COMPLETIONS, ABSORPTION AND VACANCY RATES RETAIL RESEARCH REPORT TAMPA BAY FLORIDA www.colliers.com/tampabay Publix Becomes Significant Player in Investment Sales Market EXECUTIVE SUMMARY Following the typical slowdown at the end of the summer, activity in Tampa Bay’s retail market re- turned to a brisk pace during the third quarter. A robust national and Florida economy and positive demographic growth projected for the state drove retail leasing and sales activity. Notably, Publix Supermarkets Inc. emerged as a significant player in Florida’s retail investment mar- ket during 2014. Of the 18 Publix-anchored shopping centers in the Tampa Bay and Southwest Florida markets that sold this year, Publix Supermarkets purchased seven of those, approximately 40%. Because Publix has first-right-of-refusal on acquiring centers where they lease space, other investors interested in Publix-anchored centers have been frustrated with the acquisition process given the possibility that even the top bidder could potentially be out-positioned by Publix. The Tampa Bay retail market posted 165,419 square feet of positive absorption during the second quarter of 2014. Meanwhile, overall vacancy levels fell to 8.0%. MARKET INDICATORS Q3 2014 Q4 2014* VACANCY NET ABSORPTION CONSTRUCTION OVERALL ASKING RATE Q3 2014 | RETAIL OVERALL RETAIL MARKET SUMMARY STATISTICS, Q3 2014 CURRENT VACANCY RATE: 8.0% PREV. QTR. VACANCY RATE: 8.2% YEAR AGO VACANCY RATE: 9.1% NET ABSORPTION: 165,419 sf UNDER CONSTRUCTION: 76,500 sf CURRENT AVG. ASKING RATE: $14.01/NNN PREV. QTR. AVG. ASKING RATE: $13.85/NNN YEAR AGO AVG. ASKING RATE: $13.91/NNN Tampa Bay Florida Relative to prior period. Note: Arrows compare current quarter to the previous quarter historically adjusted figures. All data in this report includes buildings 10,000 square feet and greater. Updated May 2012 *Projected • Publix Supermarkets Inc. made two major purchases in the Tampa Bay area during the third quarter, both in the Interstate 75 submarket. One was 66,500 square foot Terrace Ridge Shopping Center at 5203-5213 E Fowler Ave., sold by Centurion Realty LLC for $14.7 million. The second was 63,340 square foot Cross Creek Commons, located at 10918- 10946 Cross Creek Blvd., which Inland Private Capital Corporation sold for $11,498,312. • In Tampa Bay’s largest retail lease transaction of the third quarter, Crunch Fitness leased 31,855 square feet in the Royal Oaks Shopping Plaza retail center in Valrico. MARKET HIGHLIGHTS HIGHLIGHTED TRENDS 0% 2% 4% 6% 8% 10% 12% 0 50 100 150 200 250 300 Q3 '14 Q2 '14 Q1 '14 Q4 '13 Q3 '13 Vacancy Square Feet (In Thousands) Completions Net Absorption Overall Vacancy
Transcript
COMPLETIONS, ABSORPTION AND VACANCY RATES
RETAIL RESEARCH REPORTTAMPA BAY FLORIDA
www.colliers.com/tampabay
Publix Becomes Significant Player in Investment Sales MarketEXECUTIVE SUMMARY
Following the typical slowdown at the end of the summer, activity in Tampa Bay’s retail market re-turned to a brisk pace during the third quarter. A robust national and Florida economy and positive demographic growth projected for the state drove retail leasing and sales activity.
Notably, Publix Supermarkets Inc. emerged as a significant player in Florida’s retail investment mar-ket during 2014. Of the 18 Publix-anchored shopping centers in the Tampa Bay and Southwest Florida markets that sold this year, Publix Supermarkets purchased seven of those, approximately 40%. Because Publix has first-right-of-refusal on acquiring centers where they lease space, other investors interested in Publix-anchored centers have been frustrated with the acquisition process given the possibility that even the top bidder could potentially be out-positioned by Publix.
The Tampa Bay retail market posted 165,419 square feet of positive absorption during the second quarter of 2014. Meanwhile, overall vacancy levels fell to 8.0%.
