What could be in store as new industrial investors home in on Tampa?
From more flexible deals structures to new product development, we see change on the horizon
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.
The global e-commerce logistics market is expected to register a compound annual growth rate of more than 20 percent from 2016-2022 (Allied Market Research, 2019). 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, 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. But how will this new investor interest affect Tampa’s industrial market?
New-to-industrial investors may 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.
Escalating interest in Tampa’s industrial market is likely to continue driving 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.