cortez oaks · 2018-08-15 · cortez oaks is a 375-acre, mixed-use development north of greater...

Cortez Oaks

OFFERING MEMORANDUM

BROOKSVILLE, FL

CONFIDENTIALITY AND DISCLAIMER

The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB's or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

BROOKSVILLE, FL

Cortez Oaks

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Section 1 PRICING AND FINANCIAL ANALYSIS

Section 2 PROPERTY DESCRIPTION

Section 3 RECENT SALES

Section 4 DEMOGRAPHIC ANALYSIS

Section 5 MARKET OVERVIEW

TABLE OF CONTENTS

Cortez Oaks

Cortez OaksBROOKSVILLE, FL

PRICING AND FINANCIAL ANALYSIS

1

Summary

Property Cortez Oaks

Property Address 11195 Cortez Boulevard

Brooksville, FL 34613

Price $18,085,000

Down Payment 100% / $18,085,000

Lot Size (SF) 7,840,800

Price/SF $2.31

Lot Size (Acres) 180.0000

Price/Acre $100,472

Buildable SF 1

Type of Ownership Fee Simple

PRICING AND FINANCIAL ANALYSIS


Financing

FIRST TRUST DEED

Loan Type All Cash

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as tothe accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for anyinaccuracies. Marcus & Millichap is a trademark of Marcus & Millichap Real Estate Investment Services of Florida © 2018 X0250456 Marcus& Millichap. All rights reserved.

FINANCIAL OVERVIEW

Property Use Price PerLot/Unit/SF

Price

Phase One A: 125 Senior Single Family Finished Lots Under Contract

Phase Two B: 125 Single Family Finished Lots Under Contract

Phase Two C: 125 Single Family Finished Lots Under Contract

Phase One D: 125 Senior Single Family Finished Lots Under Contract

9.3 +/- Commercial Acres Sold

5.7 +/- Mixed Use Acres Sold

124 Attached Villa Paper Lots - Approximately 15.5 Acres $14,500/Lot $1,798,000

8.8 +/- Acres Medical Professional Office (80,000 RSF) $5.00/SF of Land $1,914,000

250 Multifamily Units - Approximately 16.7 Acres $14,500/Unit $3,625,000

33 +/- Acres Mixed Use/Commercial $6.00/SF of Land $8,625,000

106 Acres West of Power Lines $20,000/Acre $2,120,000

Total $18,085,000


PROPERTY DESCRIPTION

Cortez Oaks is a 375-acre, mixed-use development north of Greater Tampa in Brooksville, Florida. The property is filled with rolling wooded uplands and large springs fed ponds. The property is located at 11195 Cortez Boulevard, Brooksville, FL 34613. The property has approximately 3,750 linear feet of frontage on Cortez Boulevard with a traffic count of 33,500 vehicles per day. It is adjacent to the Oak Hill Hospital, a 234-bed HCA general medical and surgical facility. Cortez Oaks is located four miles west of the Suncoast Parkway, providing easy access to Tampa with a 50-minute drive to the Tampa International Airport.

Road construction has recently begun with the main entrance to the hospital being relocated through the projects new signalized interchange. Construction will begin on a new $50 million dollar senior care facility in the summer of 2018. The construction of five hundred (500) new single-family homes will begin in early 2019. Future development sites include land for zero lot line villas/townhomes, multi-family apartments, 80,000 square feet of medical offices, and 140,000 square feet of commercial/retail space. Sites are available with all spinal roads and utilities to the tracts.

Investment Highlights

■ 376.3 Acres - Mixed-Use Development Project

■ 3,750 Linear Feet of Frontage on Cortez Boulevard

■ Traffic Count of 33,500 Vehicles Per Day

■ Planned for 500 Single Family Homes and 124 AttachedVillas

■ Planned for 250 Multifamily Units

■ Planned for 80,000 Square Feet of Office and 140,000Square Feet Commercial Space

■ Property to be Delivered with Entitlements, Entry Road andMonument Signage

3




INVESTMENT OVERVIEW

4




Looking NE Along Cortez Boulevard From Power Lines

PROPERTY PHOTOS

Looking NE Along Cortez Boulevard From Southern Boundary

Local Map Regional Map

5




AREA MAPS

6




PARCELS MAP

7




PROPOSED ZONING MAP

Under Contract

Under Contract

SOLD


RECENT SALES

1)

2)

3)

4)

5)

6)

7)

8)

9)

Cortez Oaks

Brooksville Senior Living

Brookridge Lot 6

Life is Good Land

Lowe's Outparcel

Integra Junction Apartments

Lakeside Walk at Bexley

Mystic Pointe Apartments

Terra Bella One Senior Living

Terra Bella Apartments

9

RECENT SALES



RECENT SALES MAP

6

8

1

2

Comments

Purchased to build a senior living facility with 61 ALF Units and 109 skilled nursing units; paid $15,882 per unit.

Brooksville Senior Living

11165 Cortez Boulevard


Brookridge Lot 6

Tundra Drive


Comments

The property was pad ready and was purchased for future commercial development.

Cortez Oaks



Subject Property

Close of Escrow: 7/25/2018 Lot Size (SF): 635,400

Sale Price: $2,700,000 Price/SF: $4.25

Down Payment: N/A Lot Size (Acres): 15.0000

Down Payment %: N/A Price/Acre: $180,000





Zoning: C-1

10

RECENT SALES



Sale Price: $18,085,000 Lot Size (SF): 7,840,800

Down Payment: $18,085,000 Price/SF: $2.31

Down Payment %: 100% Lot Size (Acres): 180.0000

Zoning: Price/Acre: $100,472

Lot Dimensions:

RECENT SALES

3

4

5

Lowe's Outparcel

7135 Broad Street


Integra Junction Apartments

14910 State Road 54

Odessa, FL 33556

Comments

The property is an outparcel to a Lowe's and is adjacent to Capital City Bank.

