COVID-19 pandemic has yet to erode the momentum the sector has experienced in recent years, but a reckoning could be in the offing.
A year ago, Tampa Bay area retail space was riding a wave of positive momentum that was the envy of many major metro markets across the nation.
Thanks to an influx of new residents, solid tourism figures and employment growth in relatively high-paying white-collar and technology-oriented jobs, the sector was experiencing growth in development, leasing and net absorption, and rents were nearing a historic high, according to statistics compiled by commercial real estate research firm CoStar Group.
Today, however, the outlook for the region’s retail sector in Hillsborough, Pinellas, Hernando and Pasco counties has dimmed. Most notably, the full impact of the coronavirus pandemic has yet to be determined and many analysts believe the sector’s recovery will take considerable time. Many retail outlets and restaurants have suffered losses or had to close entirely.
At the same time, retail leasing activity has slowed to about half of what it was at the close of last year and sales volume is off by roughly 75% from the same period in 2019.
Still, some metrics have shown resilience, to date: Development remains healthy, as are vacancy rates and absorption figures.
Amount of new retail space, as measured in square feet, under construction in the Tampa Bay area at the end of June.
Average vacancy rate of all retail space in the Tampa Bay area at the end of June. Historically, the rate averages 5.8%.
Average rental rate for retail space, per square foot, in the Tampa Bay area at the end of June. The Westshore Business District maintains the highest average rate in the Tampa Bay submarket, at $27.32 per square foot.
Amount of retail space, in square feet, leased in the Tanpa Bay area in the second quarter of this year. By comparison, in the second quarter of 2018 — a peak three-month period in the current economic growth cycle — more than 1.38 million square feet of retail space was leased.
Sales volume of all retail space in the Tampa Bay area transacted in the second quarter of this year. In the fourth quarter of 2018, a peak three-month period, more than $450 million was generated in sales activity.
Sales volume involving all retail space in the Tampa Bay area over the previous 12 months. Historically, the 12-month average is $919.7 million.
Average capitalization rate for retail property sales in the Tampa Bay area over the previous 12 months. The average sale price of the properties in question was $182 per square foot.
Amount of rental rate growth, on a percentage basis, for all retail space in the Tampa Bay area over the previous 12 months. Downtown Tampa’s rent growth has exceeded the regional average, by comparison, at 7.5%.
Number of new retail properties or projects under construction in the Tampa Bay area at the end of June. Roughly 90% of all the space being built has been pre-leased.
Amount of net absorption, as measured in square feet, that occurred in the Tampa Bay area over the previous 12 months. Net absorption is defined as space removed from the market through leasing activity.
Source: CoStar Group