Tampa's Retail Market Wins Solid Ranking

TAMPA, FL-The Tampa Bay retail market is looking better all the time to national investors, according to an annual ranking by Encino, CA-based Marcus & Millichap Real Estate Investment Brokerage Co. Tampa moved up to No. 21 position this year from No. 24 last year.

"The bottom line for retail investors will be consistent demand for space to satisfy consumer appetites," says Steven M. Ekovich, first vice president and regional manager of the firm's local office. "National investors seeking a solid growth market should look at Tampa, as multi-tenant sales prices advanced to a median of $84 per sf."

Average asking lease rates will advance to $16.86 this year, an increase of 3%, Ekovich predicts. Above-average rent growth will be realized in Northwest Hillsborough and Clearwater/North Pinellas.

Nearly all of Tampa's industries are adding jobs. "The one exception will be the mortgage industry, which may cool, along with the refinancing boom," Ekovich says. Overall, payrolls are expected to increase by 3.7% this year, with 46,000 new jobs.

A weak link on Tampa's growth chain is grocery-anchored construction, the Marcus & Millichap executive notes. "Construction [in this category] has fallen dramatic and now represents less than 10% of the development pipeline."

But discount stores "have taken center stage, accounting for 43% of new space," Ekovich says. Tampa will add 1.3 million sf of new retail this year. "Restrained speculative development will allow the overall vacancy rate to decline to 9.8% this year," he says.

Ekovich also notes anchored properties of all types "consistently outperform the market vacancy rate by 300 basis points." He adds, "With vacancy 300 basis points below market, grocery-anchored properties will provide the greatest stability over the coming year, as little competition and a booming population fuel the need for basic services."

Cap rates, however, are about 50 basis points below the multi-tenant average.