Comments

Purchased to build 322 apartment units; paid $14,000 per unit.

Life is Good Land



Comments

The property is on the north side of Cortez Boulevard east of the subject property.





Zoning: Commercial Lot Dimensions: 175' on Broad


Sale Price: $450,000 Price/SF: $3.41



Zoning: C2 Lot Dimensions: 330'x400'

11





Zoning: MPUD

RECENT SALES



RECENT SALES

8

7

6

Mystic Pointe Apartments

2770 Mystic Pointe Parkway

Land O Lakes, FL 34638

Terra Bella One Senior Living

23633 Venezia Drive


Comments


Comments

All utilities are to the site. Purchased to build a 135 unit senior living facility; paid $21,110 per unit.

Lakeside Walk at Bexley

Bexley Village Parkway


Comments






Zoning: MPUD





Zoning: MPUD

12





Zoning: PD

RECENT SALES



RECENT SALES

9 Terra Bella Apartments

23700 Venezia Drive

Land O' Lakes, FL 34639

Comments

The property is approved for 311 multifamily units, $13,500 per unit.

Close of Escrow: 11/17/2014 Lot Size (SF): 2,260,764




Zoning: MF2

13

RECENT SALES



RECENT SALES


DEMOGRAPHIC ANALYSIS

1 Mile 3 Miles 5 Miles

2000 Population 1,605 23,255 54,516

2010 Population 1,955 32,641 77,566

2014 Population 1,986 32,805 78,112

2019 Population 2,263 36,297 86,158

2000 Households 786 10,106 23,389

2010 Households 911 13,702 32,049

2014 Households 924 13,783 32,279

2019 Households 1,025 15,271 35,730

2014 Average Household Size 2.11 2.40 2.41

2014 Daytime Population 712 7,603 16,410

2000 Owner Occupied Housing Units 77.31% 77.93% 77.87%

2000 Renter Occupied Housing Units 4.92% 10.49% 11.43%

2000 Vacant 17.76% 11.58% 10.70%



2014 Vacant 18.13% 15.01% 14.66%



2019 Vacant 17.35% 15.36% 15.17%

$ 0 - $14,999 15.1% 14.4% 13.1%

$ 15,000 - $24,999 19.1% 15.7% 15.6%

$ 25,000 - $34,999 16.3% 14.6% 14.5%

$ 35,000 - $49,999 18.3% 18.9% 18.5%

$ 50,000 - $74,999 18.9% 20.4% 19.4%

$ 75,000 - $99,999 6.1% 8.2% 9.6%

$100,000 - $124,999 2.6% 4.3% 5.1%

$125,000 - $149,999 2.2% 1.4% 1.4%

$150,000 - $199,999 0.8% 1.3% 1.5%

$200,000 - $249,999 0.2% 0.3% 0.6%

$250,000 + 0.4% 0.6% 0.8%

2014 Median Household Income $34,574 $39,538 $40,341

2014 Per Capita Income $20,481 $20,650 $21,724

2014 Average Household Income $44,000 $48,998 $52,459

Demographic data © 2010 by Experian/Applied Geographic Solutions.

15




DEMOGRAPHIC REPORT

Geography: 5 miles

Population

In 2014, the population in your selected geography is 78,111. The population has changed by 43.28% since 2000. It is estimated

that the population in your area will be 86,158 five years from now, which represents a change of 10.30% from the current year. The

current population is 47.51% male and 52.48% female. The median age of the population in your area is 48.1, compare this to the

Entire US average which is 37.3. The population density in your area is 995.54 people per square mile.

Households

There are currently 32,278 households in your selected geography. The number of households has changed by 38.01% since 2000.

It is estimated that the number of households in your area will be 35,729 five years from now, which represents a change of 10.69%

from the current year. The average household size in your area is 2.41 persons.

Income

In 2014, the median household income for your selected geography is $40,341, compare this to the Entire US average which is

currently $51,972. The median household income for your area has changed by 29.28% since 2000. It is estimated that the median

household income in your area will be $45,667 five years from now, which represents a change of 13.20% from the current year.

The current year per capita income in your area is $21,723, compare this to the Entire US average, which is $28,599. The current

year average household income in your area is $52,459, compare this to the Entire US average which is $74,533.

Race & Ethnicity

The current year racial makeup of your selected area is as follows: 88.61% White, 4.67% Black, 0.04% Native American and 1.70%

Asian/Pacific Islander. Compare these to Entire US averages which are: 71.60% White, 12.70% Black, 0.18% Native American and

5.02% Asian/Pacific Islander.

People of Hispanic origin are counted independently of race. People of Hispanic origin make up 13.24% of the current year

population in your selected area. Compare this to the Entire US average of 17.13%.

Housing

In 2000, there were 20,394 owner occupied housing units in your area and there were 2,993 renter occupied housing units in your

area. The median rent at the time was $510.

Employment

In 2014, there are 16,410 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed

that 55.99% of employees are employed in white-collar occupations in this geography, and 44.43% are employed in blue-collar

occupations. In 2014, unemployment in this area is 9.34%. In 2000, the average time traveled to work was 30.3 minutes.


16




SUMMARY REPORT

Number of people living in a given area per square mile.


17




POPULATION DENSITY

The number of people employed in a given area per square mile.


18




EMPLOYMENT DENSITY

Average income of all the people 15 years and older occupying a

single housing unit.


19




AVERAGE HOUSEHOLD INCOME

Two-way, average daily traffic volumes.Traffic Count data © 2010 by TrafficMetrix, 2017 by FDOT. All rights reserved.

