Tampa: A Must-Have for Real Estate Portfolios

Steve Patterson of Related Development reveals to MHN all the reasons why the metro is a winning bet. The CEO touches on the current multifamily landscape and also shares his predictions about how the real estate market here is going to evolve.
Steve Patterson, president & CEO, Related Development
Steve Patterson, president & CEO, Related Development

Tampa is one of the top-performing metros in Florida. Fueled by high population and job growth, its multifamily market is constantly creating demand for new development. Multi-Housing News talked with Steve Patterson, president & CEO of Related Development—The Related Group’s rental and mixed-use division—about the challenges and opportunities that Tampa’s multifamily market provides to developers and investors. Additionally, Patterson unveiled where the market is heading and the reason why it might be a good long-term bet.

How would you describe Tampa’s current landscape for multifamily development?

Patterson: Tampa’s job growth continues to drive demand in line with new supply. That said, as Tampa and the nation approaches full employment, the job growth rate will continue to decline, while new apartment starts are forecasted to increase a bit. Our industry will have to look at the growing Millennial renter cohort to fill in for reduced job-growth-driven demand. These Millennials will be more price conscious than their Baby Boomer parents that fueled demand earlier in this cycle.

What are the main opportunities and challenges in Tampa’s multifamily market now?

Patterson: Tampa is one of the top 25 metros in the country in terms of economic output and second to Miami in Florida. That makes Tampa a must have for institutional real estate portfolios and for our platform as well. Rising construction costs and moderating rent growth will make new development more difficult to underwrite. Hopefully, this slow production will keep the new supply in check with demand.

Tell us more about your recent developments in the metro.  

Patterson: Our focus is now towards lower density, more affordable apartments and less on infill high-rise projects. Our Manor Riverwalk on the Hillsborough River west of downtown and Town Westshore fronting Tampa Bay, which have both just begun preleasing, will offer luxury alternatives that are a bit more affordable than our Icon Harbour Island, which is positioned at the top of the luxury segment.

What sets Tampa Bay’s multifamily market apart from other markets your company has a presence in?

Patterson: Quality of life factors, affordability and a diverse economy will continue to make Tampa a stable environment for real estate investment. In addition to these assets, we find Tampa to be a business-friendly environment and one in which we are happy to help create new jobs and apartment homes at all price points.

We are approaching the end of 2018. What are the trends that you have seen in Tampa’s multifamily market this year?

Patterson: We continue to see high occupancy levels and rent growth above the national average in Tampa. Jeff Vinik’s Water Street project will add a new product to the downtown submarket, but at a reasonable pace. Long term, this exciting development will create new energy in the downtown neighborhood and should be a win for residential rentals in the immediate area.

How do you see multifamily demand in Tampa going forward?

Patterson: We will continue to have economic cycles in Tampa just as we always have, but demographic trends will bring new demand through the downturn when it occurs. We see no indicators of a near-term downturn and believe it will be mild when it occurs. We believe Tampa to be a good long-term bet.

Image courtesy of The Related Group