Originally Published March 21, 2017
Is there nervousness in the real estate market and our overall national economy? Yes, we are at a point in the cycle where nerves get involved because we’re nearing the peak and no-one is sure what comes next. This is working in the favor of secondary markets though, because there is still capital out there in funds that need to be placed and some secondary markets have not gotten overly frothy yet, so there’s time and yield in those markets. That yield comes with more risk though, which brings us back to nervousness.
Next Phase of the Buying Cycle
Underwriting is key and knowing what to pay for product is going to carry these buying decisions into the next phase of the cycle. This time around, this cycle is definitely peaking with added activity at the start of the year, but the sentiment is much more “realistic” and positive. We haven’t realized short-term memory loss to the extent that the Great Recession’s lessons are lost. Demand seems to balance Supply, for now, and it’s understood.
Even the Federal rate increase indicated a good balance was occurring between hourly earnings and jobs numbers. A large portion of those jobs were in construction too, indicating a further understanding that supply needs to be created in order to meet demand. A lot of that demand looks to come from Millennials now, as they look at their capability to purchase homes. Yes there are challenges that come along with the jobs reports, including inflation triggers and what types of jobs saw the wage increases, but all in all the good news that this report provided was a lot more promising.
Every decision from here on out will be critical and will require disciplined analysis. Until now, there was a level of abundance in the system. Abundant supply from consolidation and abundant revenues from efficient operations. Then came the pent up demand that was building, but no supply was being built, so all the extra supply that was a “no-brainer” got taken out of the system through purchase or lease. Now we’re left making decisions on tough locations or old product and the added costs are being added to the equation. Discipline, cautiousness and nerves are evident but they’re good things too. They’ll keep us in check early on as we approach the next challenge.
How is Tampa Making Out?
How is Tampa making out in this discussion and the oncoming nervousness of the cycle? We’re doing real good… crime is going down, which is also helping business because corporate relocations pay attention to that along with millennials looking to move to safe growing metro areas, which means people want to move and live in our region. Along with helping millennials make their decision to move here easier, we’re also working on improving our transportation plan to incorporate biking, ride sharing and autonomous access around our friendly city, and we’re bringing our historic areas into the modern age by providing more to do, more to eat, and more parks to gather in. More people means more rooftops, which means more attention from retailers, which means more goods to distribute, which means more need for “space” in commercial real estate. Yes, we will feel the effects of the national nervousness, but for now it seems we’ll lag that timeframe while the primary markets feel the pressure first.
Moral of the story… call Fortress, so we can talk expert advice on where your real estate strategy should be focused in West Central Florida. Fortress Commercial Real Estate adds value to business owners looking to grow through their real estate, office and building needs.
There’s an elephant in the room we want to talk about… Fortress Commercial Real Estate. A commercial real estate brand in Tampa Bay made of over 30 years of Florida experience and local real estate knowledge. Paying attention to Florida real estate so you can pay attention to growing your business.
Contact us online, call us at 813.444.3330 or email us at kostas@FortressCRE.com for more sound advice.