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PPR Fundamentals TAMPA Overview Map \]^ Lake Sumter Hernando ORLAN \]^75 Pasco \]^4 \]^275 \]^4 TAMPA Polk Pinellas Hillsborough \]^75 Map Layers County ST. PETERSBURG PPR Markets \]^175 U.S. Cities ? State Capital Major Cities Secondary Cities 0 7 14 21 Miles 275 \]^ ©2001 Property & Portfolio Research Summary of Last Twelve Months vs. Historical Minimum, Maximum, and Average Current Vacancy* Net New Supply (000SF)** Net Absorption (000SF)** Apartment ñ 6.6% ò 5,204 ò 3,890 3.9% 14.4% 99 9,398 674 6,516 96:4 86:4 93:2 85:2 91:3 85:1 Office ñ 15.9% ò 2,084 ò -510 9.5% 26.5% 248 4,889 -510 6,201 97:4 86:1 95:2 86:2 01:3 87:2 Retail ñ 12.0% ñ 2,932 ò 785 10.4% 22.0% 1,217 3,909 -337 6,464 00:3 92:1 93:4 86:1 82:1 00:1 Warehouse ñ 6.9% ò 814 ò 237 1.0% 6.9% 543 3,803 -111 3,838 84:2 01:3 94:4 86:1 92:4 82:1 Hotel ó 64.1% ò 1,020 ò 655 65.8% 58.7% -55 3,694 -1,037 1,606 97:4 88:1 93:4 86:3 91:2 89:1 *Occupancy for Hotels **Apartment and Hotel data are in units. 3Q2001 PPR Fundamentals ã 2001 by P R O P E R T Y&P O R T F O L I O R E S E A R C H, I N C . All Rights Reserved. www.ppr-research.com PPR Fundamentals TAMPA Analysis/Economy Notable Economic and Real Estate Market Events • ECON – Employment growth in Tampa remained above 4% as of August as the business services subsector continues to generate substantial job gains. However, the unemployment rate is above 3% this year for the first time since 1997, raising doubts about the metro’s true health. As in all Florida metros, Tampa’s tourism industry is bearing the brunt of the economic fallout from the September 11th terrorist attacks, and one local source reported that more than half of Tampa-area hotels are in technical default on their loans (meaning they are failing to meet one or more stipulations agreed upon in their loan contracts). Despite 2,600 call center job losses earlier this year, Home Depot, Merck-Medco, and Skyes Enterprises have all recently announced plans to add a total of more than 2,200 new call center jobs over the next 18 months. • APT – Vacancy rates will surpass 7% by early next year as construction remains heady even as household formation begins to slow. The suburban submarkets in Northeast and Northwest Hillsborough County remain the loosest in the metro, with tighter conditions abounding in Pinellas County due to tougher development conditions. With the bulk of recent development consisting of high-end luxury units in a metro with below- average incomes, Carolinas Real Data reported at mid-year that vacancy rates in complexes built over the past five years were more than 12%. Effective rents are easing as managers offer steep concessions in order to gain (and retain) tenants in an increasingly competitive environment. One project in Tampa Palms is offering two months of free rent on one-bedroom units that rent for $795 per month. At mid-year, more then 7,000 units remained under construction, with 1,700 units underway in Southeast Hillsborough. Vacancy rates are likely to exceed 8% by the end of next year. • OFF – Including approximately one million SF of available sublease space, office vacancies are heading towards 16%. Tampa’s tony Westshore submarket remains the metro’s tightest with vacancy rates still under 9% in the third quarter according to CB. Crescent’s 285,000 SF Corporate Center Two at International Plaza was certified for occupancy this fall in the Westshore submarket and with T. Rowe Price Services recently signing for just over 60,000 SF, the project opened with just under 50% of the space leased. However, when T. Rowe Price’s lease expires next August at the 4200 W. Cypress Street building, it will vacate 67,000 SF. Corporate Center Three is slated for 300,000 SF, but groundbreaking will likely be delayed until the economy begins to regain positive momentum. Kforce moved into its new 138,600 SF headquarters in September in Ybor City, vacating its space at the Park Tower. Merck-Medco plans to ink a lease for the 125,000 SF 8800 Hidden River Parkway building in Northeast Tampa, where it plans to bring 1,000 jobs over the next two years. The building