REAL ESTATE NEWS

Tampa's multifamily market is seeing elevated vacancy levels due to high supply despite surging demand, according to the latest report from Boutique National.

In the second quarter, vacancy shot up by more than 200 basis points versus the same period in the year before, the report highlighted. That caused the level to surpass 10 percent for the first time in 15 years.

Demand is far from an issue in Tampa, as about 3,700 units were absorbed. That represents a 25 percent boost from the first six months of 2023 and a 200 percent surge from the second half of last year.

Meanwhile, construction completions hit 7,400 units, marking a record for Tampa. Pasco County, which held the city's highest vacancy rate (20 percent), received 4,600 deliveries while absorbing roughly 1,900 units.

"The consistent influx of new supply has been more than the market can handle despite the market recording positive absorption for seven consecutive quarter," Boutique said.

Overall, asking rents were down 1.3 percent year-over-year.

And fundamentals, in at least the short-term, aren't expected to get much better. Boutique said that the roughly 11,000 projected construction completions are expected to set a new all-time high, which would cause the vacancy rate to "remain well above" the half-decade average of 6.9 percent over the next several years.

"A prolonged period of elevated vacancy will likely make it difficult for landlords to push rates, even at pre-pandemic levels. Rent growth should return to positive territory by 2025 but to half the ten-year average annual growth rate of 5.0%," Boutique said.

Additionally, in the high interest rate world, finding capital has been presented a challenge for CRE firms. That's led to fewer developments breaking the ground.

Source: GlobeSt/ALM