Naiop tampa bay 2010 broker update final cut

NAIOP Tampa Bay 2010 Broker Update

WelcomeNAIOP Chairman, Larry Pobuda

Thank you to our Silver Sponsors

Thank you to our Bronze Sponsors

Workplace Resource Bricklemyer Smolker & Bolves, P.A. WilsonMiller The Sembler Company Masters Construction Trenam Kemker


Bishop & Associates Eshenbaugh Land Company Ross Realty Group, Inc. McNamara & Carver, P.A. Cherry Bekaert & Holland, L.L.P.

Land

Bill EshenbaughEshenbaugh Land

Company

LandLand• By Bill Eshenbaugh ALC, CCIM

“The Dirt Dog”

• Eshenbaugh Land Company• [email protected] • www.TheDirtDog.com

mailto:[email protected]

http://www.thedirtdog.com/

Short Sweet VersionShort Sweet Version

• DEMAND:– Residential Finished Homesites Good

Location– Entitled Residential Land in Great Location– Occasional User Site for Retail

Little or No DemandLittle or No Demand• Hotel Sites (Thanks BP)• Industrial Land (years of Inventory to lease

and absorb first)• Office Land (changing fundamentals)• Apartment Land

– Market Rate has no financing– Tax Credits-no money, balance budgets– Bonds-15% unemployment make it tough

Back to The FutureBack to The Future• Pricing of the late 1990s to 2002 prevail• National Scene- Florida more likely to

recover than Detroit• Florida Scene-Tampa more likely to recover

than Cape Coral, Orlando• Tampa Scene-Impact fees, ‘05 real estate

taxes, 12-15% unemployment, CNN “Oil Fear” make it tough locally

What’s HotWhat’s Hot

• “Righteous” Pricing• Bank and Lender OREO• Cash Rules• Patience Required

Industrial

Mike DavisCushman & Wakefield

Mike DavisExecutive Director

Cushman & Wakefield of Florida Inc.

Investment Sales & Industrial Brokerage

National Industrial OverviewMid-Year 2010

ECONOMY Industrial demand had begun improving

U.S. exports up 17.7% from 2009

Manufacturing sector activity expanded through mid-year

Source: Cushman & Wakefield Research


OVERVIEW Vacancy rate declined for the first time in eleven

quarters to 10.6%

Leasing transactions up 25.6%

User sales up 100%

Development activity remained virtually non-existent. Most completions for build-to-suit



FORECAST Economic industrial indices are expected to

continue to post moderate growth throughout the remainder of the year

US industrial real estate is showing signs of a recovery phase of the economic cycle

However → risk factors remain Weak job growth

Uncertain governmental regulatory & tax environment

International factors

Recovery is regionalized


Market Equilibrium

Acce

lera

ting

Slow Growth

Weakening

Reco

verin

g

Atlanta, Baltimore, Boston, Chicago, Contra Costa, Dallas, Hartford, Houston, Jacksonville, LA- Central, LA- North, LA- South, Long Island, Minneapolis, New Jersey- Central and Northern, Northern Virginia, Oakland, Orange County, Orlando, Portland, SF Peninsula, Silicon Valley, St. Petersburg/Clearwater, Suburban Maryland, Tampa

Denver, Ft. Lauderdale, Inland Empire, Lakeland, Miami, PA I-81/I-78 Corridor, Palm Beach, Philadelphia, Phoenix, San Diego

Warehouse/Distribution Industrial Cycle


Florida Statewide Industrial Overall Absorption 2003 – YTD 2010

Tampa Pinellas Lakeland Orlando Central Florida Miami Broward Palm Bch Florida Total2003 1,225,758 326,829 859,826 1,434,636 3,847,049 704,873 1,142,020 178,464 5,872,4062004 890,655 529,175 705,781 3,523,179 5,648,790 502,039 2,750,633 803,699 9,705,1612005 2,579,600 507,398 1,041,578 1,970,213 6,098,789 1,483,114 2,814,628 1,521,506 11,918,0372006 1,606,686 906,294 1,138,806 2,851,682 6,503,468 1,635,540 2,393,393 916,057 11,448,4582007 1,029,547 630,350 1,398,975 356,654 3,415,526 (2,581,180) (1,259,809) 831,565 406,1022008 (1,772,598) (729,758) 170,278 (1,083,333) (3,415,411) (3,808,260) (1,333,162) (390,295) (8,947,128)2009 (435,368) (1,174,720) 50,752 (1,776,007) (3,335,343) (3,937,977) (3,336,504) (1,614,137) (12,223,961)YTD 2010 (75,802) (384,701) 456,175 (438,199) (442,527) 1,151,543 743,172 313,479 1,765,667


