tampa | multifamily outlook | december...
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Tampa | MULTIFAMILY OUTLOOK | December 2017
OVERVIEW
The Tampa economy continued to grow at a brisk pace in September 20171. A growing local economy is in line with growing rental
rates, which are expected to rise along with new housing demand. Vacancies are expected to decrease as newly constructed units
are slow to enter the local market. 70s and 80s vintage product remain popular with renters due to attractive rents. Regional private
investors are the main active buyers in Tampa, targeting higher yields. We thus have the strategic opportunity to purchase multifamily
properties in Tampa.
Figure 1: Tampa, Florida
Source: Forrent.com2.
ECONOMIC INDICATORS
MACRO ECONOMY
According to the U.S. Census Bureau, the U.S. nationwide homeownership rate in the second quarter of 2017 remains near its
lowest level of the past two decades at 63.7%3, contributing to the increase in demand for apartments nationwide. Tighter credit
standards have restricted the number of new single family homebuyers. As a result, the multifamily sector continues to experience
sustained growth and tenant demand for multifamily housing is on the rise4, according to the National Multifamily Housing Council.
1https://www.dallasfed.org/research/indicators/sa/sa171026 2goo.gl/uvQbbV 3 https://www.census.gov/housing/hvs/files/currenthvspress.pdf 4 https://weareapartments.org/NMHC-NAA-US-Apartment-Demand-in-2030.pdf
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TAMPA ECONOMY
According to the Bureau of Economic Analysis5, Tampa’s population of 3,032,171, ranked 18th in the United States6 in 2016. Tampa
is ethnically comprised of approximately 25.8% percent Hispanic, 46.4% percent White, 22.0% percent Black, three percent Asian
American, and two percent Multiracial according to the U.S. Census Bureau7.
In 2016, Tampa’s per capita real GDP was $43,8078, according to the U.S. Bureau of Economic Analysis, as seen in Figure 2
below:
Figure 2: GDP of Tampa, Florida Metropolitan Area
Source: U.S. Bureau of Economic Analysis9.
Tampa has a diversified economy primarily focused within finance, retail, health care, insurance, shipping by air and sea, national
defense, professional sports, tourism, and real estate. Tampa continues to grow with the planning of a “9-million-square-foot, $3
billion dollar mixed-use project on the south side of the city’s downtown that will employ more than 15 architecture teams, designing
more than 20 buildings. The first phase is slated to be complete by the end of 2020”10. In February 2017, Forbes ranked Tampa-St.
Petersburg-Clearwater as the eight fastest growing city in the U.S. and Tampa is ranked fifth for projected wage growth.11
5 https://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?src=bkmk 6https://www.bea.gov/regional/bearfacts/pdf.cfm?fips=45300&areatype=MSA&geotype=4 7https://datausa.io/profile/geo/tampa-fl/ 8https://www.bea.gov/regional/bearfacts/pdf.cfm?fips=45300&areatype=MSA&geotype=4 9https://www.bea.gov/iTable/iTable.cfm?reqid=70&step=1&isuri=1&acrdn=3#reqid=70&step=10&isuri=1&7003=1000&7035=-
1&7004=naics&7005=1&7006=41700&7036=-1&7001=21000&7002=2&7090=70&7007=-1&7093=levels 10https://archpaper.com/2017/04/massive-development-accelerates-tampa-floridas-growth/ 11https://www.forbes.com/pictures/5894edfa31358e590cda1ed2/8-tampa-st-petersburg-cle/#596b0095309b
($ mm)
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EMPLOYMENT
The employment rate in Tampa has been on an upward trend since 2010. As of September 2017, the unemployment rate in Tampa
was 3.3%, down from 4.9% in June 2016, according to the Bureau of Labor Statistics12. Tampa’s unemployment rate is below the
Florida State unemployment rate of 4.3%, according to Bureau of Labor Statistics data13.
Figure 3: Unemployment rate: Tampa, Florida.
Source: Bureau of Labor Statistics14.
