Hope everyone had an enjoyable and relaxing holiday weekend.
This is a short blog update, with just one link to a recent article highlighting our team and some insight into the coming market changes. Click here to read more
On another note, if you’re looking for a short term holiday warehouse for inventory or product storage, please send an email and we will help you.
The latest employment figures per industry for the past 2 months came out last Friday, since the government shutdown halted information releases for that timeframe. The major job losses locally came in State and Local Govt, Amusement/Gambling/Recreation, and Wholesale Trade. The highest percentage of increase came in Construction and Specialty Trade, and Warehouse & Storage.
See how FL and it’s counties did by clicking to read this article.
Unemployment in Hillsborough was 6.2% in Oct-13, the lowest since May-08 when it was 5.7%, and in addition we are outperforming the State!
- Non-Agricultural employment in the MSA was 1,202,600 in Oct-13, an increase of 3.4% from Oct-12, while statewide employment was up 2.4% over the same period.
- The Metro Area’s year over year growth rates in mining, logging, construction; trade, transportation, utilities; and manufacturing were stronger than statewide growth in these industries as well.
Port Activity during the recent summer months also improved, with Airport Total Cargo growing by 3.5% year-over-year, and Seaport Containers growing by 7% year-over-year. Keep in mind, the Port of Tampa is FL’s largest, most diversified seaport with 5,000 acres and an $8 billion impact on the local economy, and is the closest U.S. full-service port to the Panama Canal.
The 3rd Quarter was also a strong one for Tampa Bay companies, as they outshined their national counterparts in corporate earnings.
Add to that the things our local county economic development organization is doing with BIG WINS while our local Ports also entertain HUGE ENDEAVORS with mergers and in discussions with LARGE automotive players and you’ll see why the future has great potential for growth!
Nationally, current real estate conditions remain flat in sentiment as we get into 4Q13, and future conditions sentiments seem to have dropped a little. Mostly due to an eventual uptick in interest rates that are at historical lows, as well as the gridlock in government that is still providing uncertainty.
Another thing to watch nationally (in markets where development is occurring) is how new industrial development impacts rent growth. Will extra supply coming online impact rents by softening the market? Timing the increase in demand with the appropriate level of absorption in order to overcome existing competitive options along with new development will be the next challenge.
Locally, here are some interesting articles relevant to the area:
From a national level, please find a great video on the US Industrial MarketView for the 3rd Quarter
The key regional trends that propelled the national industrial market included:
- Auto industry activity in the Midwest, giving them the lowest vacancy in the US;
- Large, modern facilities being constructed on the West Coast, giving them a spike in development;
- The East Coast had moderate yet strong leasing activity, and the expansion of the Panama Canal will help this region long-term;
- Investment activity saw increased demand, with investors outnumbering listed properties 4 to 1, Year-to-Date Sales Volume was at $31.9 billion, cap rates inching up to 7.7%, and a focus on secondary markets now that yields are changing.
It looks like a few new jobs were added this past month… 204,000 in the US in October, to be exact. GDP also looked stronger, showing 2.8% growth in the 3rd Quarter of 2013. More bright news came from the ISM Manufacturing Index, showing a 5th consecutive month of expansion, and if you look at manufacturing jobs there were the biggest gains in that sector since February. It is all very welcome news at a time when confidence was slipping due to Washington D.C., and as we head into the holiday season.
On a local level, our team made up of Rian, Kris and I have joined the CBRE office here in Tampa, as an Industrial Agency Leasing team. We are excited about the opportunity to work in this environment with these great professionals and this proven organization. The tools available to us will have a direct benefit to clients. We look forward to leveraging all the resources and service lines available to us within CBRE.
This was a once in a lifetime opportunity for this team to join a world-class company. CBRE is the market leader in the industry, and with the improving industrial market, the timing is perfect for us to be positioned here. CBRE works with 80% of the Fortune 100 companies, and that’s the kind of network you want. Bigger IS sometimes better. Our clients want to see more opportunities and CBRE brings that to bear through its specialty practice groups, geographic reach, scalable resources and tailored market intelligence.
CBRE’s market research is unparalleled in the industry – and that will help us achieve better rates and occupancy levels for our clients.
With activity settling down locally this quarter, we had more time to ramp up prospecting. Over the last 3-4 weeks we have consistently made it out. This hasn’t uncovered any immediate opportunities but it has given us some knowledge regarding who could potentially grow and who could potentially be forced out of a neighboring space in 2014.
As we talk to those involved in residential sales and construction, tied to our economic driver, we hear their market is flattening out and turning a complete 180 degrees from where it was 3-6 months ago. Investors are starting to see the run-up they created and could begin unloading some of the homes they bought due to realizing gains in appreciation. Investor purchases grew in September, as a percentage of all US sales, to 14%. Median sales price of homes went up month-over-month in September, yet volume of sales went down and there were fewer mortgage applications. All still pointing to mostly investor activity, which doesn’t help the demand side of our equation. If real users come out and buy the homes investors will unload or rent, then we could see increased demand for all other consumer products, household goods and furnishings, which would be a positive externality associated with that situation.
