Q4 Tampa/Hillsborough commercial real estate roundup
January 7, 2016
Over the past year, Florida’s job market has enjoyed strong employment growth in all of the major private economic sectors. In November, the Tampa metro area led the state creating 40,500 new jobs over the past twelve months. This increase represents an annual growth rate of 3.3 percent, a 10-year high for employment growth in the Tampa MSA. One of the industry sectors with a significant contribution to this expansion was Professional and Business Services, which spiked at a 4.0 percent growth rate and added 8,200 jobs over the year. The boom in this category’s jobs signals a strong leasing and sales trend for the local real estate market going into 2016.
An increasing flow of investor dollars into Tampa has been evident for some time, and local office properties have been a frequent target of new ownership groups. Improving real estate fundamentals plus strong employment and demographic trends have created a wide-ranging buzz for Tampa’s inventory.
As the year was drawing to a close, one of Tampa’s iconic downtown office towers, Bank of America Plaza, was acquired by a joint venture between Miami-based Banyan Street Capital and Los Angeles-based Oaktree Capital Management. The 42-story office building totals 787,042 square feet and sold in December for $193.5 million, or about $246 per square foot.
The pace of commercial and residential activity in Tampa’s Central Business District (CBD) is clearly on the upswing heading into 2016. In December, Strategic Property Partners’ planned $2 billion redevelopment of the downtown Channelside district got off to a momentous start. A groundbreaking ceremony was held at the new site for the University of South Florida’s Morsani College of Medicine and the USF Health Heart Institute, both of which are scheduled for completion in 2020. Strategic Property Partners (SPP) is a joint venture between Tampa Bay Lightning owner Jeff Vinik and the Bill Gates-owned Cascade Investment, LLC, and the group donated the land for this central component of its overall development plan. The site is in close proximity to USF’s primary teaching hospital, Tampa General Hospital, and only a few blocks away from USF’s state-of-the-art Center for Advanced Medical Learning and Simulation.
In addition, SPP has a vision to create the first WELL Certified™ district in the world within its 40-acre downtown waterfront development project. The goal is to use design elements to promote the health and well-being of employees, residents, and visitors to the district. As part of its first phase, the massive mixed-use development plans to incorporate a 650,000 square foot signature office tower, which is drawing immediate interest among potential corporate users.
In November, Feldman Equities LLC in partnership with Tower Realty Partners announced plans for a new 52-story project, integrating office space totaling 215,000 square feet, 203 luxury apartments, and two waterfront restaurants. With anticipated plans to deliver in 2018, Riverwalk Tower would represent the first new multi-tenant office space completed in the CBD since 1992.
With a continuous stream of new apartment projects coming online and the recently announced plans for a new Publix supermarket, Tampa’s downtown is bolstering its professional workforce and is primed for growth in 2016.
The Westshore submarket, recognized as Tampa’s largest business district with nearly 94,000 employees, continues to grow its workforce with a steady stream of projects geared to attract young professionals. The Westley, a 262-unit luxury apartment complex, is being developed by Framework Group and is scheduled for occupancy by June 2016. Also under construction is Grady Square, a $56 million, 300-unit apartment complex which is scheduled for delivery in the summer of 2016.
Tampa International Airport (TPA), which was recently ranked second by J.D. Power for overall customer satisfaction among the nation’s large airports, is a major driver of business activity in the Westshore district. It has been just over a year since its official groundbreaking, but TPA’s new $953 million expansion project is well under way and moving closer to its target completion date of late 2017. Major components of the project include an expanded main terminal, an automated people mover, and a new 2.6 million square foot rental car center.
In east Tampa this year, the I-75 Corridor submarket saw new leasing activity from leading companies with worldwide recognition. Citi, Johnson & Johnson, and Coca Cola Beverages Florida are among the companies that have expanded or established new operations in this submarket. Factors driving growth are close proximity to a significant skilled workforce and office locations with easy access to the interstate highways. Also, this submarket is better able to accommodate office operations requiring higher parking ratios than are traditionally available in urban settings.
Information technology (IT) is an expanding industry sector within the I-75 Corridor, and IT companies are creating new investment and leasing activity. The growth in data center operations is riding a wave of escalating demand by companies with a need for data storage and security. In September, Peak 10 completed construction of a new 20,000-square-foot data center in east Tampa’s Hidden River office park. The state-of-the-art facility has onsite security, around-the-clock video monitoring, biometric fingerprint readers, and its reinforced steel walls are built to withstand a Category 5 hurricane. Another data center provider, Hivelocity, is adding its second Tampa location in Breckenridge Park and is investing $5 million to retrofit a 30,200 square foot space. Locally, the health care sector is driving much of the data center demand and this trend is projected to stay on a positive track for the foreseeable future.