Polk County market has "strong outlook" for commercial real estate
Buoyed by strong demand by logistics operators and developers, the outlook for Polk County commercial real estate is “strong,” according to commercial real estate brokerage firm Coldwell Banker Commercial Saunders Ralston Dantzler Realty.
The company notes the county, and specifically the Lakeland-Winter Haven metropolitan statistical area, is the sixth fastest growing in the U.S., and has a population exceeding 20.2 million within a five-hour drive — making the area an idea locale for distributors such as Walmart, Amazon, Coca-Cola and other Fortune 500 companies.
“The warehouse distribution real estate market is one of the best in the nation,” he adds.
Ralston notes, too, that transportation and warehouse employment in the statistical area is nearly twice the national average.
But the region’s popularity — prices rose 7% from May 2017 through the same month this year — has caused some investors to ride the proverbial fence.
“Buyers are becoming more selective at this point in the market’s cycle,” Ralston writes. “They are concerned about the potential of increasing interest rates and higher cap rates. At this point, the debt spread and equity spread have compressed and as a result there has been very little overall increase in cap rates.”
In all, the firm says $627.3 million worth of commercial real estate sales occurred in the county from May 2017 through May 2018, involving more than 8.87 million square feet.
As in many areas, multifamily rental sales dominated the landscape in Polk County, led by a $49.3 million deal in July 2017 in Lakeland, where rent averages $915 per month — an 8.6% jump from the year before — and the vacancy at the close of 2017 stood at 3.4% — below the national average of 4.3%.
The county’s office market, however, has not fared as well. Vacancy stood at just under 20% at the end of last year, below the national average of 16.4%, though it is down from a 2014 high of 22%, notes CBC Saunders agent David Hungerford.
The largest office sale of the past year in the county involved an 11,000-square-foot property in Winter Haven, which sold for $6.1 million, though prospects may be improving — professional and business services jobs gained 3.8% in the past year, the firm reports.
Retail properties also are gaining interest, as rental rates in high-traffic area push toward $35 per square foot.
Ralston writes that as in many areas in Florida, non-traditional tenants like medical providers are increasingly turning to retail centers to reach customers.
The largest Polk County retail sale of the past year involved a 105,841-square-foot retail center on nearly 16 acres in the Davenport section of the county, which sold for $23.35 million.