20




33,500 (2017)

TRAFFIC COUNTS


MARKET OVERVIEW

22

MARKET OVERVIEW


Tampa-St. Petersburg-Clearwater

Metro

Geography

The Tampa-St. Petersburg-Clearwater metro

encompasses four counties along the west coast of

Florida, near the Gulf of Mexico: Hillsborough, Pasco,

Hernando and Pinellas. Tampa Bay refers both to the

entire metropolitan area and to the large bay that

extends inland from the Gulf of Mexico. The city of

Tampa is located northeast of the bay, and the city of

St. Petersburg is located on the peninsula near the

mouth of the bay. The topography of the region is flat,

with the Hillsborough River stretching 56 miles through

the center of Hillsborough County.


Market Highlights

Favorable business climate

■ A low cost of living and economic development

incentives bring a thriving business landscape to the

metro.

Port of Tampa

■ One of the largest seaports in the Southeast, the Port

of Tampa services both cruise ships and commercial

freighters.

Diverse economy

■ The high-tech, tourism and seaborne commerce

industries drive the local economy.

TAMPA

23

MARKET OVERVIEW

Largest Cities by Population


* ForecastSources: Marcus & Millichap Research Services, Experian

Metro

The Tampa metro contains nearly 2.9 million residents.

Tampa is the largest city with a population of 352,300

and is the Hillsborough County seat. St. Petersburg and

Brandon are the next most populous cities. Higher-

density redevelopment projects will spur urban

population growth over the next five years.

Infrastructure

Residents of the metro benefit from an extensive freeway

network. Interstate 4 and Highway 60 facilitate

eastbound and westbound travel, while Interstates 75

and 275 and Highway 301 accommodate northbound

and southbound travel. Two international airports

service the region: St. Petersburg/Clearwater and Tampa

International. There are also three general aviation

airports. Tampa International Airport broke ground last

year on the first phase of a $2.5 billion expansion that is

expected to bring 20,000 additional jobs to the area.

The metro is also home to two ports: the Port of Tampa

and the Port of St. Petersburg. Port Manatee is also

nearby. In addition to cargo facilities, four cruise lines

dock at the Port of Tampa. The port is the largest in

terms of cargo tonnage in Florida and is positioned to

benefit greatly from the expansion of the Panama Canal

to be completed in 2015. The port supports nearly

100,000 jobs and brings in $8 billion of economic

activity to the region each year. Tampa Bay Area

Regional Transportation Authority coordinates public

transportation throughout the region, with each county

offering public transit.


Tampa 352,300

St Petersburg 247,400

Clearwater 108,400

Brandon 108,100

Spring Hill 99,100

Town’n’Country 82,400

TAMPA

Airports

■ Tampa International Airport■ St. Petersburg/Clearwater Int’l. Airport■ Three general aviation airports

Major Roadways

■ Interstates 4, 75, 175, 275■ Highways 19, 41, 60 and 301; 618 tollway

Rail

■ Freight - CSX■ Passenger - Amtrak

Ports

■ Port of Tampa■ Port of St. Petersburg

The Tampa Metro is:

■ 85 miles from Orlando■ 130 miles from Fort Myers■ 280 miles from Miami■ 450 miles from Atlanta

24

MARKET OVERVIEW

* ForecastSources: Marcus & Millichap Research Services,Tampa Port Authority, BLS, Economy.com, U.S. CensusBureau


Economy

The metro economy is expanding, with gross

metropolitan product (GMP) expected to grow by 2.5

percent in 2014. Retail sales are expected to expand 6.4

percent this year compared with the U.S. level of 5.8

percent. Ongoing job gains in the metro through 2019

bode well for the region’s economy.

Bioscience and other high-tech industries are expanding,

due in part to research at Tampa’s nearly 80 institutions

of higher learning. Growth in these industries further

bolsters Tampa’s reputation as a high-tech corridor; the

region is referred to as “Technology Bay.” The area is

home to many large businesses, including WellCare

Health Plans, Tech Data and Jabil Circuit, all of which

are Fortune 500 companies. Tourism also plays a

significant role in the local economy, injecting more

than $3.5 billion each year. A large portion of the

revenue comes from the many area hotels and resorts.

The Seminole Hard Rock Hotel & Casino in Tampa

claims to be the sixth-largest casino in the world.

Local ports contribute to a major presence in the

shipping, distribution and logistics industry. CSX is in

the process of constructing an integrated logistics center

in nearby Polk County, which will add 5 million square

feet of warehouse, office and industrial space. The

center will also include rail-to-truck distribution

capabilities. Amazon is also a major player in the

logistics industry. The company has a 1 million-square-

foot fulfillment center in Ruskin.


Port of Tampa Quick Facts: FY 2014

Dry Bulk Cargo (net tons) 14,435,291

Liquid Bulk Cargo (net tons) 20,605,818

General Cargo (net tons) 1,176,334

Passengers 888,343

Cruise Lines 4

Number of Sailings 198

TAMPA

25

MARKET OVERVIEW


Labor

Containing nearly 1.2 million people, the Tampa employment base is stable and diverse. After expanding an

average of 2.0 percent annually over the previous five years, employment growth in the metro is now forecast to

average 1.8 percent annually through 2019, above the U.S. average of 1.3 percent per year. In the coming five

years, job creation is expected in nearly all employment sectors.

Representing 19 percent of regional jobs, the trade, transportation and utilities sector is Tampa’s largest employer,

offering more than 250,000 positions. Employment in this industry will grow by 1.7 percent annually through

2019, as the Tampa economy further diversifies. Professional and business services, and education and health

services make up the next largest shares of metro employment. These sectors comprise 17 percent and 16 percent

of all area jobs, respectively. Payroll expansion in both of these sectors is expected through the coming five years,

with education and health services forecast to increase 3.4 percent annually during this period.

In line with the metro’s ongoing economic diversification, employment in Tampa’s manufacturing sector is

expected to contract by 1.6 percent annually through 2019. These job losses will be outpaced by growth in the

service sectors.


* ForecastSources: Marcus & Millichap Research Services, BLS, Economy.com

TAMPA

26

MARKET OVERVIEW


Major Employers

Employers

As part of Florida’s high-tech corridor and home to

multiple universities and colleges with research facilities,

Tampa Bay presents an abundance of opportunities for

emerging companies. Organizations throughout the

region offer education, training and grant programs to

help businesses succeed.

