Office | Retail | Industrial | Apartments
Office construction in the Sarasota-Bradenton MSA has been relatively stable since 1998, and current market conditions will hold construction activity down over the next year. Approximately 700,000 square feet of new office space came online over the last year, up from 600,000 square feet the previous year. Starts have averaged between 600,000 square feet and 800,000 square feet annually over the past five years, but the local market will experience a decline from that pace in 2004. However, the area’s demographics are strong and figure to remain that way over the long term, which may lead to more office development as the region’s employment base continues to advance southward from Tampa along the I-75 corridor.
Retail development in the Sarasota-Bradenton MSA has been relatively constrained for a number of years and new construction has been largely dominated by the activities of such big box retailers as Wal-Mart, Best Buy, and Lowe's, as well as the Walgreen's and Eckerd who, like Wal-Mart, continue to migrate from in-line to free-standing facilities. While this migration, together with the closing of such chains as Luria's, Montgomery Ward, and Service Merchandise, opened up considerable community center space, virtually all of it has been snapped up by locally-based Beall's department stores and such new entries to the market as, Ross Dress For Less, Chuck E. Cheese, and Burlington Coat Factory.
The preceding not withstanding, new anchored shopping centers are being built and several others are planned, especially in the rapidly expanding area east of I-75 in Manatee County.
New industrial development is once more constrained and largely confined to owner-occupied facilities. Most of the newer industrial development is concentrated in south Manatee County where taxes and impact fees are lower. This area also has good accessibility to Sarasota - Bradenton International Airport and Interstate 75.
Another area that has seen significant activity lies near the I-75/I-275 interchange in northern Manatee County, which has excellent accessibility to Pinellas and Hillsborough Counties to the north, as well as nearby Port Manatee.
Apartment construction has been relatively stable in Manatee and Sarasota Counties since 1998, ranging between 1,500 units and 2,400 units per year. While the 1,600 units scheduled to come online over the next 12 months is once again at the low end of the area's typical output, the region's strong and improving demographics have led to increased activity in the construction pipeline. Various projects are in the planning stages, and although a fair amount of the activity will be geared toward condominium and townhouse development, apartment construction is forecast to accelerate in 2004 and beyond.
The average vacancy rate in the Sarasota-Bradenton MSA will remain the highest in the Tampa Bay region over the next year, at 10.8 percent. The area's strengthening demographics have led to steady apartment construction over the past few years, which has caused vacancies to rise, particularly in Sarasota. Absorption figures will be steady, however, and the market has begun to stabilize. With continued population and job growth, the area is set to experience a drop in vacancy to single digits in the near future.
Rents will average modest increases of 1 percent over the next year, as construction has been relatively stable but strong over the past few years, leading to the highest average vacancy rates in the Tampa Bay region. Solid growth over the long term is projected, however, due to strong demographics and a continued attraction to the area. Sarasota has the highest rents in the area, at $815 per month, averaging more than $100 more per month than Manatee County where rents softened by more than 4 percent over the last year as new properties continued to come online.
Steady construction levels will lead to higher vacancy rates and slower rent growth over the next year, but prices will rise as buyers compete for properties in order to position themselves for the coming rebound. Population and job growth have been extremely strong in the area and that trend is forecast to continue over the long term. While new construction has softened the market somewhat, the region's potential will contribute to increased investor interest in the area's apartment properties. That said however, the majority of the residents in Florida, particularly those in smaller markets, choose homeownership over renting, and that fact has put a strain on vacancy given the recent strong construction levels. Wide fluctuations in apartment vacancy have been experienced in the region, as new developments have a greater effect on the market due to its smaller size.
Market Snapshots
