“Tampa has evolved so much since I arrived here in 2002, back when the market for investment property sales were in the infant stages compared to where they are today,” says Paul Carr, the Executive Vice President of Investment Services at Colliers.
“Downtown Tampa was a relatively 9-5 p.m. city back then, Downtown St. Petersburg was considered a retiree area and most of the legacy office buildings and other property types were developed in the ’80s and ’90s. To see how much the market has changed over the past 20+ years is pretty staggering.”
With Forbes naming Tampa the best city to live in Florida, it’s not surprising that the number of residents moving to the Bay continues to grow, making the balance of residential and commercial properties a hot topic.
“Tampa is considered a strong secondary market, comparable with other cities like Nashville and Austin, but Florida in general has become so popular in recent years post-Covid, the growth and migration we are seeing all over the state are unprecedented,” Carr says.
“Over the past few years, the number of new multi-family, retail, restaurants, industrial, mixed-use and even office projects has increased substantially in the Tampa Bay area. Projects like Water Street, Midtown, the Heights District, Gas Worx and others have changed and will continue to change the landscape of Tampa for generations to come.”
While the pandemic shifted many businesses to online platforms, Tampa was left relatively unscathed.
“Tampa’s commercial real estate market has been performing quite well compared to the rest of the country,” says Andrew Wright, Founder and Chairman of Franklin Street. “While some challenges have been experienced in other markets, Tampa has stood out positively in several aspects from economic development, wealth migration to a relatively healthy office market.”
While many office retail spaces closed around the country in favor of work-from-home alternatives, the impact was not felt as heavily in the Bay.
“The trend of remote work, which grew during the pandemic, has indeed impacted the demand for traditional office space in downtown areas across America, but this effect is not as pronounced in Tampa,” Wright says.
“Innovation has played a significant role in commercial real estate, with adaptations in retail properties dating back to 2019 to address changing retail dynamics,” he adds. “While some businesses and positions may return to more traditional office setups, there’s a growing recognition that remote work is here to stay, given the importance of in-person interactions, non-verbal communication and the evolving needs of modern workers.”
“Tampa was one of six markets in the country to report an overall vacancy decrease for the second consecutive quarter, ending 2Q23 at 20.3 percent,” Garlick says.
While converting commercial businesses to residential has been considered to accommodate the growing number of people moving to the area, it’s not a trend Garlick expects to see here.
“The office-to-residential conversion can be very difficult and costly, so I would not expect to see that in the Tampa Bay market at scale. Depending upon the location, we could see some office-to-industrial type conversions with continued increases in asking rents in industrial.”
While the future trends of the commercial real estate industry aren’t set in stone, it’s a market that’s here to stay.
“Commercial real estate will always be in our lives,” says Claire Calzon, the Senior Vice President at Colliers. “Every day we touch this industry whether it’s retail, office, medical or industrial. The future of how we use commercial real estate space will be dictated by the changing times.”
“At this point in time, it’s still too early to identify a specific market trend, but like all other downturns in the market,” she adds, “we will see a shift back to more robust times, just different than where we’re coming from.”