MARKET INDICATORS
Q3 2014 Q4 2014*
VACANCY
NET ABSORPTION
CONSTRUCTION
OVERALL ASKING RATE
Q3 2014 | RETAIL
OVERALL RETAIL MARKETSUMMARY STATISTICS, Q3 2014
CURRENT VACANCY RATE: 8.0%
PREV. QTR. VACANCY RATE: 8.2%
YEAR AGO VACANCY RATE: 9.1%
NET ABSORPTION: 165,419 sf
UNDER CONSTRUCTION: 76,500 sf
CURRENT AVG. ASKING RATE: $14.01/NNN
PREV. QTR. AVG. ASKING RATE: $13.85/NNN
YEAR AGO AVG. ASKING RATE: $13.91/NNN
Tampa Bay Florida
Relative to prior period. Note: Arrows compare current
quarter to the previous quarter historically adjusted figures.
All data in this report includes buildings 10,000 square feet
and greater.
Updated May 2012
*Projected
• Publix Supermarkets Inc. made two major purchases in the Tampa Bay area during the third quarter, both in the Interstate 75 submarket. One was 66,500 square foot Terrace Ridge Shopping Center at 5203-5213 E Fowler Ave., sold by Centurion Realty LLC for $14.7 million. The second was 63,340 square foot Cross Creek Commons, located at 10918-
10946 Cross Creek Blvd., which Inland Private Capital Corporation sold for $11,498,312.
• In Tampa Bay’s largest retail lease transaction of the third quarter, Crunch Fitness leased 31,855 square feet in the Royal Oaks Shopping Plaza retail center in Valrico.
MARKET HIGHLIGHTS
HIGHLIGHTED TRENDS
0%
2%
4%
6%
8%
10%
12%
0
50
100
150
200
250
300
Q3 '14Q2 '14Q1 '14Q4 '13Q3 '13
Vaca
ncy
Squa
re F
eet (
In T
hous
ands
)
Completions Net Absorption Overall Vacancy
Rental rates inched upward during the third quarter, especially in submarkets where space was tight. Tampa Bay’s overall retail market reported an average asking rental rate of $14.01 per square foot. The Mid-Pinellas County submarket commanded the region’s highest average asking rental rate, $14.88 per square foot.
Concessions on retail lease transactions in Tampa Bay during the third quarter continued to dwindle. Two months of free rent or less on a five-year lease – outside the term – and an average of $10 per square foot in tenant improvement allowances, depending on tenant credit worthiness, were standard during the quarter.
ACTIVE TENANTS
During the third quarter, the fast-casual and full-service restaurant sectors remained highly active in Tampa Bay. Locations for automotive supply stores, convenience stores/gas stations, pet stores, medical and fitness retailers of all types and sizes were also in demand. Crunch Fitness inked deals for two new locations in South Tampa and Bloomingdale. In the home improvement sector, The Tile Shop signed a 28,900 square foot lease at Clayton Plaza in Brandon. Grocers Whole Foods and Aldi were also active in the Tampa Bay retail market in the third quarter. Walmart is continuing their expansion throughout Tampa Bay, with more than eight new stores under construction, including two Walmart Supercenters and six Walmart Neighborhood Markets.
Several new restaurant concepts entered the Tampa Bay market. 4 Rivers Smokehouse signed a lease in the Carrollwood area; Mexican restaurant bartaco signed a 5,000 square foot lease in Hyde Park Village in Tampa; and Mexican restaurant Besito signed at 7,500 square foot lease in the Westshore Plaza mall, where The Palm was previously located. Tom and Chee, a fast-casual restaurant, was also seeking sites in Tampa Bay.
Activity is so hot in the Tampa Bay market that several local restaurant groups are expanding and introducing new concepts. Tijuana Flats signed leases for two new South Tampa locations, one on Platt Street and another on South Dale Mabry Highway, while actively seeking a third location in the Westshore Business District; Tampa based Ciccio’s Restaurant Group has a new concept, Fresh
Kitchen, that has opened its doors for its first location on South Howard Avenue, and are actively seeking to expand established brands, Ciccio’s Cali and Daily Eats, throughout the Tampa Bay area.
INVESTMENT SALES
The Tampa Bay retail market saw investor demand at an all-time high during the third quarter, with capital and debt still abundant and inexpensive. In fact, 2014 is on track to exceed 2013 in the total number of investment sales transactions, both by square-footage and dollar volume.
Publix-anchored centers continued to be in high demand during the third quarter, commanding cap rates as low as the mid-6% range. Triple-net (NNN) leased retail properties in Tampa Bay also continued to be in high demand, with cap rates on well-located drug store tenants like CVS and Walgreens ranging between 5.75% and 6.25%. Ground leases on the highest quality properties posted cap rates around 5%.
