There are a number of trends that may have a huge impact on the Tampa retail commercial real estate market. There is a trend toward smaller developments that may be anchored by a grocery or an entertainment venue. This trend is bolstered by the growing preference for mixed-use developments that may include office, health care facilities and residential complexes. Additionally, online retailing is challenging brick-and-mortar operations and possibly contributing to a decline in number of stores open. However, industry experts also point out that as online retailers ramp up their services, there is a need for “last-mile” facilities that can process and fulfill same-day deliveries of orders placed online.
Pricing Trends for Tampa Retail Commercial Real Estate
The median price for commercial retail spaces in the first quarter of 2017 was placed at $178.50 per square foot for sites within city limits. This figure represents an increase of 3.2 percent compared to the prior quarter and a 2.7 percent increase on a year-over-year basis. For the entire Tampa DMA, the median asking price for retail properties was $143.72 per square foot, which is still much lower than the statewide median of $163.26. In comparative terms, the Metro area median asking prices delivered a slight increase of 0.6 percent on a quarterly analysis, and a drop of 5.8 percent year-over-year. The mixed results may be partly due to pressure exerted by additional inventory as completed projects are added to available inventory.
Inventory and Demand for Retail Properties
In dollar value terms, retail spaces for sale declined by 2.6 percent compared to the values from the previous quarter. On an annual basis, the value of retail real estate for sale dropped by 13.6 percent. Looking at the number of for-sale listings classified as retail real estate, the Tampa Bay area showed a 4.4 percent increase from the previous three months although this level represents a drop of 3.4 percent, comparing year-over-year numbers. The number of profile views of available listings is an indicator of demand, and for Tampa Bay, demand rose by 13.6 percent as a quarterly change or 18.8 percent on year-over-year comparison. These numbers indicate that the demand for Tampa retail commercial real estate remains strong even as large retail operations appear to be retreating. Measured as square footage available for sale, retail properties saw a subtle rise of 0.8 percent compare to the previous quarter, yet these numbers are still much lower by 8.5 percent compared to the previous year.
Leasable Retail Real Estate Trends
Median rental rates for retail properties in Tampa was placed at $15.78 per square foot, which is about equal to the statewide median. In Tampa, this rate represents a drop of 0.2 percent compared to the last quarter of 2016 although it is still higher by 4.9 percent compared to the year-over-year numbers. Viewing the same numbers for the Tampa Bay metro region shows similar indications. At a median rental rate of $14.09 per square foot, lease rates for retail spaces rose 0.8 percent comparing quarterly numbers and $4.8 percent comparing annual figures.
The Tampa area saw a 4.2 percent increase in the total number of spaces for lease on a quarterly basis, which was about the same change at 4.0 percent year-over-year. Looking at total square footage, the Tampa retail real estate subsector showed an increase of 4.0 percent increase comparing quarterly numbers and 22.0 percent comparing year-over-year figures.
Demand for Retail Real Estate
Profile views for retail properties offered for lease declined significantly in the first quarter of 2017. Compared to the fourth quarter of 2016, profile views dropped by 44.7 percent and 39.4 percent comparing year-over-year numbers. This is consistent with expectations of a decline in demand for retail real estate due to contractions in the retail sector that included closing low-performing stores and shuttering entire chains.