Tampa's New Housing Wave

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Tampa's New Housing Wave Tampa’s New Housing Wave Multifamily Fall Report 2015 Rent Growth Accelerates Tourism, Ports Lead Job Gains Investors Devour Properties TAMPA MULTIFAMILY Market Analysis Population Growth Fuels Tampa Multifamily Fall 2015 The Tampa-St. Petersburg’s multifamily market is rebounding nicely, thanks Contacts to strong economic growth and a booming population. The metro’s housing- Paul Fiorilla sensitive economy was among the hardest hit in the nation by the housing- Associate Director of Research driven recession. The metro’s recovery — although uneven — is now moving in [email protected] earnest. As more and more residents ow into the region, the increased demand (800) 866-1124 x5764 stimulates investors’ interest and motivates developers to act quickly. Dana Seeley Employment is growing at above-trend levels, attracting an in ux of residents. Senior Research Analyst Resultant bene ts include a boost in single-family and apartment construction; in- [email protected] creased consumer spending, which bene ts both retailers and the port; and record (800) 866-1124 x2035 tourism, which is driving the leisure and hospitality segment. What’s more, the re- gion is working on a number of infrastructure projects, such as improving toll routes, Jack Kern the completion of a 2.5-mile section of controlled-access highway in Pinellas County Director of Research and Publications and Tampa Electric Co.’s construction of a 25-megawatt solar array in Apollo Beach. [email protected] (800) 866-1124 x2444 Investors are drawn to Tampa’s growth story, with the metro on pace to record $1.8 billion in transactions for the second straight year. Steady construction activity has kept rents in check. The average monthly payment is still below $1,000, which is helping to attract residents from higher-cost areas. Rents have already risen 6.9% this year, well above the 5% forecast by Yardi Matrix, and we expect continued steady growth. Recent Tampa Transactions Mainsail South Carrollwood Station City: Tampa, Fla. City: Tampa, Fla. Buyer: Avesta Communities Buyer: Providence Management Co. Purchase Price: $31 MM Purchase Price: $30 MM Price per Unit: $98,194 Price per Unit: $89,658 Swandy Lane Swan Lake City: Largo, Fla. City: Tampa, Fla. Buyer: Hirsh, Douglass Buyer: Krupp Brothers Purchase Price: $13 MM Purchase Price: $20 MM Price per Unit: $56,596 Price per Unit: $83,755 2 On the cover: Photo by Deborah Maxemow/iStockphoto.com Rent Trends The average rent in the Tampa-St. Petersburg metro increased by 7.9% year-over-year through September, well above the national average growth rate of 6.6%, according to Yardi Matrix’s survey. The average rent is $897, well shy of the $1,167 U.S. average. Rents in the metro have fluctuated between buoyant and mediocre in recent years. Demand for multifamily is robust, driven by the rapidly growing population and relatively strong job creation. The upward pressure on rents has already produced a 6.9% increase year-to-date through September, surpassing Yardi Matrix’s 5% rent growth forecast for 2015. Rents had been growing faster in working-class Rent By Necessity assets from late 2013 until recently. However, rent growth for higher-end Lifestyle properties has accelerated in recent months, rising to 8.3% in September after being basically flat through 2013 and early 2014. The increase in Lifestyle rents signals an elevated demand for luxury apartments among higher-wage workers. Rents average $1,184 in Lifestyle and $844 in Rent By Necessity properties. CloseRent: to two-thirds YoY vs Nationalof the Tampa-St. Petersburg metro’s 64 submarkets experienced rent growth of 6% or more year- Supply: Percentage of Stock Employment Growth: YoY 6mo-avg over-year in the May/June period. The highest growth was registered in Tampa Heights (24.6%), Dunedin (13.8%), Ruskin (13.1%), Dade City (12.9%) and Brooksville (11.4%). Rent: YoY vs National Supply: Percentage of Stock Employment Growth: YoY 6mo-avg 4.5% Tampa10.0% vs. National Rent Growth (Sequential 3 Month, Year-Over-Year) 4.0% 4.0% 8.0% 2.0% 4.5%3.5% 10.0%6.0% 4.0%0.0% 4.0%3.0% 2.0% 8.0%4.0% -2.0% 3.5%2.5% -4.0%0.0% 6.0%2.0% 3.0%2.0% -2.0%-6.0% 4.0%0.0% 2.5%1.5% -4.0% 2.0% -8.0% 2.0%1.0% Jul-14 Jul-15 Jan-15 Jun-14 Jun-15 -6.0% Oct-14 Apr-14 Apr-15 