12https://data.bls.gov/timeseries/LAUMT122726000000005?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true 13 https://data.bls.gov/timeseries/LASST120000000000004?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true 14https://data.bls.gov/timeseries/LAUMT122726000000005?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true
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Figure 4: Tampa Labor Force Makeup
Source: U.S. Bureau of Labor Statistics
Workers in the Tampa-St. Petersburg-Clearwater Metropolitan Statistical Area had an average mean hourly wage of $21.88 in May
2016, according to the Bureau of Labor Statistics. Local employment in Tampa is most highly concentrated in seven of the 22
occupational groups, including office and administrative support, sales and related, and business and financial operations.15
15https://www.bls.gov/regions/southeast/news-release/occupationalemploymentandwages_tampa.htm
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Figure 5: Tampa Occupational Employment and Wages
Source: Bureau of Labor Statistics16
According to the U.S. Bureau of Economic Analysis, wage and salary employment has grown steadily year on year from 2010 to
2016, as in Figure 4 below. Wage and salary employment measures the average annual number of full-time ad part-time jobs in
each area by place of work. All jobs for which wages and salaries are paid are counted.
MAJOR EMPLOYERS & INDUSTRIES
Due to Tampa’s strong presence of finance, healthcare, insurance, shipping by air and sea, national defense, professional sports,
tourism, and real estate, the economy continues to grow in Tampa.
16https://www.bls.gov/regions/southeast/news-release/occupationalemploymentandwages_tampa.htm
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Exhibit 6: Tampa Area Employment
Source: Bureau of Labor Statistics17.
“Hiring in the professional and business services sector boosted overall job growth in the Tampa Bay-St. Petersburg metropolitan
area” during the past year18. Professional and business services employers led job creation in the first eight months of 2017 by
adding 16,200 net workers to the Tampa Bay workforce19. Overall, the metrowide labor force grew by 39,600 positions, to expand
3.0%. The local increase outpaced the national increase of 1.4% during the same period. In addition to the professional and
business services sector, the construction industry continued to have over-sized growth, expanding at 10.5% year over year20.
3,200 net jobs were added in the trade, transportation, and utilities sector, creating a 1.3% expansion.
Exhibit 7: Tampa Average Hourly Wages for Select Occupations
17https://www.bls.gov/regions/southwest/summary/blssummary_sanantonio.pdf 18https://www.berkadia.com/wp-content/uploads/2017/10/Third-Quarter-2017-Tampa-St.-Petersburg.pdf 19https://www.berkadia.com/wp-content/uploads/2017/10/Third-Quarter-2017-Tampa-St.-Petersburg.pdf 20https://www.berkadia.com/wp-content/uploads/2017/10/Third-Quarter-2017-Tampa-St.-Petersburg.pdf
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The most significant employers in the Tampa area are Publix, Bay Care Health, Hillsborough County School District, and the
University of South Florida. Exhibit 7 below shows Tampa’s largest employers, employees, and associated industry.
Exhibit 8: Tampa Major Regional Employers 2017
Company Employees Industry
Publix Super Markets, Inc. 37,254 Food/Consumer Goods
BayCare Health System 26,900 Healthcare
Hillsborough County School District 26,016 Education
University of South Florida 9,000 Education
WellCare 6,000 Healthcare
Tampa General Hospital 6,400 Healthcare
Verizon 6,000 Telecommunications
JP Morgan Chase 5,500 Financial Services
Source: Tampa Bay Business Journal21 and Livability22
21https://www.bizjournals.com/tampabay/news/2017/07/24/meet-tampa-bays-largest-employers.html 22https://livability.com/fl/tampa/business/top-employers-in-tampa-fl
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LOCAL MULTIFAMILY TRENDS
MEDIAN GROSS RENT
Tampa continues to participate in the upward demand for multifamily housing. According to the US Census Bureau23, median
monthly gross residential rent in Tampa between 2012-2016 was $983 and the renter-occupied housing unit rate between 2012-
2016 was 51.6%. According to the Department of Numbers, the real gross rent in Tampa was $976 in 2015, a +2.52% increase from
the year prior.
Exhibit 9: Tampa Median Gross Rent keeps pace with the uptick in Florida Gross Rents
Source: Department of Numbers24
Exhibit 9 above shows a positive change of 2.52% between 2014 and 2015 on Tampa’s median gross rent, and a positive three year
change of 9.05%. Looking at the Tampa market at a glance, we see that occupancy has remained stable, dipping slightly, over the
past year, while asking rents have increased and concessions have decreased. These factors point to a stable rental market for the
Tampa-St. Petersburg metropolitan area.
