Industrial Appetite Zeros In On Tampa Market

TAMPA, FL—Many investors who used to focus on more than one industry are progressively zeroing in on the industrial market, choosing to increase their position in industrial real estate or even commit to it exclusively. Driving these new players in the market is the strong long-term outlook for an unrelenting e-commerce shift in the supply chain.

John Dunphy, EVP at JLL believes the industrial real estate market has significantly changed over the years—and will likely continue to do so rapidly. The global e-commerce logistics market is expected to register a compound annual growth rate of more than 20% from 2016-2022. With demand for industrial real estate showing no signs of abating soon, more investors than ever are eyeing direct-to-consumer businesses and those related to it for long-term investments.

In Tampa specifically, this has resulted in development being hyper focused around Florida’s major East-West I-4 corridor. The location empowers companies’ regional distribution by granting access to 20 million people within a 5-hour drive time and also by providing last-mile delivery opportunity for Tampa and Orlando, both of which are accessible within an hour.

GlobeSt.com sat down with Dunphy to hear more about these trends. This is what he had to say.

Will new-to-industrial investors help increase the flexibility of deal structures?

The gamut of mouths looking to take a bite out of the market will likely fuel a competition for space and introduce a plurality of investing goals to the market. For example, new investors may drive more or less interest in long- or short-term returns. This enhanced investor diversity—in both aims and business practices—may make it harder for any one group to dominate. In order to capture a deal, players may need to be a lot more flexible in how they do it. Sure, the prevailing Blackstone and Prologis types are expected to remain powerhouses, but will they be able to as assertively dictate deal terms? We’ll have to wait and see.

Is the escalating interest in Tampa’s industrial market likely to continue to drive new product development?

From Polk County to Pinellas County, more people than ever are looking to build in Tampa, as evidenced by the tremendous amount of spec development going on today. Currently, over 5 million square feet of industrial space is under construction along the I-4 corridor. This figure represents 12 unique developers who are working on projects ranging from 100,000 to 1 million square feet. But unlike in previous years, fewer developers are repeat players. In order to maximize opportunities and help guard against a downturn, new entrants should partner with expert real estate advisors who have experienced both good and bad market cycles.

With more investors on the hunt for deals, will more targets shift to the urban core?

Whether it’s by tearing down parts of a building to create more parking spaces, raising roofs, or converting metal construction to block, companies are increasingly rehabbing buildings in the urban core. And if as projected Tampa’s urban population (and people’s online buying habits) continue to increase, so too would demand for downtown spaces that service last-mile deliveries. With that, more investors are likely to continue eyeing the city, making it increasingly important to monitor how increased interest in the core will affect Tampa’s market.