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KENT SCHWARZ
Executive Vice President, Hospitality
Colliers International Tampa Bay, Central Florida and Southwest Florida
Tampa
“As far as the hotel market goes, this area is still seeing a lot of new supply being proposed. In the greater Tampa Bay market, for instance, there are now 41 new lodging projects in the pipeline, which is down a little year-over-year but that’s still a huge number. Last year at this time, there were 50 projects being planned, so the supply is moderating slightly. The Sarasota-Bradenton area, which also includes Venice, has 18 separate projects in the pipeline, which is about the same number as this time last year. The Fort Myers-Naples market is the one with the most potential growth in 2019, as they have 23 hotel projects in the pipeline —— up from just nine at this time last year. That two and a half times as many new projects, though I believe that some of that stems from the fact that they came out of the recession somewhat later than the other submarkets and because they got hit especially hard a decade ago. The Gulf Coast is interesting because it has a mix of transient and business travel, which is somewhat unique. I don’t see demand weakening in 2019. Nationally, occupancy is expected to be at worst flat in 2019 and (average daily rate) is projected to rise 2.5% to 3%, and I think we’ll largely mirror those figures or even outperform them slightly in 2019.”
PAUL RUTLEDGE
Senior Vice President, Retail
JLL
Tampa
“Everybody that I know is optimistic about the retail market for the Tampa Bay area for 2019. There’s not much on the horizon that seems overtly negative. However, if you watch TV you could get suicidal given the way things are presented. I think the risk factors to our market are not so much with our market but with potential global impacts, because we live in such an international state. But we’re not in a situation of oversupply on either the residential end or in retail space. All of the big boxes, even the department stores that went dark, are now being occupied. Christmas sales were up in 2018. Now, could investors decide they’re not going to sign a note for a loan for a new shopping center here and there? Sure, but I don’t see that coming in the near term, either. I think 2019 will be a good year. There’s just not a lot of headwinds. If anything, I see a potential impact with cap rate movement, but even there, we’ve been involved with a lot of transactions recently, involving out-of-state investors across the spectrum, and they see buying opportunities here. And these are a lot of different companies, with very prudent investors. Fluctuations could come if folks become overleveraged, but I think there’s too much lending discipline for that to become a huge problem in the year ahead. E-commerce now accounts for 10% of retail sales overall, and a lot of that comes from retailers who predominantly operate brick-and-mortar stores, so I don’t see that as a big phenomenon for change, either, even though the growth of e-commerce has been impressive. In fact, I think what you’ll see more of are online merchants working to get things into the hands of consumers more easily, which is why you’re seeing more and more ‘store-within-a-store’ concepts popping up.”
DAN O’BERSKI
Founder and Managing Broker
Trinity Commercial Group Inc.
Estero
“I think we’ll look back and view 2018 as the peak year of this cycle. We’re starting to see softness and gaps in some areas, but that’s presenting some interesting opportunities as a result. The ‘newness’ factor has worn off of a lot of retail that came into this marketplace in the wake of the recession, especially in the restaurant sector, and sales are dropping off. I think in 2019 we’ll see flat rent growth overall for retail, with the exception of certain irreplaceable locations. And interestingly, there’s still a great appetite among the major homebuilders for quality locations. Investment sales in 2019, I think, will continue to be dominated by cash buyers. And high equity buyers will still see a lot of growth in 2019. In the core retail business, I believe we’ll still see the growth of the grocery sector, especially among the specialty merchants like Publix’s Greenwise concept, and there will be a lot more infill that will take place. I don’t see a lot of growth among big box retailers, and replacement tenants will skew more to entertainment-related uses, such as theaters and experiential uses. Overall, though, I think 2019 will probably be one of the best years in this growth market. There may be some cooling to follow, but I only have positive expectations for 2019.”
"I think 2019 will probably be one of the best years in this growth market. There may be some cooling to follow, but I only have positive expectations for 2019.” — Dan O'Berski, Managing Broker, Trinity Commercial Group
ELIZABETH MADZULA
Managing Director, Asset Enhancement
The Dilweg Cos.
Sarasota and Tampa
“I think 2019 will continue to be pretty strong along the Gulf Coast for commercial real estate. The overall economy, both regionally and nationally, is still pretty robust, and everyone I’ve spoken to seems to think that that will continue on, into 2020. Prices are still somewhat high, especially for value-add investors like we are at Dilweg, and there’s not a lot of product out there to choose from, especially in our target markets of Tampa and Sarasota. We’d like to continue to buy properties here, but the pricing does not seem to be shying downward at all. But unemployment continues to fall somewhat and rental rates continue to rise, which are positive signs for the region. And the occupancy in our Florida portfolio has picked up, which is good, too. We signed a new 22,000-square-foot lease in one of our Tampa properties, Orion Center, eight days before Christmas, so we’re feeling pretty positive about that. Activity really picked up in the second half of 2018, so we’re anticipating that momentum to carry over into the new year. Just as interesting, in terms of market indicators, we’re beginning to see new office development in the Tampa area. So I am quite optimistic about where we’re headed.”
JAG GREWAL
Partner
Ian Black Real Estate
Sarasota
“I see some changes on the horizon, especially in regard to values. I don’t see appreciation continuing as it has for, say, the past five years. But by the same token, I don’t see anything on the horizon that would derail the current growth cycle, either. Namely, I don’t see people who are overleveraged the way they were a little over a decade ago. So I don’t see any kind of crash coming anytime soon. Our book of business is full, and there’s still a great deal of velocity in the marketplace. The investors we’re talking to, primarily for Sarasota properties, seem to want industrial deals, and I think that will be the next big sector for growth over the next 12 months. They’re shying away from apartments and hotels, because there’s been a lot of supply delivered in Sarasota, and office to an extent, because the office market in downtown Sarasota has been slow, to the point of negative absorption, even as there’s been a crazy amount of absorption around the Interstate 75 submarket. Overall, I think 2019 will be a good year. A lot of people are talking about a looming slowdown but I don’t see where that would come from. That said, so much of the market and growth is determined by land prices, which are not cheap at this stage of the cycle.”
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