Exhibit 10: Tampa Occupancy Rate, Asking Rent, & Concessions
23https://www.census.gov/quickfacts/fact/table/sanantoniocityFlorida,US/HSG495215 24http://www.deptofnumbers.com/rent/Florida/san-antonio/
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Source: Berkadia Tampa-St. Petersburg Multi-Family Report Third Quarter 2017.
OCCUPANCY
Occupancy rates in Tampa have increased over the past year, bringing the rental vacancy rate to 6.77%, according to the
Department of Numbers.
Exhibit 11: Rental Vacancy in Tampa, Florida
Source: Department of Numbers25
Exhibit 12 below shows the occupancy rates and rent trends for Tampa to 3Q of 2017. Occupancy is about 95% and asking rent is
over $1,100, roughly in line with September 2016 for multifamily units, according to Berkadia26. The occupancy rate decreased
slightly in the past year due to an increase in the velocity of single-family home sales27.
Exhibit 12: Tampa Multifamily Occupancy and Rent Trends Third Quarter 2017
Source: Berkadia Tampa Multifamily Report Third Quarter 2017.
LOCAL RENTAL ECONOMICS
Developers delivered 3,157 units in the 12 months to September of 201728. Exhibtit 13 below shows the new apartments
constructed to during 3Q 2017, and their net absorption, or the rate at which the new apartments have been leased:
25http://www.deptofnumbers.com/rent/florida/tampa/ 26file:///C:/Users/Analyst2/Downloads/Third-Quarter-2017-San-Antonio.pdf
28file:///C:/Users/Analyst2/Downloads/Third-Quarter-2017-San-Antonio.pdf
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Exhibit 13: Tampa Deliveries and Net Absorption in 3Q 2017
Source: Berkadia Tampa Multifamily Report Third Quarter 2017.
Comparing net absorption in 2016 to 2017, we see that the rate at which new apartments have been leased have increased from
2016 to 2017. We also see that deliveries, the construction of new apartments, fell from 2016 to 2017, indicating a tightening of
apartment supply and thus a boost to increases in rents.
Located in the University submarkets, the St. Moritz property has benefitted from positive rental increases in 2017. Average rent
increased by 2.8% in the third quarter of 2017, bringing average rent in Tampa to $1,154. Exhibit 14 shows the rental submarket
breakdown for the Tampa Metropolitan area.
Exhibit 14: Tampa Submarket Rental Breakdown in 3Q 2017
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Source: Berkadia Tampa Multifamily Report Third Quarter 2017.
CAP RATES
CBRE categorizes Tampa as a Tier III market for multifamily housing. Exhibit 15 below shows the cap rates for the first half of 2017
for both stabilized and value-add properties by classes “A”, “B”, “C” across Tier I, Tier II, and Tier III cities in the United States.
A cap rate refers to the percentage of net operating income represented by the purchase price of the apartment complex. In this
way, one can think of the cap rate as the return an investor can expect to receive on a given apartment complex or the amount of
money an investor can expect to receive as a proportion of the apartment complex’s purchase price.
Class B stabilized cap rates are at 5.50%-6.00%, while value add cap rates are 6.00%-6.50%. Class C stabilized cap rates are at
6.50%-7.00%, with value add are floating around 7.00%-7.50%29. Tampa’s cap rates are favorable compared to other metropolitan
areas, especially Tier I assets, which have cap rates between 4.00% - 4.50% for stabilized class B assets and 4.00% to 4.75% for
class B value add assets30. The lower cap rates seen in Tier l markets are due to the overbought nature of these markets. As a
result, we are drawn to the yield opportunities in the Tier II and Tier III markets.
Exhibit 15: CBRE Cap Rates for First Half 2017 by Tier I, Tier II, and Tier III Cities
29 Source: Source: Berkadia Tampa Multifamily Report Third Quarter 2017. 30 Source: Source: Berkadia Tampa Multifamily Report Third Quarter 2017.
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Source: CBRE Research U.S. Cap Rate Survey First Half 201731.
CONTACT
Maurice Benitah
President
310-786-8100
Jonathan Benitah
Senior Vice President
424-284-4132
Roxana Vaziri
Acquisitions Analyst
424-284-4131
Heather Sipan
Acquisitions Analyst
424-284-4133
31http://cbre.vo.llnwd.net/grgservices/secure/H1%202017%20North%20American%20Cap%20Rate%20Survey%20Key%20Rates%
20FINAL.pdf?e=1503951302&h=35d2fc3ac764e6b9fe588d22b06aea29
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