MacDill Air Force Base has been in operation since

1939 and is a major employer in the area, with nearly

15,000 military and civilian personnel. The local

economic impact of the base is estimated at more than

$2 billion annually. In addition, many military retirees

remain in the region, indirectly adding to the base’s

impact on the local economy.

Finance, insurance and real estate firms, including

Raymond James Financial Inc. and JPMorgan Chase,

employ close to 100,000 people. Medical technology

companies such as Bausch & Lomb, Baxter Healthcare

Corp. and Transitions Optical Inc. hire more than

10,000 people locally. The medical field in Tampa

benefits from CAMLS, one of the most cutting-edge

medical simulation training centers in the world. Also,

the University of South Florida is planning to build a

new medical school downtown.

Additionally, many large companies, including FedEx,

Humana, Mortgage Investors Corp., and USAA have

relocated to or expanded in the region in recent years.

Other nationally recognized brands, such as Checkers

Drive-Ins and the Home Shopping Network (HSN) are

based out of Tampa. * ForecastSources: Marcus & Millichap Research Services, BLS,Economy.com


TAMPA

BayCare Health Care System

Publix Supermarkets, Inc.

HCA West Florida

Wal-Mart

Verizon Communications, Inc.

MacDill Air Force Base

University of South Florida

JPMorgan Chase

Citibank

TECO Energy, Inc.

27

MARKET OVERVIEW


Demographics

The population of the Tampa metro is nearly 2.9

million people. Since 1990, Tampa’s population has

expanded by more than 39 percent, well above the

national population growth rate. Domestic in-migration

accounted for most of the gains. The rate of population

growth is expected to register 1.2 percent annually over

the next five years, slightly above the national average.

Approximately 26 percent of the area’s population age

25 years and older holds a bachelor’s degree, up from 22

percent in 2000. The uptick is due in part to an

increased number of higher-paying technology jobs and

improved retention of graduates from local colleges.

These employment opportunities are helping to raise

the median household income in the metro, which is

roughly $46,600 per year.

The cost of housing has become more affordable since

the housing crisis began, with the median home price

falling to around $168,000. Nevertheless, rental housing

remains the most logical option for many households

employed in lower-paying service sectors. Currently 66

percent of the metro’s households own their homes,

which is slightly above the national rate.

With a median age of 41.8 years, Tampa residents are

much older than the U.S. as a whole. In addition, 18

percent of the population is age 65 or older, well above

the U.S. average.

* ForecastSources: Marcus & Millichap Research Services, Economy.com,U.S. Census Bureau, Experian, AGS


TAMPA

28

MARKET OVERVIEW

The information contained in the market overview comes from sources deemed to be reliable, however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. The most timely data available at time of production, including estimates and forecasts, were used and may be subject to revision.


Quality Of Life

Tampa Bay boasts a mild climate and a beautiful

waterfront that attracts many residents and visitors. The

metro ranks high in terms of transportation, job

creation, quality of life, cultural activities and

educational opportunities. Recreational and cultural

amenities in the region include the NFL’s Tampa Bay

Buccaneers, NHL’s Tampa Bay Lightning and MLB’s

Tampa Bay Rays. The metro has more than 200 golf

courses and abundant water-related activities, with

Tampa Bay and the Gulf Coast nearby. The world-

famous Busch Gardens theme park draws visitors, as do

the major festivals that reflect the area’s diverse cultural

heritage. Ybor City, once a cigar-manufacturing center,

is now a shopping, entertainment and nightlife

destination near downtown Tampa.

Educational advancement is available at nearly 80

institutions of higher learning located in the Tampa Bay

area. The University of South Florida, located in

Tampa, is the third-largest university in the state, with

an enrollment close to 45,000 undergraduate and

graduate students and a staff of 15,000 people.

There are more than 11,000 acres of parkland and 100

trail acres within a 60-mile radius. The Tampa area is

also surrounded by numerous state parks, historic sites,

museums, theaters and retail centers. Other popular

destinations include the Lowry Park Zoo and Bok

Tower Gardens. * ForecastSources: Marcus & Millichap Research Services, Economy.com,U.S. Census BureauNational Association of Realtors®


TAMPA

29

Rents to Rise Despite Vacancy Bump, Maintaining Liquid Tampa Bay Market

Vacancies will remain particularly tight in Tampa Bay this year as developers scurry to keep pace with an

accelerating rate of household formation. The project pipeline remains full and permitting trends signal a

continuation of the current building cycle beyond 2016. While the possibility of oversupplying luxury rentals

persists, the strong performance of new properties through last year suggests developers have accurately identified

locations where robust upper-end demand exists and is growing. Completions this year will feature 1,800 rentals

in the Westshore and Tampa CBD submarkets, where five consecutive years of employment growth are increasing

the daytime population and enlarging the pool of prospective renters. Apartment rents in the area continue to

grow at slightly above the vigorous pace recorded throughout the entire metro. An additional climb in marketwide

rents this year will greatly mitigate any potential erosion of NOIs related to supply-induced increases in vacancy.

Improvements in property performance will continue to maintain the flow of capital in the investment market and

place upward pressure on prices. Through last year, the average price had doubled since the recession ended. The

opportunity to capture somewhat higher yields than available in other markets will elicit more scrutiny from large

capital sources, but smaller regional and local investors are also active. Assets purchased two or three years ago that

have had physical upgrades and sustained cash flows will command interest, especially if additional upside exists

through re-tenanting. Elsewhere, properties in suburban submarkets, including Brandon and Wesley Chapel,

where job growth is generating new rental housing demand, offer potentially higher yields. Cap rates in the metro

span a wide range, from the low-5 percent band for high-quality assets in the center of the metro to 7 percent for

functioning Class C complexes in lower-density areas.

