Q3 2016 Commercial Real Estate Roundup

October 17, 2016

    [caption id="attachment_824" align="alignleft" width="233"]Director of Research Randy Smith, Director of Research[/caption] Industrial demand from new and expanding companies in Tampa and Hillsborough County remained healthy this summer, and a substantial pipeline of new industrial development is now providing state-of-the-art facilities to address these needs. One reason for this corporate growth? The Sunshine State’s positive business climate, which continues to provide a sustainable environment where companies can start-up, grow and thrive. Tampa ranked among the top five locations in the U.S. and 14th among 51 large international cities for its favorable business tax structure in KPMG’s 2016 Competitive Alternatives Report.   Sustained Job Growth The over-the-year job growth rate for the Tampa MSA remains high and is now closing in on 24 straight months of 3.0 percent or greater growth. In August, this growth rate was 3.1 percent and accounted for 38,200 new jobs. Among the industrial sectors, Trade, Transportation and Utilities enjoyed a strong employment boost in August, adding 7,900 new jobs over-the-year.   Upbeat Industrial Trends According to just released 3Q 2016 market statistics by the Tampa Cushman & Wakefield research team, industrial demand in Tampa and Hillsborough County has accounted for over 500,000 square feet of positive net absorption through the first nine months of this year. The overall vacancy rate for industrial space ended the third quarter at 5.6 percent, down from 6.7 percent at the same time last year. Leasing activity remains steady, and year-to-date it broke the 2 million square foot mark at the end of the third quarter. Much of this growth has come from expansion by local companies looking for larger and more efficient facilities to serve their customer base.   Active New Development Industrial development is heating up as demand by larger users of class A space is drawing down available space. There’s also a growing preference among industrial users to own instead of lease. Currently, the areas along the I-75 Corridor in east Tampa and along County Line Road in Plant City are most active, with projects under construction and scheduled to break ground in the coming months. Some highlights from around Hillsborough County:   - East Tampa: o At Madison Business Park, developer IDI Gazeley has created a turn-key 88,000 square foot industrial facility for All American Containers.   o According to the leasing team at Newmark Grubb Knight Frank, the largest speculative warehouse constructed in Hillsborough County since 2007 is currently underway at Grand Oaks 75 Business Center. Located in Riverview just a few miles from I-75, this 168,000-square foot dock-high distribution center is the first phase of a 49-acre business park being developed by Atlanta-based TPA Group. This new distribution center features 30-foot clear ceiling height and is scheduled for completion in the first quarter of next year.   o Crossroads Commerce Center is a new industrial development located on 71 acres just south of the intersection of I-4 and I-75. The local JLL leasing team reports that it will kick off its first construction in December, breaking ground on two new build-to-suit projects. One building totaling 236,000 square feet and another 112,000 square feet will likely kick-start other projects in the development. The current site plan provides for up to three additional industrial buildings totaling 320,000 square feet.   - Plant City: o At County Line Road and Rice Road, Central Florida Development recently completed site work on the initial phase of its Central Florida Commerce Center. At full build-out, the 62-acre park will contain over one million square feet of industrial and office buildings. The first speculative industrial building will be 140,000 square feet and is expected to deliver in 2017.   o In July, McCraney Property Company closed on 70 acres along County Line Road on the south side of Rice Road. The developer, with leasing representatives Cushman & Wakefield of Florida, announced plans for a 1.3 million square foot industrial park called County Line Logistics Center. The first phase calls for two rear-load buildings – 131,000 square feet with 28-foot clear height and 168,000-square feet with 30-foot clear height.   - South Shore: o South Shore Corporate Park, home to a one-million square foot Amazon Fulfillment Center, is seeing an uptick in activity according to leasing representatives at JLL. An existing 91,000-square foot facility was recently sold and the park features a pad-ready site to accommodate a 401,000-square foot development. Also, the park offers development ready sites ranging in size from 3 to 47 acres.   Positive Momentum The Tampa Bay region is attracting a growing number of large industrial users looking to position their operations to take advantage of the close proximity of a skilled workforce, thriving population centers and multiple connectivity options. Amazon’s presence in the market is setting a precedent and encouraging other e-commerce firms and related suppliers such as Ashley Furniture Industries to put a major stake in the ground here, too.