had previously housed a call center for SBC Communications. • RET – Taubman opened the 1.2 million SF International Plaza in October, with 70% of the space leased. However, in light of the September 11th attacks, the grand opening was somewhat less than celebratory as Tampa-area retailers contend with a lackluster tourism industry. Three-fourths of the metro’s visitors arrive by air and with flight schedules cut and air travel off significantly, retail spending has been down substantially since September 11th. Despite the slowdown, Pinnacle Group Holdings has revitalized plans for a 250,000 SF entertainment and retail center on a 12-acre site bordered by Channelside Drive, South Nebraska Avenue, Finley Street, and the CSX railroad tracks in central Tampa, recently requesting that the land be rezoned and publicly affirming that financing is in place. Big-box contruction remains active in the suburbs, led by Wal-Mart and Home Depot. • WHS – The construction of warehouse and distribution space in Tampa is limited, but vacancy rates continue to tick up due to weak net absorption. With tenants maintaining a wait-and-see attitude with regard to expanding or upgrading their space needs, little activity has taken place in the leasing market as of late. Trammell Crow is moving forward with its plans for a 600,000 SF redevelopment of the former Tampa Port Authority headquarters, including 300,000 SF of bulk warehouse space, 200,000 SF of distribution space, and 100,000 SF of office across Ybor Channel from the Tampa Marriott Waterside hotel. Graybar Electric added a 208,000 SF project at the Parkway Center at Oak Creek business park on the Eastside. • HOT – With hotels struggling prior to September 11th, conditions have gotten even uglier over the past couple of months. Financing new projects will be exceedingly difficult, but the Seminole Tribe did finally approve plans to build a new Hard Rock Hotel & Casino northeast of the city. Demographic Trends Annual Growth Rates 2001* 1981-1990 1991-2000 2001-2006 Category Market U.S. Market U.S. Market U.S. Market U.S. Population 2,441 285,253 2.4% 1.0% 1.4% 1.2% 1.0% 0.9% Households 1,029 107,134 2.6% 1.3% 1.5% 1.4% 1.1% 1.0% Median Household Income $44,009 $45,084 6.1% 5.1% 4.8% 3.9% 3.6% 3.5% Apartment-Renting Households 310 34,848 3.5% 1.7% 0.6% 0.4% 1.5% 0.9% Real Retail Sales Per Capita $7,307 $5,967 1.4% 0.8% 1.8% 1.9% 0.8% 0.7% Employment Trends 2001* Annual Growth Rates Location 1981-1990 1991-2000 2001-2006 SIC Category Employment Quotient Market U.S. Market U.S. Market U.S. Total Services 529 1.4 7.6% 4.4% 6.1% 3.8% 2.9% 2.2% Business Services 249 2.8 11.3% 7.0% 12.5% 6.9% 3.8% 1.9% Other Services 280 0.9 6.5% 4.0% 2.8% 3.0% 2.1% 2.3% Retail Trade 209 0.9 4.3% 2.7% 1.3% 1.8% 0.8% 1.4% Government 149 0.8 3.5% 1.3% 2.1% 1.2% 1.0% 0.9% Manufacturing 91 0.5 1.1% -0.7% 0.4% -0.2% -0.1% -0.7% F.I.R.E. 88 1.2 4.9% 2.5% 2.9% 1.2% 1.4% 0.8% Wholesale Trade 67 1.0 3.5% 1.4% 2.3% 1.4% 1.1% 0.9% Trans., Comm., Util. 55 0.8 2.4% 1.2% 3.0% 2.1% 0.9% 0.9% Construction 59 0.9 0.9% 1.5% 2.2% 3.2% 1.0% 0.8% Mining 1 0.1 -2.2% -4.5% -0.7% -2.5% -0.8% -0.1% Total Employment 1,247 1.0 4.4% 1.9% 3.4% 1.9% 1.7% 1.2% Office-Using Employment 424 1.5 6.6% 3.1% 6.5% 2.9% 2.9% 1.5% Trucking/Warehouse Employment 76 0.9 3.5% 1.6% 2.2% 1.7% 0.8% 0.4% *All units (except for dollar denominated figures) in thousands. Current Economic Indicators Employment Labor Force UnemploymentEmployment Net Migration (000) Cost Indices (U.S. = 100) Growth 8/01 Growth 8/01 Rate 8/01Volatility Ratio 2000 Business Living 4.4% 5.2% 3.3%1.1 34.7 99 100 Sources: PPR; Economy.com 3Q2001 PPR Fundamentals ã 2001 by P R O P E R T Y&P O R T F O L I O R E S E A R C H, I N C . All Rights Reserved. www.ppr-research.com PPR Fundamentals TAMPA Apartment Supply, Demand, and Vacancy Demand & Supply (Units) Net Absorption Percentage Vacant Net Completions 10,000 Vacancy Rate 16 9,000 14 8,000 12 7,000 6,000 10 5,000 8 4,000 6 3,000 4 2,000 1,000 2 0 0 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 F F F F F F Apartment Market Statistics (Units) 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Apt.