MULTIFAMILY REPORT Tampa Builds On Its Strengths Winter 2021 Small-Business Jobs Gain Momentum Metro Leads Short-Term Rent Growth 2020 Construction Starts Outperform 2019 TAMPA MULTIFAMILY Recent Tampa Transactions Trellis at the Lakes Warm Climate Boosts Rental Market Mirroring nationwide trends of contrasting growth between City: St. Petersburg, Fla. gateway markets and lower-cost metros, Tampa’s rental market Buyer: Varia US Properties Purchase Price: $114 MM not only proved resilient in the face of economic hardship but Price per Unit: $165,698 also showcased strong performance in 2020. The metro led the top 30 markets for short-term rent gains in December, while rents on a trailing three-month basis were up 0.8% to $1,337, Bayside Arbors just below the $1,462 U.S. average. In the 12 months ending in November, Tampa’s employment sector shed a combined 63,900 jobs, with leisure and hospitality carrying the weight of the loss (down 31,000 jobs). While job improvement is still sluggish, Tampa led growth in small-business employment as of December, according to the Small Business Employment Watch by Paychex. For December, the metro’s overall index stood at 96.84. City: Clearwater, Fla. Buyer: The Connor Group Tampa had 14,157 units under construction as of December, with Purchase Price: $93 MM 85% of those aimed at high-income renters. More than half of the Price per Unit: $213,876 pipeline (62%) is expected to come online in 2021. Some $2.5 bil- lion in assets traded in 2020 through December, for a 36% decline Swan Lake from 2019. While the pandemic curbed sales activity, the modera- tion came after the decade’s cycle peak of $3.8 billion in 2019. City: Tampa, Fla. Market Analysis | Winter 2021 Buyer: Covenant Capital Group Purchase Price: $83 MM Price per Unit: $128,906 Contacts Jeff Adler Ron Brock, Jr. Radius Palms Vice President & General Industry Principal, Matrix Manager of Yardi Matrix [email protected] [email protected] (480) 663-1149 x2404 (303) 615-3676 Author Jack Kern Timea-Erika Papp Director of Research Senior Associate Editor and Publications [email protected] City: Tampa, Fla. (800) 866-1124 x2444 Buyer: Bridge Investment Group Purchase Price: $83 MM Price per Unit: $152,778 On the cover: Photo by felixmizioznikov/iStockphoto.com 8,000 6,000 8,000 4,000 6,000 2,000 4,000 2,000 0 2013 0 2014 2013 2015 4.0% $180,000 2014 2016 2.0% $160,000 2015 2017 $140,000 0.0% 4.0% $180,000 2018 $120,000 -2.0% 2016 2.0% $100,000$160,000 2019 -4.0% 2017 $140,000 0.0% $80,000 2018 2020 $120,000 -2.0%-6.0% $60,000 $100,000 2019 $40,000 -4.0%-8.0% $80,000 -10.0% 2020 -6.0% $60,000 $40,000 -8.0% 2011 -10.0% 2012 2013 2011 2014 Tampa 2012 2015 2013 2016 3.5% 2014 Tampa May-19 National 2017 2015 3.0% 2018 2016 2.5%3.5% 2019 2017 May-19 National 2020 2.0%3.0% 2018 Aug-19 2019 1.5%2.5% 2020 1.0%2.0% Aug-19 0.5%1.5% 2012 0.0%1.0% Nov-19 0.5% 2014 Tampa 2012 0.0% Nov-19 2016 2014 2018 Tampa Feb-20 2016 2013 2014 2015 2016 2017 2018 2019 2020 YTDNational 2020 Feb-20 2018 2013 2014 2015 2016 2017 2018 2019 2020 YTDNational 2020 RENT TRENDS May-20 May-20 ➤ Tampa rents were up 0.8% on a trailing three- Aug-20 month (T3) basis as of December, while the U.S. rate slid 0.1%. The metro’s average stood at Aug-20 $1,337, below the $1,462 U.S. figure. Rent gains Tampa have been consistent in Tampa over the past Nov-20 three years, except for a slight shift last May 14,157 Units (-0.2%) and June (-0.1%). Tampa Nov-20 ➤ National $4,000 14,157 Units On a month-over-month basis, Tampa led the 8,500 Units top 30 markets for short-term rent growth in $3,000 National December$4,000 (up 0.9%). Other warm-weather met 8,500 Units ros including Phoenix, the Inland Empire and Or Planned $3,000$2,000 ange County followed, all with 0.5% rent gains. 31,899 Units Rents in Tampa improved 3.9% year-over-year. Planned ➤ $2,000$1,000 Prospective Rent evolution across the quality spectrum was 31,899 Units mostly even—rates in the upscale Lifestyle seg- $1,000 $0 Prospective Tampa vs. National Rent Growth Under Construction $0 ment were up 0.9% to $1,541, while rates in 2011 2012 2013 2014 2015 2016 2017 2018Under 2019 Construction 2020 the working-class Renter-by-Necessity segment 0.8% rose 0.6% to $1,140. 