The 2010 surge in demand for apartments, seen virtually throughout the nation, rescued the Tampa Bay area market from the recession-driven double-digit spike in vacancy the year before. Since 2010’s burst, demand has cooled somewhat but has remained strong, vacancy has continued to decline and rent growth, if uneven overall, has run positive. The latest phase in the market’s recovery has been the return of construction. Following no market-rate completions throughout 2011, 682 units delivered during the first half of 2012. These were roughly doubled by the period’s 1,123 units of net absorption. (Not included in the completion calculation was the 192-unit Camden Montague property that delivered in the Westshore submarket.) As of early September, meanwhile, 2,036 market-rate apartments were under construction metro wide in a half dozen large projects, two of which, with a combined total of 744, are scheduled to deliver by the end of the year. The largest of the current endeavors, due on line in November, is Colonial Properties’ 486-unit Colonial Grand at Hampton Preserve at Bruce B. Downs Boulevard and County Line Road in north Tampa. Construction began in December 2010. Recent starts, meanwhile, include the May 2012 groundbreaking of the 240-unit Elon Gatewater in St. Petersburg. The 344-unit second phase of Crescent Resources’ Circle at Crosstown started in April and will complete in October 2013. And construction of the 360-unit Channelside Apartments began in February.
Second quarter vacancy was 5.9%, same as a quarter earlier, down 100 basis points since the second quarter of 2011 and a return to the pre-recession range. Sixty-six units of positive net absorption in July accompanied by no new supply shaved 10 additional points from the rate. A slowdown in rent growth in 2011 has been followed by the return of higher rates of increase to date in 2012. At $860 and $818 per month, second quarter asking and effective averages were up 1.2% and 1.4% from the quarter before and were up 1.4% and 2.1% since year-end. Gains of 0.2% and 0.3% followed in July.
Reis expects net absorption to remain formidable during the remainder of the year; it should exceed the year’s portion of new supply by about a thousand units. Vacancy should end the year at 5.5%. Gains of 3.2% and 4.2% are projected for the mean asking and effective rents for the year. The market should continue to tighten next year.