Recent Storms Don’t Sway Business Buyers
Hurricanes have wreaked havoc on Florida insurance rates, but investors with billions of dollars are still chasing quality office and industrial buildings in the Tampa Bay area and beyond.
Case in point: Tuesday’s arrival in Tampa of Jeremy Katz, an analyst with New York’s Real Estate Capital Partners.
On a buying expedition for his company, Katz said investors, both foreign and domestic, still hanker for well-placed office development in Tampa and St. Petersburg.
Their hunger is limited only by the availability of good buildings for sale, he said. Florida’s balmy business climate, including 3 percent unemployment, overshadows the recent deadly storms sweeping through the area.
Hurricanes and tornadoes may scare off some individual Florida home mortgage applicants and push insurance rates too high for some prospective buyers, but it won’t derail big investors like teacher’s pension funds, Katz said.
“Our company represents mostly German institutional investors. They just love Florida,” he added.
Katz’s remarks came during an annual luncheon Tuesday hosted by the real estate firm Grubb & Ellis in Tampa. Except for the slow Florida housing market sector, executives bore good news about area real estate:
Tampa’s Westshore business district, where Florida mortgage loans remain affordable for commercial banks, remains the region’s healthiest market and one of the best in Florida.
Downtown St. Petersburg was a strong No. 2, with vacancy half the national average at about 7 percent. Kennedy suspects downtown St. Petersburg, with its restaurants and waterfront, will lure tenants this year.
Overall, with limited land for growth and rising demand for quality space, office owners are sure to charge more this year, some rents reaching $28 to $30 per square foot.
“It’s clearly a landlord’s market,” he said.
COMMERCIAL REAL ESTATE
Most of the big retail action is confined to what Grubb calls the “northern outlying submarket” - Pasco County.
In Wesley Chapel/Land O’Lakes, three commercial real estate developments will be competing for tenants this year. The Grove at Wesley Chapel, the Shops at Wiregrass and Cypress Creek Town Center are about three-quarters leased. New retail won’t bypass Pinellas County either. A 575,000-square-foot project called Largo Town Center is in the works.
The Tampa Bay area boasted 6 percent vacancy for warehouses, factories and other industrial space, below the 8 percent national average. The rental market rose the fastest in Hillsborough and Polk County, where leasing costs leapt about 25 percent.
VACANT LAND
Property prices still hover in the stratosphere after years of investor-fueled growth. But Grubb’s Bob Zegota dubs the land market dead this year, thanks to strapped home builders looking to liquidate.
“I think there’s going to be a little washout,” Zegota said.
That’s welcome news to Florida mortgage holders on the consumer end. At the same time, Florida’s most densely developed county, Pinellas County, had the highest average land price last year: $437,000 per acre. So it’s hard to know how much relief one down year will bring.
In Hillsborough County, with miles of vacant tracts south of Tampa, the average acre sold for $81,000 last year.