MARKET OVERVIEW



* Estimate** ForecastSources: Marcus & Millichap Research Services; BLS; CoStar Group, Inc.

TAMPA-ST. PETERSBURG

NMI Rank27, down 5 places

Employmentup 2.6%

Construction4,500 units

Vacancyup 30 bps

Rentup 5.4%

Investment

Strong construction and rising vacancy pushed the market down five positions in the Index.

Healthy expansions in medical fields and leisure and hospitality will set the pace in 2016 andcontribute significantly to a gain of 32,600 positions during the year. Employers made30,200 new hires in 2015.

The pipeline in Tampa Bay remains quite full. This year, 4,500 rentals will come online, upfrom 3,600 apartments in 2015.

A sizable increase in jobs will spark the creation of new households, but completions willoutpace new demand in 2016 to push up vacancy 30 basis points to 3.8 percent.

Following a hefty 8.1 percent jump last year, the average rent will rise 5.4 percent during2016 to $1,075 per month. Tight vacancy will minimize concession use.

In addition to searching the Tampa Bay suburbs to secure higher yields, investors seeking tohold assets for an extended period may increasingly consider top properties outside of themetro in nearby Manatee, Polk and Sarasota counties.

30

2016 Market Outlook

MARKET OVERVIEW



* Estimate** ForecastSources: Marcus & Millichap Research Services; CoStar Group, Inc.; Real Capital Analytics

TAMPA-ST. PETERSBURG

31

MARKET OVERVIEW

Tampa Bay’s Office Market Making Steady Gains

In spite of some slowing in the first three months of 2015, ongoing job creation is keeping the Tampa Bay officemarket on target for lower vacancy and higher rents this year. A spurt of hiring early in the second quarter putoffice-using employment within 1,100 positions of the prior peak, and the gains in payrolls are graduallybeginning to translate into new space requirements. While vacancy will continue to fall behind the growth in spacedemand, a return to the ultra-tight pre-downturn levels may not be in the making. Many tenants have right-sizedtheir staffing since the recession and have also tempered growth expectations and revised anticipated space needs.Remote working arrangements, especially in a metro known for challenging commutes, will enable employers toadd workers without occupying additional space. As the way employers view space requirements changes, the focusof local developers is also shifting to building in submarkets with access to a large population hubs.

Securing office development sites near densely populated areas, often through purchases of multiple buildings, willlikely account for a modestly larger share of the office investment market this year. Investors’ focus on existingoffice assets in downtown Tampa and St. Petersburg will also sharpen as residential development in those areascontinues to resonate with prospective tenants seeking locations near workers. Properties that require minorupdates to space and have capacity to add tenants will draw a greater level of attention in the coming months. Ingeneral, the investment market is in sound condition, with flows of debt and equity and greater visibility onpricing encouraging listings and motivating investors to make deals. In addition to competitive properties, medicaloffice assets are also generating interest. Pricing for existing properties will vary depending on several factors, withhigher amounts generally paid for assets near a hospital or medical campus. Development of new modern spacewill also occur in areas including Wesley Chapel, where Florida Hospital is undertaking a large expansion.


Employment: In 2015, employers will add 29,000 positions in the metro, including6,600 office-using jobs. Last year’s gain of 34,400 positions was fueled by growth inleisure and hospitality, and health care.

Construction: Developers will complete 550,000 square feet in the market this year,encompassing competitive space and more than 270,000 square feet of medical offices.In 2014, 158,000 square feet was finished.

Vacancy: Despite a minor uptick in the first quarter, growing space demand andrestrained development will support a 140-basis-point drop in vacancy in 2015 to 13.4percent. A decline of 160 basis points was posted last year.

Rents: Property managers will leverage tightening vacancy to push up asking rent for athird consecutive year. Average rent will climb 2 percent to $19.47 per square foot in2015 after a gain of 1 percent was posted last year.

2015 Annual Office Forecast


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32

MARKET OVERVIEW


Economy

■ Employers created 3,000 jobs in the first quarter this year; the total, however, includes a loss of positions inseveral sectors in the first month of 2015. Over the past 12 months, though, employment grew a respectable2.6 percent, or by 31,000 jobs.

■ Residential building continues to contribute to the local economy. Construction trades added 2,300 employeesduring the first quarter, the highest total among all employment sectors. Education and health services alsoexpanded, hiring 1,800 workers in the first three months of the year as medical practices continued to staff upto serve the needs of residents who gained employee-sponsored medical coverage.

■ Office-using sectors did not fare well in the first quarter. Layoffs led to a loss of 1,800 professional and businessservices positions, while financial services shed 1,000 workers. Each sector, however, has posted an increase instaffing over the past year.

■ Outlook: Staffing in the Tampa metro will expand 2.4 percent in 2015, or by 29,000 workers.


Construction

■ Only 184,000 square feet of space was finished in the past 12 months, representing a 0.2 percent uptick inoffice stock. In the preceding 12-month span, 216,000 square feet was completed.

■ Properties delivered last year and in the first three months of 2015 were only 11 percent vacant at the end ofthe first quarter. Work is progressing on more than 500,000 square feet of space that will be delivered during2015.

■ The largest project slated for completion this year is a 260,000-square-foot campus at Crosstown Center forUSAA Insurance. The firm will consolidate workers from other leased space in east Hillsborough County.

■ Outlook: Approximately 550,000 square feet of space will be completed in the Tampa Bay market this year,expanding office stock 0.7 percent.

TAMPA

* ForecastSource: CoStar Group, Inc.

33

MARKET OVERVIEW


Vacancy

■ The marketwide vacancy rate ticked up 10 basis points in the first quarter, to 14.9 percent. Despite theadvance during the period, the vacancy rate is 150 basis points less than one year ago. The market’s pace ofimprovement is accelerating; a drop of 110 basis points was posted in the prior year.

