TAMPA — There’s a few concerns keeping them up at night — higher interest rates, for one — but a panel of experts in local commercial real estate are extremely bullish on conditions in the Tampa Bay area for at least two years out.
“We’re talking about 41,400 jobs this past 2015 in the Tampa Bay market. We saw a 20 percent drop in the office inventory year-over-year, and we’re seeing single-digit vacancy numbers,” said Larry Feldman, head of Feldman Equities in St. Petersburg and developer of the future Riverwalk Tower in downtown Tampa. “I see development occurring, and I see it being very viable, and I don’t see this cycle anything like the last cycle. I really see this as a slow, steady, nice recovery without excess like we’ve seen in the past.”
The blue-sky forecasts came at the 2016 Trends Conference, an annual event organized by the Urban Land Institute Tampa Bay.
The keynote speaker was Jeff Vinik, who echoed the optimism after updating about 425 real estate operators at the Tampa Theater on his $2 billion development of the 40 acres around Amalie Arena.
When asked by a guest about the volume of residential development proposed in downtown Tampa — plans for as many as 16 high-rise or mid-rise residential complexes have been floated — Vinik pointed out that residential development had been stagnant for decades.
“I think it’s fantastic, the number of buildings that have been announced down here. (There is) thirty years of pent-up demand for people who want an urban experience. So there are a lot of buildings ... I have no doubt that over five to 10 years, we’ll absorb all that.”
Vinik also said that if there was any sort of economic slowdown, “we’d build right through it.”
But experts in the major sectors of commercial development — office, multifamily, planned development and lodging — all aren’t expecting any economic issues, at least for the next two years.
Anthony Everett, a partner in Pollack Shores Real Estate Group, said in the recession, the multifamily market had been dominated by baby boomers who were renting not by choice, but by necessity.
“We’re seeing a lot more renting by choice, we’re seeing the millennial push that we’ve expected for about 10 years now, so demand is very high,” Everett said. “Going forward the next few years, demand is going to stay high.”
J.D. Porter, developer of Wiregrass Ranch in Pasco County, said builders learned from the recession of 2008. “By not going so far out on a limb ... we’re going to be able to insulate ourselves as a region a lot better and do a lot better than we were able to do last time,” Porter said. As for the next two years, “I feel good about it,” he said.
Kent Schwarz, executive vice president of Colliers International Hotels, said excluding Clearwater Beach, less than two dozen hotels have been introduced into the Tampa Bay market recently while demand is strong.
“Our average rates keep going up, profits are going to be the best they’ve ever been for two or three more years. I think hotels are going to be extremely strong through 2019 or so.”
Moderator Lee Arnold, chief executive of Colliers International, asked each panelist to discuss what’s keeping them up at night — the chief concern for their sector. Feldman brought up interest rates; the Federal Reserve raised its federal funds rate target range a quarter of a percentage point in December for the first time in nine years.
“If we do see interest rate increases without fundamentals catching up, we could be in trouble,” Feldman said. “Hopefully, the Fed is not going to begin raising rates until we see the fundamentals catching up.”