Sep-14 Sep-15 Feb-15 Dec-14 Aug-14 Aug-15 Nov-14 Mar-14 Mar-15 0.0% May-14 May-15 0.5% Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 1.5% Oct-08 Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 Oct-14 -8.0% Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 National Tampa - St Petersburg 1.0%0.0% Jul-14 Jul-15 Jan-15 Jun-14 Jun-15 Oct-14 Apr-14 Apr-15 Sep-14 Sep-15 Feb-15 Dec-14 Aug-14 Aug-15 Nov-14 National Tampa - St Petersburg Mar-14 Mar-15 May-14 May-15 2008 2009 2010 2011 2012 2013 2014 2015 0.5% Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Oct-08 Oct-09 Oct-10 Oct-11 Oct-12 Oct-13 Oct-14 Feb-08 Feb-09 Feb-10 Feb-11 Feb-12 Feb-13 Feb-14 Feb-15 National Tampa - St Petersburg 0.0% National Tampa - St Petersburg National Tampa - St Petersburg Source: YardiMatrix 2008 2009 2010 2011 2012 2013 2014 2015 Rent: Lifestyle vs RBN Supply: Completions Transactions: Price Per Unit Tampa Rent Growth by Asset Class (Sequential 3 Month, Year-Over-Year) National Tampa - St Petersburg Rent: Lifestyle vs RBN Supply: Completions Transactions: Price Per Unit 10.0% 6,000 $140,000 8.0% $120,000 10.0%6.0% 6,0005,000 $140,000$100,000 8.0%4.0% $120,000 $80,000 5,0004,000 6.0%2.0% $100,000 $60,000 4.0%0.0% $80,000$40,000 4,0003,000 2.0% $60,000$20,000 Jul-15 Jul-14 Jan-15 Jun-14 Jun-15 Oct-14 Apr-14 Apr-15 Sep-14 Sep-15 Feb-15 Dec-14 Aug-15 Aug-14 Nov-14 Mar-14 Mar-15 2008 2009 2010 2011 2012 2013 2014 2015 0.0% May-14 May-15 $40,000 3,0002,000 Lifestyle Rent-by-Necessity $20,000 National Tampa - St Petersburg Jul-14 Jul-15 Jan-15 Jun-14 Jun-15 Oct-14 Apr-14 Apr-15 Sep-14 Sep-15 Feb-15 Dec-14 Aug-14 Aug-15 Nov-14 Mar-14 Mar-15 2008 2009 2010 2011 2012 2013 2014 2015 Source: YardiMatrix May-14 May-15 2,0001,000 Lifestyle Rent-by-Necessity National Tampa - St Petersburg 1,0000 Tampa Multifamily | Fall 2015 3 2008 2009 2010 2011 2012 2013 2014 2015 0 Supply: 2008Development2009 2010 Pipeline2011 2012 2013 2014 2015as of 9/1/2015 Transactions: Total Volume Supply: Development Pipeline as of 9/1/2015 Transactions: Total Volume $2,000 100 $1,800 90 $1,600 80 7,212 Units $2,000 100 6,552 Units $1,800$1,400 9070 $1,600$1,200 8060 7,212 Units $1,000 50 6,552 Units $1,400 70 $1,200 $800 6040 $1,000 $600 5030 10,372… $800$400 4020 $600$200 3010 $- 0 10,372… $400 2008 2009 2010 2011 2012 2013 2014 2015 20 Volume $200 ($MM) $420 $345 $612 $852 $1,081 $1,160 $1,784 $1,394 10 $- 0 #Properties Planned Prospective Under Construction 200839 200936 201053 201184 201280 201369 201492 201564 l Volume ($MM) $420 $345 $612 $852 $1,081 $1,160 $1,784 $1,394 #Properties Planned Prospective Under Construction 39 36 53 84 80 69 92 64 l Economic Snapshot Since the first wave of positive job growth during the recovery, Tampa has consistently created new positions at a rate that has been in line with, or at times above, the U.S. average. The metro added 39,200 new jobs year-over-year through July, a 3% increase, compared to the 2.5% national average. Unemployment in the metro has also fallen — to 5.2%, its lowest point on both levels since late 2007. Growth was led by the leisure and hospitality segment, which added 15,300 jobs. Tourism hit record levels in the Sunshine State in 2014, and that trend should continue, given lower gasoline prices that make travel less expensive. The education and health services segment, which caters to the area’s large senior population, added 8.900 jobs. The trade, transportation and utilities sector added 7,800 jobs, boosted by the strength of Port Tampa Bay as well as the significant industrial activity in the Lakeland area, which is home to the Publix corporate headquarters and an Amazon distribution center. Tampa’s housing segment, which collapsed during the recession, is again picking up steam once again, leading to the addition of 1,700 construction jobs. Employment growth was virtually flat in the government and financial activities sectors and negative in the information sector, despite the high concentration of finance and insurance companies in the region. Three Fortune 500 firms are based in the metro: IT products distributor and service provider Tech Data Corp., electronics Rent: YoY vs National Supply: Percentage of Stock manufacturerEmployment Jabil Growth: Circuit YoY and 6mo-avg healthcare company WellCare Health Plans.
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