■ In the Westshore submarket, the availability rate rose 30 basis points in the first quarter to 15.4 percent,although the physical vacancy rate slightly decreased. The increase in availability is primarily attributable to anearly 27,000-square-foot block of sublease space at MetWest One that was placed on the market.

■ In Pinellas County, the vacancy rate in the Gateway submarket rose 40 basis points year to date, to 13.9percent, due to some downsizings and move-outs. With a sizable concentration of Class B/C space for smalltenants, the submarket typically performs best when higher-end space becomes full.

■ Outlook: Expanding tenants will generate new space demand, supporting a 140-basis-point fall in vacancy to13.4 percent this year.


Rents

■ Property owners are gradually gaining traction, imposing higher rents. In the first quarter, the marketwideaverage advanced 1.4 percent to $20.72 per square foot. The current level is 3.0 percent more than one yearago.

■ Nearly all of the space available for lease is direct, while sublease availability continues to dwindle. Since localemployers resumed hiring five years ago, available sublease space has shrunk roughly 40 percent.

■ Leasing velocity remains elevated as new businesses form and existing tenants renew commitments. The averagelease size, however, has not increased appreciably, indicating that growth in tenants’ staffing has not yet beensufficient to trigger significant new requirements for larger layouts.

■ Outlook: The average rent in the Tampa Bay market will rise 3.4 percent in 2015 to $21.14 per square foot,the highest rate of growth in Tampa Bay since the recession.

TAMPA


34

MARKET OVERVIEW


Sales Trends**

■ Readily available debt and greater transparency on property values supported a nearly 40 percent surge intransaction velocity over the past 12 months. Sales of properties in the $1 million to $10 million tranche rosemore than 40 percent.

■ Deals of more than $50 million primarily accounted for a sizable jump in transaction dollar volume over thepast year. Recent improvements in property performance, meanwhile, underpinned a 7 percent rise in theaverage price to $166 per square foot.

■ Cap rates are compressing slightly. The average in the market over the past 12 months varied within the mid-7percent to high-8 percent range.

■ Outlook: Investors will likely become more active and motivated ahead of an inevitable hike in interest rates.The market’s recovery is still in its early phases, leaving several assets with attainable performance upsides as theeconomy grows.

Medical Office

■ Builders completed a 26,000-square-foot property in the first quarter, which also accounts for all of the medicaloffice space delivered during the past 12 months. The property, at 6119 Gunn Highway in Tampa, was fullypre-leased at the time it was placed in service.

■ Mirroring the trend in the overall market, the medical office vacancy rate inched up 10 basis points in the firstquarter to 12.5 percent. However, medical practices occupied an additional 60,000 square feet since the firstquarter last year to trim the vacancy rate 40 basis points.

■ Available space on the market was listed at an average of $21.43 per square foot in the first quarter, marking anominal gain from the level posted in the first quarter 2014.

■ Interest in medical office properties is intensifying, resulting in a slight acceleration in deals over the past 12months. Transactions were completed at prices generally ranging from $200 per square foot to $250 per squarefoot, though owner-user deals trended higher.


** Trailing 12-month period through first quarter*** 1Q15Sources: CoStar Group, Inc.; Real Capital Analytics

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35

MARKET OVERVIEW



Local Highlights

■ The pace of medical office construction is accelerating. More than 270,000 square feet will be finished thisyear, the highest annual total since 2012. Key projects on course for completion during 2015 include the56,000-square-foot Brandon Professional Plaza and the Brandon Medical Pavilion, measuring 39,000 squarefeet.

■ Sales of office properties in Pinellas County rose about 20 percent last year, and the combination of moretransactions and higher prices pushed up dollar volume about 40 percent. Pricing varied widely, however,depending on buyer’s objective and asset condition.

■ Wellness products company Twinlab will relocate its suburban New York City headquarters to a 30,600-square-foot space at First Central Tower in St. Petersburg. The move is the latest affecting the revitalized St.Petersburg CBD submarket. Tenants occupied an additional 118,000 square feet since the first quarter lastyear, slashing the vacancy rate more than 300 basis points to 12.4 percent during that span.

TAMPA

Capital Markets

■ Although volatility and speculation about the first rate hike since 2006 have ramped up considerably in recentweeks, the yield on the 10-year U.S. Treasury has traded near 2.4 percent, mostly due to recent issues in theeurozone involving Greece. Economic data is improving since the weak print in first quarter GDP, proving theFederal Reserve’s thesis of seasonal factors and transitory conditions as the culprits behind soft GDP. Marketparticipants are now positioning for the September meeting as the most likely starting point for an interest ratehike, while the latest comments from Federal Reserve Chairwoman Janet Yellen indicate that the exact momentis still data-dependent.

■ The Federal Open Market Committee has committed to a policy of “lower for longer” as it assuages fears thatthe first interest rate increase will disrupt the recovery that is underway. The first policy rate change is expectedto be just 25 basis points, with measures remaining accommodative for some time as the Federal Reserve seeksto move past crisis-era policies nearly six years into the current cycle.

■ Interest rate volatility has moved over to the commercial loan markets and 10-year fixed-rates are now pricingbetween 4 and 4.6 percent with LTVs from 55 to 75 percent for office properties, depending on location, asunderwriters have become more competitive in an effort to do business. Floating bridge loans for stabilizedassets will require LTVs of 65 percent and price with a spread between 250 and 400 basis points over LIBOR,while re-positionings will be underwritten at 80 percent LTV with a 300- to 475-basis-point spread.

■ Total CMBS issuance is expected to top 2014 levels this year as $100 billion to $125 billion is underwritten,driven largely by growth in office property originations. A wave of pre-crisis loans will start to come due overthe next few years, prompting refinancing as current owners renegotiate the capital structure of their assets.Through April, $35.8 billion in CMBS has been originated, underscoring the availability of credit as creditunions, insurance companies and alternative asset managers expand their offerings. Meanwhile, traditionalcommercial banks have backed off due to higher capital reserve requirements and intensifying regulation.