Very few distressed retail assets were on the market in Tampa Bay during the third quarter; however, those that were on the market achieved strong pricing upon sale, which speaks to the strength of the market. Colliers International predicts a strong start to 2015, especially if the Federal Reserve holds rates low.
NEW DEVELOPMENT
Most retail development underway in Tampa Bay during the third quarter was standalone development. World of Beer began construction for a 7,222 square foot building at 2815 E Fowler Avenue in Tampa. In addition, a new 45,000 square foot Mercedes-Benz dealership at the northeast corner of State Road 56 and Interstate 75 in Wesley Chapel, is underway. Meanwhile, construction is ongoing in Largo on two key shopping centers under redevelopment, Tri-City Plaza, a 215,916 square foot retail/storefront community center on East Bay Drive, and Midway Plaza, a 127,198 square foot retail center located on Missouri Avenue. Lakeland Park Center, a new retail development off of US 98 North in Lakeland, opened for business in the third quarter. First to open was Dick’s Sporting Goods, followed by PetSmart, Old Navy, Ulta, Ross Dress for Less, Floor and Décor and many more.
The Tampa Bay MSA unemployment rate posted 6.8% in August 2014, which represents a 0.5% decrease from August 2013. The State of Florida ended the month of August at 6.3%, while the national rate posted 6.1%.
Source: US Bureau of Labor Statistics
UNEMPLOYMENT TRENDS
TRANSACTION UPDATE
SALES ACTIVITY
PROPERTY ADDRESS PROPERTY TYPE BUYER NAME SIZE (SF) SALES PRICE SUBMARKET/CITY
Terrace Ridge Shopping Center Neighborhood Publix Supermarkets, Inc. 66,500 $14,700,000 ($221.05/sf) Northeast Tampa
Cross Creek Commons Neighborhood Publix Supermarkets, Inc. 63,340 $11,498,312 ($181.53/sf) Northeast Tampa
LEASING ACTIVITY
PROPERTY ADDRESS SPACE TYPE TENANT NAME SIZE (SF) LEASE TYPE SUBMARKET/CITY
Royal Oaks Shopping Plaza Anchor Crunch Fitness 31,855 New Interstate 75
Clayton Plaza Anchor The Tile Shop 28,900 New Interstate 75
Strawberry Plaza Anchor Planet Fitness 24,000 New Eastern Outlying
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
Aug-
14
Feb-
14
Aug-
13
Feb-
13
Aug-
12
Feb-
12
Aug-
11
Feb-
11
Aug-
10
Feb-
10
Aug-
09
Florida Tampa MSA USA
LEASING ACTIVITY
Tampa Bay’s retail market saw total vacancy dip to 8%, with a healthy 165,419 square feet absorbed in the third quarter. The Westshore/Northwest Tampa submarket reported the region’s lowest total vacancy, 5.7%, as well as the most absorption, with 61,357 square feet of retail space absorbed.
Overall, Tampa Bay’s retail market was very active during the third quarter. Properties in highest demand included multi-tenant outparcels and single-tenant outparcels, followed by grocery-anchored and non-grocery anchored centers. And while activity in Class A and B properties mirrored that of the previous quarter, activity in Class C retail centers increased at a rate that hasn’t been seen for several quarters.
P. 2 | COLLIERS INTERNATIONAL TAMPA BAY FLORIDA
RESEARCH REPORT | Q3 2014 | RETAIL | COLLIERS INTERNATIONAL TAMPA BAY FLORIDA
UPDATE SUBMARKET COMPARISONS
SUBMARKET BREAKDOWN
Sbmrkt Bldgs. Total Inventory S.F. Direct Vac. % Total Vac.
The information contained herein has been obtained from sources deemed reliable. While every reasonable effort has been made to ensure its accuracy, we cannot guarantee it. No responsibility is assumed for any inaccuracies. Readers are encouraged to consult their professional advisors prior to acting on any of the material contained in this report.
This report includes owner and non-owner occuped space 10,000 square feet and greater. Directional arrows compare current quarter to previous quarter numbers. Arrows show change when there is a 10 cent or more change in lease rate or 0.5 percent or more change in vacancy rate. Due to continual updates and refinements in the historical database, some of the data in this report may not match data published in previous quarters. Sources: Costar Property and Colliers International Tampa Bay Florida.
SUBMARKET MAP
Britney MroczkowskiAssociate, Retail & Land Services
