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OCTOBER 04, 2007
Is office real estate getting a case of the housing willies?
Just what we needed. Housing's in the tank and now office real estate isn't looking so peachy either. Here's the take from a local expert I've spoken to several times:
If every Tampa Bay area office project currently under development gets built, the regional economy will be buffeted –– though not too severely –– by a surplus otherwise known as “overbuild,” says one commercial property expert.
Stevens E. Tombrink, CCIM, regional vice president for real estate services at Equity in the Tampa region, said he isn’t too worried Tampa’s office market will reach the “overbuild” stage.
“We pay very close attention to every project, so we have a clear picture of both the macro and the micro in office development,” Tombrink said. “The truth is that only a percentage of projects under development now will ever open. Office development is a rigorous, time-consuming enterprise, and typically more projects start the development process than end it,” he said.
Tombrink said office development in the region is more severely affected by high-flying insurance costs and property taxes, which have substantially reduced Florida’s competitive edge in attracting new business and industry to the state.
“The true effects on these price hikes are just now being felt and they will only get worse as time goes on,” said Tombrink. “With all our efforts to create new employment here, the cost spikes are particularly disheartening,” he added.
Florida’s flagging housing industry is adding new woes to the region’s economy, Tombrink explained. With fewer new homes under construction, demand for retail space is also slowing at a time when rents are approaching a ceiling.
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