Tampa, FL Industrial Market Report
Market Overview
Tampa’s industrial market grew rapidly over the past few years, with high leasing activity, net absorption rates, and rent growth. Its advantageous location on the Interstate 4 corridor connecting Tampa to Lakeland and Orlando significantly contributes to the area’s growth. Despite delivering approximately 6.4 million square feet of new industrial space over the past 12 months, logistics tenants still demand more modern and efficient space. As a result, the vacancy rate has remained low. Investment sales activity has also been high, with 520 industrial properties trading hands for $1.5 billion in transaction volume over the last year. Lastly, pricing has risen; the average price per square foot for industrial trades is up about 30 percent since the beginning of the pandemic.
Highlights
- In the last year, roughly 6.4 million square feet of new industrial space has been completed, and there is currently 3.6 million square feet of new industrial space underway, which makes up about 1.7% of the total inventory in the market.
- Tampa’s industrial market currently has a vacancy rate of 3.9%, which is higher than other major markets in Florida, but is similar to the national benchmark rate of 4.4%.
- Leasing activity in Tampa is consistently increasing, and several agreements have been signed over the past 12 months for spaces larger than 100,000 square feet.
- On a triple-net basis, the average asking rent for industrial properties is $10.95 per square foot.
Rents | Vacancy | Construction
Tampa’s industrial rents have an annual growth rate of 12.3 percent due to the rising demand for distribution space. Despite the new supply causing a brief cooling in rent growth, the market has had no trouble absorbing speculative supply over the past three years. Landlords have the upper hand in negotiations, and rent growth is projected to stay in the range of nine to 11 percent through the end of 2023. The industrial vacancy rate in Tampa has decreased to 3.9 percent in Q1 2023, comparable to the neighboring Lakeland market’s vacancy rate of 4.6 percent. Despite the addition of new industrial space, the vacancy rate is projected to remain low due to the sector’s overall robust fundamentals.
As a result of strong demand and low vacancies in the industrial sector, construction starts have increased in Tampa. Since the beginning of 2021, almost 11 million square feet in new projects have been recorded, with around 3.4 million square feet in Q1 2022 alone. Currently, there are 3.6 million square feet underway in Tampa, consisting primarily of speculative construction, and approximately 60 percent is already preleased. The biggest project is a 1.2 million square foot bulk distribution center in Plant City’s County Line Farms industrial park, developed by Aspyre Properties, which began construction in January 2022 and was fully leased to Lowe’s Companies, Inc. at around the same time.
Tampa’s industrial rent growth remained constant throughout the height of the pandemic-related uncertainties and is expected to remain resilient throughout 2023.
Sales
Investors are actively seeking well-located distribution properties in Tampa, leading to high transaction volumes and rising prices. In 2022, Q4 saw the second-highest quarterly performance on record, with over $550 million traded. While finding opportunities in strong infill areas is challenging, investors are still searching the market for deals. One significant transaction was the $103 million acquisition of the 402,156-square-foot Home Depot distribution center in SE Hillsborough in May 2022. Another notable sale was the 112,000-square-foot Tampa Regional Industrial Park distribution facility to AGS Properties Corp. for $55.6 million in March 2022. The newly constructed Class-A last-mile delivery facility is fully leased to Amazon.
Tampa by the Numbers
- SF Under Construction: 3.6 Million
- Average Vacancy Rate: 3.9%
- 12-Month Rent Growth: 12.3%
- Sales Volume: $1.5 Billion
- Average Asking Rent Per SF: $10.95