36

A Dearth of Available Retail Listings Intensifies Investor Competition

Favorable demographics and rising sales are attracting retailers to the metro and activating developers. Strong jobgrowth has contributed to household formation as well increased household incomes during the last four quarters.As a result, retail sales are trending higher and drawing new retailers to the metro as well as encouraging others toexpand. The escalating demand for space is spurring developers. In Pinellas County, the first phase of the Tri-CityPlaza redevelopment in Largo opened in the second quarter and the redevelopment of Seminole Mall is gettingunderway. This project will transform the enclosed structure into an outdoor shopping center renamed SeminoleCity Center. The 400,000-square-foot facility will be anchored by a movie theater. Also, the Tampa PremiumOutlets in Wesley Chapel will open in the final quarter of this year. The center is likely to spur additional retaildevelopment nearby. Retailers adding locations in the metro include Bass Pro Shops, Wal-Mart, Dollar Generaland Popeye’s. Solid tenant demand and the redevelopment of older underutilized space will tighten vacancy andslowly nudge rents higher during 2015.

Strengthening local economy is luring investors to the metro, and with the number of buyers outpacing availablelistings, a competitive bidding environment has ensued. Exchange buyers are especially active in the single-tenantarena. Aggressive demand for these assets has driven prices higher and compressed cap rates into the upper-4percent area for corporate tenants with long-term leases. Compressing cap rates in single-tenant assets has morebuyers considering new multi-tenant properties with fewer than five national tenants signed to long-term leases.These assets will typically start to trade at initial yields in the low- to mid-6 percent range. Properties near big-boxanchored centers, along major transit routes or near employment hubs are especially sought after. Although localinvestors are not as active as in previous years, many are pursuing lower-tier assets with strong cash flows or thatcan be easily repositioned.

MARKET OVERVIEW

Employment: During 2014, 34,400 jobs were generated, led by gains in the trade,transportation and utilities sector. The sector is expected to top this year’s payrollexpansions as employers add a total of 30,200 workers to payrolls, a 2.5 percent gain.

Construction: During 2015, approximately 1.2 million square feet of shopping centerspace is scheduled to be delivered, bringing absorption to 2.4 million square feet. Thisis down from last year when 1.7 million square feet was completed and nearly 3million square feet was absorbed.

Vacancy: Strong tenant demand and significant pre-leasing activity in new projectsbeing delivered will move vacancy down 70 basis points in 2015 to 6.1 percent. Thisfollows a 90-basis-point drop in the rate last year.

Rents: After the average asking rent dipped 0.1 percent in 2014, increased tenantdemand will contribute to the average asking rent rising 1.5 percent to $14.17 persquare foot in 2015. The Central Tampa submarket will retain the highest rents


2015 Annual Retail Forecast


TAMPA

37

MARKET OVERVIEW


Economy

■ During the second quarter of 2015, employers created 17,000 jobs, raising the 12-month total to 35,900positions, or 3.0 percent. One year earlier, payrolls expanded 2.8 percent.

■ Year over year in the second quarter, employment gains were led by the leisure and hospitality sector, whichaccounted for more than a third of the total positions. This was due in part to new hotels opening. So far thisyear, roughly 400 hotel rooms have been added and another 1,000 are underway with completions scheduledinto 2018.

■ The rise in employment has encouraged household growth. More than 21,700 households were formed overthe past four quarters ending in June, a 1.8 percent gain. With more people working, retail sales have climbed3.4 percent during this time.

■ Outlook: Employers will create 30,200 jobs in 2015, a 2.5 percent advance. This is down slightly from the 2.9expansion last year, when 34,400 workers were added to payrolls.

Construction

■ Year to date, developers have completed 425,000 square feet of retail space, a 0.3 percent rise in inventory.This is down from the same period one year ago, when 615,000 square feet was delivered.

■ Construction will remain heightened as builders have more than 800,000 square feet underway withcompletions scheduled into 2017. There is also roughly 1.5 million square feet of proposed projects, althoughless than a fourth of that has a planned start date.

■ The largest project due for delivery during 2015 is Tampa Premium Outlets in Wesley Chapel. Thedevelopment will bring 110 stores in 441,000 square feet of retail space to the Pasco County submarket uponcompletion in October.

■ Outlook: During 2015, approximately 1.2 million square feet is scheduled to be delivered in the metro. This isdown from last year when 1.7 million square feet was brought into service.


* ForecastSources: BLS; CoStar Group, Inc.

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38

MARKET OVERVIEW


Vacancy

■ Heightened tenant demand inched vacancy down 10 basis points in the second quarter to 6.7 percent. Duringthe last 12 months the rate has decreased 50 basis points, following an 80-basis-point decline one year earlier.

■ In the second quarter, the tightest vacancy was posted in the I-75 Corridor submarket. Here vacancy dropped50 basis points year over year to 4.9 percent. At the other end of the spectrum, Pasco County submarketregistered the highest midyear vacancy at 8.3 percent after contracting 80 basis points year over year.

■ Vacancy among shopping centers, which includes strip, neighborhood and community centers, rested at 8.2percent in June, having receded 90 basis points in the last four quarters. The rate varies widely amongsubmarkets with the lowest vacancy in North Hillsborough at 4.9 percent.

■ Outlook: Strong tenant demand and significant pre-leasing activity in new projects being delivered will movevacancy down 70 basis points in 2015 to 6.1 percent. This follows a 90-basis-point drop in the rate last year.

Rents

■ Despite vacancy improvements, asking rent growth is slow to gain momentum. Metrowide, the average askingrent remained steady at $13.97 per square foot in the second quarter, which is down 0.1 percent year over year.In the prior 12-month period, rents receded 0.4 percent.

