Tampa area ranks among top U.S. secondary MSAs
The Tampa-St. Petersburg-Clearwater metropolitan statistical area ranks among the Top 20 performing secondary MSAs in the U.S. for potential commercial real estate investors, according to a new survey by real estate research firm Trepp LLC.
Trepp ranked the city 13th for its debt service coverage ratio of 1.97x, its loan delinquency rate of 6.91%, its commercial occupancy rate of 90.83%, an unemployment rate of 3.25% and a population growth rate of 1.81%.
Ron Ruffner, a senior vice president at commercial real estate brokerage JLL, told Trepp that developers now appear poised to begin projects after a lull this growth cycle based on sustained population and job growth. He believes employment gains will bode well for office space demand, in particular.
Trepp conducted the research into what it terms secondary markets because it says commercial real estate values are higher than ever in so-called “gateway” cities like New York, Chicago, Los Angeles and Chicago, and capitalization rates tighter than ever.
“Finding suitable risk-adjusted returns in gateway cities has become very difficult,” report states.
While higher cap rates indicate properties are generating increased income, they also tend to also be a measure of higher overall risk, Trepp notes.
Secondary MSAs are defined as areas with employment between one million and two million, the report says.