Tampa, FL Retail Market Report
Market Overview
Over the past decade, Tampa has had solid population gains, wage growth, and steady consumer spending, resulting in consistently strong retail demand. Over the past 12 months, there have been 1.7 million square feet of net absorption. Development activity is high, ranking among the top markets in the country for total new retail space delivered over the last four quarters. There are roughly 990,000 square feet under construction in Tampa.
Highlights
- Furniture, home goods, discount department stores, and fitness tenants continue to make up most of the leasing demand in Tampa.
- Rents in Tampa are up 8.3 percent year-over-year to $24.02 per square foot. A majority of the growth occurred during Q3 2022.
- The 12-month sales volume of $1.4 billion is well above the historical average of $967.8 million despite economic headwinds of rising interest rates.
Rents | Vacancy | Construction
Tampa is featured on the list of top U.S. markets and overall leasing fundamentals have strengthened, which has resulted in high rent growth. Average asking rents as of Q1 2023 are up more than 15 percent since the beginning of the pandemic at $24.02 per square foot. The pace of rent growth is double the national average at 8.3 percent. In recent months, there has been a notable drop in construction, however, Tampa’s construction pipeline remains active. There is a total of 1.7 million square feet of net absorption over the past year. This fast pace of development landed Tampa on the list of the top 10 U.S. markets for new retail space delivered during 2022. The highest average vacancy rates are malls at 7.1 percent and the lowest average vacancy rates are general retail at 1.8 percent. The vacancy rate in Tampa is 3.1 percent and is forecasted to remain on an upward steady trend through 2026.
Sales
Retail investment activity in Tampa over the last year has totaled about $1.4 billion in total transaction volume. This was mainly driven by 2022 Q1 when nearly $600 million in retail properties traded hands. Retail investors continue to seek higher yields, which leads them to target deals in secondary markets like Tampa. In addition, single-tenant net leased assets have been a popular investment because of the stability they bring through the uncertain market. The average cap rate sits at 5.8 percent and is forecasted to remain steady through 2026.
Tampa by the numbers
- Units Under Construction: 999,000
- Net Absorption (12-month): 1.7M SF
- Vacancy Rate % Change YOY: 3.1%
- Asking Rent Growth (YOY): 8.3%
- Average Price Per Square Foot: $257
- Sales Comparables 12-Month: 788