0.6% ➤ 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Tampa Heights (23.9% to $1,435), Gandy/Bal- 0.4%0.8% last Point (12.9% to $1,528) and Downtown St. 0.6% 0.2% Petersburg (12.6% to $1,516) led gains in the 0.0%0.4% - 12 months ending in December. Rates in Down- - -0.2%0.2% town Tampa/Ybor City—one of the priciest sub- markets—increased 3.7% to $1,956. -0.4%0.0% Number of Properties ➤ Source: Yardi Matrix-0.2% (Trailing 3 Months) The new $900 billion federal relief package allots -0.4% Number of Properties $25 billion for rental assistance to be distributed among households earning below 80% of the Tampa Rent Growth by Asset Class respective area median income. According to the National Low-Income Housing Coalition, Florida 1.0% Mar-19 is estimated to receive some $1.4 billion. Volume in Millions 0.8% 0.6% 1.0% Mar-19 120 0.4% Volume in Millions 0.8% Jun-19 0.2% 100 0.6% 0.0% 120 0.4% 80 -0.2% Jun-19 0.2% 100 -0.4% 60 0.0% Sep-19 -0.6% 80 -0.2% 40 -0.4% 60 Sep-19 20 -0.6% Tampa 40 Source: Yardi Matrix Dec-19 0 (Trailing 3 Months) 20 Tampa Dec-19 0 Mar-19 National Mar-20 Mar-19 National Mar-20 Jun-19 Jun-20 Jun-19 Jun-20 Sep-19 Sep-20 Renter-by-Necessity Sep-19 Sep-20 Dec-19 Renter-by-Necessity Dec-20 Dec-19 Dec-20 Mar-20 Lifestyle Mar-20 Lifestyle Jun-20 Jun-20 Sep-20 Sep-20 Tampa Multifamily | Winter 2021 3 Dec-20 Dec-20 ECONOMIC SNAPSHOT ➤ As of November, the unemployment rate was Employment Watch by Paychex, which measures 6.4% in Florida and 5.7% in the metro, both be- employment, on a monthly basis, for businesses low the 6.7% national level. Unemployment in with less than 50 employees. For December, the the metro peaked at 13.2% in April. Compared metro’s overall index stood at 96.84. to other Florida markets, Tampa’s November un- employment rate was below the levels in Miami ➤ The $900 billion stimulus package provides (7.0%) and Orlando (7.7%). an additional $300 in federal assistance and extends the Pandemic Unemployment Assis- ➤ In the 12 months ending in November, Tampa lost tance and Pandemic Emergency Unemploy- a combined 63,900 jobs, with leisure and hospi- ment Compensation programs at least until tality bearing the brunt of the economic fallout— late March. The bill includes a new program the sector contracted 16.5%, down 31,000 posi- that provides an additional $100 for eligible tions. While improvement in unemployment was workers, such as gig workers. The Mixed Earner sluggish, Tampa led growth in small-business jobs Unemployment Compensation program was as of December, according to the Small Business optional, but Florida opted in. Tampa Employment Share by Sector Current Employment Code Employment Sector (000) % Share 80 Other Services 55 3.5% 30 Manufacturing 88 5.6% 55 Financial Activities 136 8.6% 90 Government 189 11.9% 50 Information 26 1.6% 15 Mining, Logging and Construction 94 5.9% 65 Education and Health Services 251 15.8% 40 Trade, Transportation and Utilities 313 19.7% 60 Professional and Business Services 276 17.4% 70 Leisure and Hospitality 157 9.9% Sources: Yardi Matrix, Bureau of Labor Statistics Population Tampa vs. National Population ➤ Tampa gained 406,464 residents over 2016 2017 2018 2019 the past decade, for a 14.6% uptick, well above the 6.1% U.S. rate. National 323,071,342 325,147,121 327,167,434 328,239,523 ➤ Population growth is expected to ex- Tampa ceed 25% over the next 20 years, with 3,034,215 3,091,225 3,142,663 3,194,831 Metro Tampa’s population anticipated to surpass 3.8 million by 2040, according Sources: U.S. Census, Moody’s Analytics to a study by Roofstock. Tampa Multifamily | Winter 2021 4 SUPPLY ➤ Tampa had 14,157 units under construction as of December, with 85% of those aimed at high- income earners. More than half of the pipeline (62%) is scheduled for completion in 2021, with the remaining projects expected to come online over the next two years. Multifamily has proven resilient in the face of economic disruption, prompting8,000 developers to plan ahead—another 40,400 units were in the planning and permit ting6,000 stages as of December. ➤ 4,000 Developers added 4,518 units to the rental in- 2,000ventory between January and December, com- prising 2.0% of total stock and almost on par with the national rate.