Here are a couple articles on the residential statistics:
On a separate topic, not too relevant to real estate but appropriate for networking and prospecting in a way, I have been getting involved in charities this year hoping to meet people on boards of directors that might also be heads of companies needing space. Hopefully, that turns into future leads and referrals to fill space, but for the time being it’s been mostly event planning, committee help and fundraising. I do it outside of the bounds of brokerage, but I’m always open to discussing the groups I personally raise funds for, so email me anytime to ask about that (Stoilas@yahoo.com) and I can add you to my fundraising distribution list. Currently I’m doing a small fundraiser for the Crisis Center of Tampa Bay, which can be found at http://www.causetofund.com/crisis-center-tampa
It’s been the year of the small deal here in Tampa! That’s a good sign for our market though, because small users are the local mom-n-pop shops and local trades that begin driving our economy. In contrast, larger Build-To-Suit activity has been starting up, with significant activity in Polk County just east of Hillsborough County.
Tampa Bay’s economy, has slowly, but steadily improved over the past 18 months. Job growth has returned to positive figures, unemployment has consistently dropped, population growth has ballooned and there has been a significant increase in smaller tenants “shopping” for space in the market. Along with improvement in the local economy, the Tampa Bay industrial market showed an improvement in many key market fundamentals thus far in 2013, with overall vacancy falling slightly, an increase in sales volume and overall absorption, while minimal, continues to be positive.
With just less than 1.5 msf of new space being completed within the region since 2010, an overwhelming 89.7% of this recently completed space was constructed on a build-to-suit basis. On County Line Rd, within 1 mile of each other, there has been a 388,000 square foot O’Reilly’s facility built, a 550,000 square foot Publix expansion and a 1Mil square foot Amazon distribution center. In addition, Amazon is also building a 2nd 1.1Mil square foot building in Ruskin, and Brew Hub just put up 50,000 square feet in Lakeland.
You can see the range of smaller deal sizes as we recap Leasing Activity, which was heavier in the 2nd quarter than it was in the 1st, but 3rd quarter was less active than both prior quarters.
o 101 reported new or expansion deals done in 3Q13:
§ 7 deals over 40k SF (5 under 50k SF though), 15 between 10-40k SF, the remaining 79 all under 10,000 SF.
o 125 new leases or expansion signed 2Q13:
§ 5 over 40,000 SF (only 1 deal was over 60k SF).
o 114 new or expansion deals signed in 1Q13:
§ 3 over 40,000 SF.
Since mid-year 2010, industrial absorption in the Tampa Bay market has continued on a positive trend, though we don’t expect absorption in the area to return to pre-recession levels until at least early 2015.
Logical reasons Tampa is lagging while the rest of the country booms, 1) the current revival and spec construction is happening in “big box” spaces across the country, 2) Florida’s current frenzy of activity is a result of South America’s growth and the preparations for the Panama Canal expansion, and 3) primary gateway markets for distribution are feeling the first improvements. You can see from this that our market in Tampa Bay is still driven by local homebuilding and local distribution, rather than “big box” users. Tampa hasn’t been your typical 250,000 SF+ “big box” market, we don’t have as large a South American presence as south Florida, and our tertiary-market status takes time to meet the same supply/demand curve as primary markets.
All the news in Tampa points to growth from new users coming to town via Amazon, bio-tech and new start-ups, but in case you were wondering why we’re not seeing anything “today” then hopefully this summary answers some of your questions. For the time being, let’s all learn what types of buildings new users in our coming industries will need, so that when spec construction begins we can build the right product for our changing market.
It’s public info…Amazon is a go! They are to begin construction on the Ruskin site in Hillsborough County, per county commissioners. There could be ancillary users that need space near Amazon, so that’s another positive externality of this move. As of yet we can’t identify who or what types of users they are. One thing is for sure…it will be noticeable here in Tampa Bay!
We’ve approached “last-mile delivery” companies and so far their answers to our inquiries are they won’t see an immediate increase in their footprints because it’ll be mostly truck traffic from the Amazon site to the doorsteps of consumers. Seeing as this is 1 year away from opening, it’ll probably be 2015 before the impacts can be felt by those companies, and adjustments made in their needs.
In general industry news around the country, you’re seeing 1,000 jobs added in Houston…219 jobs in Atlanta added…500 hired in St. Louis…Swisher Hygiene opens a manufacturing plant in Arizona…Manufacturing seeing a revival, etc.. It’s activity and news for the economy, so please be patient with us in Tampa. We’re catching up!
In case you’re paying attention to China, their benchmark interest rate for overnight lending is at 25%!! It was at 2.5% in early 2013…so I guess we’re doing pretty darn good here in the U.S.
Finally! Cool news to read about…the potential for robots to drive freight trucks in the future…yup, robots replacing human truck drivers! Read about it at this link here.