■ Among submarkets, the North Hillsborough area recorded the largest rent improvement over the past fourquarters. Here, the average asking rent climbed 5.2 percent to $13.85 per square foot at midyear. The CentralTampa submarket commands the highest rent at an average of $16.93 per square foot, down 3.7 percent overthe last 12 months.

■ The average asking rent in shopping centers rose 1.3 percent to $13.29 per square foot year over year in thesecond quarter, after a 0.8 percent decrease 12 months earlier.

■ Outlook: Increased tenant demand and new projects leasing up will move the average asking rent up 1.5percent to $14.17 per square foot in 2015. Last year, rents dipped 0.1 percent.



TAMPA

39

MARKET OVERVIEW


Single-Tenant Sales Trends**

■ Transaction velocity of single-tenant properties in the metro decreased 22 percent during the most recent fourquarters as fewer quality properties were listed. Freestanding assets in Tampa and Clearwater garneredsignificant investor attention.

■ Even though trading volume slowed during the last 12 months ending in June, prices continue to rise. Duringthis period, the average price of a fast-food restaurant rose 7 percent to nearly $600 per square foot, whilefreestanding properties traded at an average of $226 per square foot.

■ New fast-food restaurants with a strong corporate tenant are being listed with cap rates in the mid- to upper-4percent range. Initial yields for dollar stores begin in the low- to mid-6 percent span for quality properties in agood location and a long-term lease.

■ Outlook: Buyer demand will remain strong for net-leased assets with long-term tenants; however, intensecompetitive bidding environment will require investors to expand their portfolio parameters.

Multi-Tenant Sales Trends**

■ Transaction velocity of single-tenant properties in the metro decreased 22 percent during the most recent fourquarters as fewer quality properties were listed. Freestanding assets in Tampa and Clearwater garnered

significant investor attention.

■ Even though trading volume slowed during the last 12 months ending in June, prices continue to rise. Duringthis period, the average price of a fast-food restaurant rose 7 percent to nearly $600 per square foot, while

freestanding properties traded at an average of $226 per square foot.

■ New fast-food restaurants with a strong corporate tenant are being listed with cap rates in the mid- to upper-4percent range. Initial yields for dollar stores begin in the low- to mid-6 percent span for quality properties in a

good location and a long-term lease.

■ Outlook: Buyer demand will remain strong for net-leased assets with long-term tenants; however, intensecompetitive bidding environment will require investors to expand their portfolio parameters.


** Trailing 12-month period through 2QSources: CoStar Group, Inc.; Real Capital Analytics

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MARKET OVERVIEW



Capital Markets

■ Several macroeconomic headwinds, including the strong dollar and lower energy prices, have recently droppedthe yield on the 10-year U.S. Treasury to the low-2 percent range. Despite weakness abroad, U.S. economicdata remains robust as existing home sales hit levels not seen since 2006 and retail sales growth indicates awillingness by consumers to spend in areas beyond the essentials. Additionally, jobless claims are just above a41-year low and more than 200,000 positions have been created in 14 of the last 16 months, providing furtherevidence of broad strength in the labor market.

■ The Federal Open Market Committee has committed to a policy of “lower for longer” as it assuages fearssurrounding a possible interest rate increase this fall. The initial policy rate change is expected to be just 25basis points, the first hike since 2006, with measures remaining accommodative for several years.

■ Life insurance firms are underwriting with terms of up to 25 years for retail loans. Their 10-year pricing rangesbetween 4 and 4.25 percent with average LTVs from 60 to 65 percent. Meanwhile, CMBS lenders are offering10-year terms at rates between 4.4 and 4.65 percent, with LTVs at 75 percent. Commercial banks are alsoactive in the sector, generally offering shorter-term loans from 3.75 to 4.75 percent for 70 percent leverage.Floating bridge loans for stabilized assets will require LTVs of 70 percent and price with a spread between 250and 425 basis points over LIBOR, while value-add transactions will be underwritten at 80 percent LTV (60-65percent of cost) with a 300- to 475-basis-point spread.

■ Total CMBS issuance reached $52 billion by the end of the second quarter, representing a sizable uptick fromlast year. More than $600 billion in CMBS is expected to come to market during the next few years as pre-crisis loans come due, prompting owners to renegotiate their capital structure at much lower interest rates.Many of these owners may choose to list their assets instead, providing investors an opportunity to place capitalin highly sought-after markets.

Local Highlights

■ Plans are underway for a 25-acre development between Amalie Arena and the Selmon Expressway. The projectwould offer roughly 3 million square feet of commercial space including more than 1 million square feet ofoffice space that would attract a corporate headquarters to the area. Plans also feature hotel, retail andresidential components.

■ Ground has broken on the former Amazon Hose and Rubber site for an eight-story apartment building at theintersection of Kennedy Boulevard and North 12th Street. The 300-unit project will include ground-level retailand a six-story parking garage.

■ A mixed-use development that would offer retail and multifamily uses has been proposed on the 29-acre formerRaytheon site in St. Petersburg. The long-vacant property at 1501 72nd St. N. has recently been purchased.

■ Construction has begun on an expansion that will add more than 110,000 square feet to the Florida HospitalWesley Chapel. The $78 million project should increase foot traffic to nearby restaurants and retailers.

■ Port Tampa Bay revealed development plans for 45 acres along Channelside Drive that would add 9 millionsquare feet of mixed-use projects. The site is expected to be divided into four districts: the cruise district, thecentral waterfront, marina district and park district, and it will contain a combination of residential towers andretail and commercial space.

TAMPA

BROOKSVILLE, FL

OFFERING MEMORANDUM

Cortez Oaks

Offices Throughout the U.S. and Canada

www.MarcusMillichap.com

Exclusively Listed By:

Paul BouldinFirst Vice President Investments

Senior Director, National Land GroupTampa Office

License: FL: BK236288Tel: (813) 387-4747Fax: (813) 387-4710

[email protected]/PaulBouldin

cortez oaks · 2018-08-15 · cortez oaks is a 375-acre, mixed-use development north of greater...

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