampa) 26 1.7% -900 -3.3% 90 Government 170 10.9% -1,100 -0.6% Sources: YardiMatrix, Bureau of Labor Statistics 6,974 Units 8,756 Units Tampa Multifamily | Fall 2018 4 25,511 Units Planned Prospective Under Construction Transactions: Total Volume (Tampa) $2,500 120 100 $2,000 80 $1,500 60 $1,000 40 $500 20 $0 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Volume in Millions Number of Properties Rent: YoY vs National (Tampa) 6.0% 4.0% 2.0% 0.0% National Tampa Rent: Lifestyle vs RBN (Tampa) 8.0% 6.0% 4.0% 2.0% 0.0% Lifestyle Renter-by-Necessity Demographics Affordability The median home price in Tampa rose to a cycle peak of $183,196 in the first half of 2018, up 6.7% since 2017 and 105% above the 2011 level.