The

DORAN JASON

Group of Tampa Inc.
Realtors

Market Study Findings

In June of 2006, Cantera Consultants & Advisors (an affiliated company to American Apartment Advisors Inc.) performed a market study for the Kress Square Partners LLC. The following are a summary of the findings of that report:

 

Market Analysis

Tampa’s location, affordable living, and quality of living have all made contributions to increasing employment pushing unemployment down to 2.9%  As more and more jobs move into the Tampa MSA, demand for office, retail and residential  development continues. According to RERC, Cap rates in Tampa range from 6.9% for apartments to 9.6% for hotels, but recent transactions have seen apartment Cap rates plummet to 5%.

 

Based on IRR.com real estate cycle monitors Tampa Multifamily is moving from the recovery phase to the expansion phase, bolstered by a loss of inventory to condo conversions (79 communities totaling 7,712 units). 

 

Using methodologies based on employment growth as a demand driver for residential real estate, preliminary analysis indicates an unmet demand for 3,241 apartments in 2006, increasing to 6,976 units in 2006.  The fluidity with which developers and residents are moving from condos to multifamily rental has made it difficult to ascertain a preference for one product type over another, but demand will remain strong so long as employment continues to expand.

 

As it relates to the downtown trade area, although a number of projects are in the works, many are catering to the high to very high end, creating a large gap in work force and middle income rental and ownership multifamily.

 

Recent completions are at 689 condos, current under construction are 2,796 condos, approved units are 1,789 (including the subject property at 975) units and in various stages of planning are another 3,975 units followed by another 726 units of proposed development.

 

Pricing

A majority of the product coming on line is slated for condo for sale vs. apartment for rent development—even the Post properties at Harbour and Hyde are in the process of conversion.

 

Comparable Rent & Condo Analysis

Prices range from $122/sf to $1,049/sf depending on the quality of the buildout, size of the unit, and developer (Trump for example is over $1,000/sf) - with the median price at $273/sf.  Lease rates have been quoted from $1.30 to $1.54/sf.

“If a developer had to start from scratch, the barriers to entry to develop a high rise in downtown Tampa would be large and wide—extending for a multitude of years– the only shortcut is if one developer Purchaser’s another's position  as Trump did recently on the Residences on the Riverside side (now Trump Tower).  The fact that the subject blocks have all entitlements and are ready to build, adds incalculable value to the property for a developer who is ready to build in 2006.”

-Todd Clarke CCIM