It’s been a topic of conversation lately on where we are in this cycle and where Tampa Bay is heading in a mayoral race and a business expansion environment. It’s been hard telling fact from media headline. All that keeps coming back up though is a strong structural foundation growing differently than prior boom times.
Nationally, we are in an environment of low rates, consistent economic growth and consumer demand, and a strong flow of capital globally and locally. The Conference Board consumer confidence index is still below it’s all-time high from 2000. Locally, we are at a watershed moment for our region, seeing continued population growth and tourism, with low unemployment and a clear path to more people and corporate jobs coming to the area. Even the ecosystem surrounding Tech in Tampa Bay(SM) is growing. Where else in Florida can such phenomenal growth go? Our Central and West Florida markets are in the path of progress.
Each sector is moving at its own pattern. Multi family is now potentially decreasing in rents due to the amount of supply (providing affordable options), retail is still growing and breaking the idea that ecommerce won (giving credence to the omni-channels), coworking and office space dynamics are yet again changing again with the shift in how people go paperless and park extra employees (allowing companies to use space more efficiently), and industrial is now the darling of commercial real estate investing.
Where are the markets going?
Residential is going to flatten out and more than likely see a pricing correction. Inventory isn’t keeping up and demand could start slipping because wages aren’t keeping up with price and rate increases.
Commercial still has some room and it’s not as easy to tell, but it’s clear something is going to change. The question is whether it changes on the supply side or the demand side. If supply continues to increase along with demand then prices will remain steady, but if demand slows down then it could affect pricing considerably depending on where supply and development are at that point. Obviously that’s not some rocket science forecast...it’s just a representation of timing and suppliers / demand dynamics.
We have a long way to go before the relative high rates and demand issues take effect on the economy. You should expect a plateau rather than a decline in the next correction....but that could just be my optimistic opinion. Who knows... Even the Conference Board’s Leading Economic Index says “it doesn't get much better than this.”
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