Friday, January 19, 2018
Business

Commercial real estate lags improving housing market

TAMPA — When builders broke ground this month on an office park in the Tampa suburbs, perhaps the first speculative project this area has seen in half a decade, one developer called it a "good sign that we've turned the corner on the recession."

But don't expect office parks to bloom at the same frenzied speed as new homes. Agents and builders said Tampa Bay's commercial construction remains a wasteland, stalled by lack of business, stung by vacancies and strapped for development cash.

In the wake of the housing bust, as homes fly off the market and buyers battle over thin inventories, it's the area's strip malls and office centers that remain in price-sinking oversupply.

Coupled with still-simmering worries over unemployment, weak wages and lagging consumer confidence, agents said the demand for new commercial space has crumbled.

Builders in March saw contracts for future home and apartment construction in Tampa Bay skyrocket 80 percent over last March, to $338 million, McGraw-Hill Construction data show.

Meanwhile, contracts for construction on nearly everything else — storefronts, offices, schools, hotels, religious halls, manufacturing plants and recreational centers — plummeted 80 percent last month, to just over $15 million.

Tampa Bay's commercial marketplace is "still suffering from the downturn in the economy, with more foreclosures to come," said Tim Watson, who heads the commercial division of RE/MAX ACR Elite Group, Inc.

"If you don't have the jobs for people and they're not making money, they're not going out for dinner as much, they're not getting their hair cut as much — they're just not going out to spend money as much as they used to," he said. "That affects everyone."

Sprawling apartment projects and newly revived subdivisions helped local construction jobs grow 6 percent over the past year, the Associated General Contractors of America said last week.

But nearly all of the cranes and crews working commercial these days are building sparsely and for single tenants: Wawas, Walmarts, banks and dollar stores, where sales are steady or company leaders are seeking new markets.

Commercial developers aren't turning dirt, or even winning lenders' confidence to invest in new projects, because so much empty space remains cheap and up for grabs. But even with property values and lease rates at staggering lows, property owners who cater to businesses struggle to sign new leases.

"Landlords are bending over backwards and doing deals that make no economic sense" to keep tenants in shopping centers, said Jonathan Graber, an investment associate at Tampa commercial real estate firm Franklin Street.

Empty storefronts tend to siphon traffic from neighboring businesses and can trigger disastrous domino effects, Graber added. At one 15,000-square-foot strip center, he said, the landlord "can't give space away."

Core markets and urban centers tend to fare better than outlying enclaves like New Tampa and southeast Hillsborough County, which lack the density of residents and shoppers that businesses need to survive.

But many developments, like regional malls, suburban offices and big-box-laden "power centers," remain unpopular no matter where they're built, as retailers and office leaders downsize because of slowing business, online shopping or oversaturated markets.

When retailers do move, agents said, they tend to play musical chairs, moving in where another company has downsized or gone out of business and cannibalizing their last locale.

Retailers, as the saying goes, follow "rooftops," blossoming most often among dense traffic and neighborhoods. But they follow in another way as well, by tending to lag economic progress in housing. In the last recession, agents saw commercial property prices sink only a few months after the broader housing market's bust.

That has some agents and builders optimistic that resurgent home prices and upticks in employment could inject needed business into shops, restaurants and entertainment.

Small-business owners and franchisees could turn once again to home equity for startup loans. And tightfisted lenders could see better chances in commercial building as developers fix up aging strip centers or unveil plans for new growth.

"We expect we'll be busy into the fall, but we try not to look too far ahead," said Mark Weaver, vice president of Tampa builder Ed Taylor Construction. "You never know what's going to happen."

Contact Drew Harwell at (727) 893-8252 or [email protected]

Comments

Proposed monument near St. Pete pier would honor Tony Jannus history-making flight

ST. PETERSBURG — Tony Jannus’s history-making flight in an early seaplane — simultaneously as ungainly and graceful as a pelican on the wing — is what Mayor Rick Kriseman calls an "under-told and under-appreciated" story, but a team of local history ...
Updated: 7 minutes ago
See how bus rapid transit would work in Tampa Bay

See how bus rapid transit would work in Tampa Bay

ST. PETERSBURG — The next, best hope for bringing mass transit to the Tampa Bay area is a bus rapid transit system projected to cover the 41-miles separating St. Petersburg from Wesley Chapel, attract 4,500 new riders and cost about half as much as a...
Updated: 27 minutes ago
Five things Tampa Bay needs to know about bus rapid transit

Five things Tampa Bay needs to know about bus rapid transit

ST. PETERSBURG — Transportation planners on Friday unveiled a new transit vision for Tampa Bay leaders on Friday morning: Bus rapid transit.Also known as BRT, it has arisen as the leading option in an ongoing study to find the best regional transit p...
Updated: 3 hours ago
Amazon boosts monthly Prime membership fees by 20 percent

Amazon boosts monthly Prime membership fees by 20 percent

NEW YORK — Amazon is raising the price of its Prime membership monthly plan by nearly 20 percent. The fee of $99 for an annual membership will not change, the company said Friday. The online retailer had added the monthly payment option about two yea...
Updated: 5 hours ago
Cuba’s tourism is booming despite Trump’s tougher policy

Cuba’s tourism is booming despite Trump’s tougher policy

HAVANA — On a sweltering early summer afternoon in Miami’s Little Havana, President Donald Trump told a cheering Cuban-American crowd that he was rolling back some of Barack Obama’s opening to Cuba in order to starve the island’s military-run economy...
Updated: 5 hours ago
Tech firm TranferWise moves to Ybor City, illustrating a new chapter in Tampa’s business history

Tech firm TranferWise moves to Ybor City, illustrating a new chapter in Tampa’s business history

TAMPA — You could sketch an economic history of the city of Tampa — and maybe get a glimpse of its future — just by looking at the old J. Seidenberg & Co./Havana-American Cigar Factory.It opened in 1894, making it Ybor City’s second oldest brick ciga...
Published: 01/19/18
Florida unemployment rate increases slightly in December

Florida unemployment rate increases slightly in December

Florida’s rock-bottom unemployment rate ticked back up slightly after months of decline. The state’s unemployment rate was 3.7 percent in December, up from 3.6 percent in November, according to state figures released Friday. Tampa Bay’s jobless rate ...
Updated: 5 hours ago
House approves government spending bill

House approves government spending bill

A divided House on Thursday passed an 11-hour plan to keep the government running. But the GOP-written measure faced gloomy prospects in the Senate, and it remained unclear whether lawmakers would be able to find a way to keep federal offices open pa...
Published: 01/18/18
Will the third time be the charm for these Tampa Bay townhouses?

Will the third time be the charm for these Tampa Bay townhouses?

ST. PETERSBURG — In real estate circles, it would seem an odd match — 54 townhouses in an office park and a group of Realtors best known for selling luxury single-family homes in Snell Isle. Yet the Strickland Property Group is convinced it can do wh...
Published: 01/19/18
Crystal Lagoon planners cut the ribbon on a chilly day (w/video)

Crystal Lagoon planners cut the ribbon on a chilly day (w/video)

WESLEY CHAPEL — Mother Nature seems to have a way of putting a chill on one of the hottest amenities in residential real estate development.Members of the business community, elected officials and executives with Metro Development Group and Crystal L...
Published: 01/18/18