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Despite the seemingly constant development of new multifamily rental product in the Tampa area since the official end of the economic recession in 2011, the market may just be warming up.
In a winter 2018 report entitled “Tampa Bay's Apartment Boom,” California-based commercial real estate research firm Yardi Systems Inc. notes 7,500 new apartments are now under construction in the Tampa area, which also includes St. Petersburg, Clearwater, Plant City, Lakeland and part of Pasco and Hernando counties.
But another 27,900 apartments are either in the “planning or permitting stages,” Yardi notes, developments being pushed forward by the addition of 33,500 jobs between October 2016 and October 2017 and unemployment of 3.3%.
“Above-average population and job gains, along with positive macroeconomic trends and historically low interest rates, have intensified competition for multifamily assets in Tampa,” Yardi states.
Despite the robust deliveries and planned additions to supply — Yardi says 5,300 units came online in the area last year in a “post-recession high” and another 7,000-plus are set to be delivered in 2018 — there has been no discernable compression in rental rates.
Yardi contends Tampa Bay-area rents will jump another 3.7% this year, on top of a 3.4% hike in 2017 that outpaced the national average of 2.5%.
The spike hasn't diminished investor interest, either, according to Yardi. Some $2.1 billion in multifamily assets traded in 2017, for an average price per unit of $125,970 — also a post-recession high — led by Northland Investment Corp.'s $112 million deal for the 35-story Element apartment tower and other purchases.
Yardi says millennials and empty nesters have largely fueled demand, sending occupancy rates to 95.4%.
But the research firm also provides a potentially cautionary note in its report: Average Tampa-area mortgage payments accounted for 15% of household income in 2017, while rent payments took up 26%.
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