Florida Statewide Industrial Sales Activity 2003 - YTD 2010

Tampa Pinellas Lakeland Orlando Central Florida Miami Broward Palm Bch. Florida Total2003 4,387,395 2,370,993 1,057,079 3,814,754 11,630,221 9,379,087 4,159,205 1,372,320 26,540,8332004 5,043,013 2,343,295 1,046,083 4,017,565 12,449,956 9,939,041 3,272,403 1,422,766 27,084,1662005 7,498,370 3,091,870 846,651 6,469,880 17,906,771 7,935,573 4,973,666 3,640,864 34,456,8742006 3,037,982 3,444,282 522,375 5,115,521 12,120,160 9,167,225 6,816,571 3,210,331 31,314,2872007 4,072,112 2,401,107 847,854 5,990,832 13,311,905 6,712,630 5,124,277 1,813,167 26,961,9792008 3,125,442 1,152,757 102,851 2,468,123 6,849,173 4,328,861 2,497,631 1,248,651 14,924,3162009 747,127 268,677 159,406 2,565,609 3,740,819 2,299,826 986,088 222,220 7,248,953YTD 2010 1,747,785 514,711 22,278 489,597 2,774,371 1,615,697 1,618,127 356,786 6,364,981


Central Florida Industrial Average Rents & Vacancy2003 - YTD 2010

Tampa Rent

Pinellas Rent

Lakeland Rent

Orlando Rent

Central Florida

RentTampa

VacancyPinellas Vacancy

Lakeland Vacancy

Orlando Vacancy

Central Florida

Vacancy2003 $4.52 $5.76 $3.45 $5.32 $4.99 8.3% 6.8% 7.9% 11.6% 9.2%

2004 $4.68 $6.13 $3.79 $5.87 $5.39 7.5% 5.8% 5.5% 9.7% 7.8%

2005 $5.60 $6.44 $4.67 $6.72 $6.23 4.8% 4.9% 3.4% 7.3% 5.7%

2006 $7.08 $7.08 $4.85 $7.81 $7.17 3.9% 3.9% 5.9% 6.0% 4.9%

2007 $7.58 $6.97 $5.42 $7.58 $7.30 4.0% 4.0% 4.7% 7.9% 5.6%

2008 $6.74 $6.88 $5.52 $7.59 $7.12 7.7% 5.3% 5.3% 10.9% 8.3%

2009 $5.59 $6.22 $4.35 $6.03 $5.82 9.2% 7.3% 7.3% 13.9% 10.5%Q2-2010 $5.46 $5.74 $4.18 $5.76 $5.29 9.2% 8.3% 5.7% 14.6% 9.5%


Florida Industrial Investment Sales

Investment Sales Activity Up 32.3%

Core industrial → torrid demand

Palmetto Distribution Center 27 offers

$68 million – 5.9% cap!

Several more pending

Value add pricing still cautious


Investments

Bryn MerreyMarcus & Millichap

22

0

250

500

750

1,000

00 02 04 06 08 1H10Ann.

Apartment Industrial Office Retail

Tota

l Tra

nsac

tions

(000

s)

U.S. Sales $1 million and aboveSources: Marcus & Millichap Research Services, CoStar Group, Inc., Real Capital Analytics

1H 2010 Annualized

$0

$2

$4

$6

$8

00 02 04 06 08 1H10Ann.

Apartment Industrial Office Retail

Tota

l Dol

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olum

e (B

il.)

Total Dollar VolumeTotal Transactions

1H 2010 Annualized

Commercial Real Estate Sales TrendsTampa-St. Petersburg

23

Distress Scaled to Activity

$0

$10

$20

$30

$40

$50

Miami

Jack

sonv

ille

Palm B

each

Fort La

uderd

ale

Orland

o

Tampa

Atlanta

Nashv

ille0%

5%

10%

15%

20%

25%Distress Volume Scaled Distress

Dis

tres

s Vo

lum

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illio

ns)

Scaled Distress as %

of Market*

* Distress volume as of July 21, 2010 as a % of total sales volume 2005-2008Includes apartment, office, retail, industrial, and hotel properties (excluding casinos)Sources: Marcus & Millichap Research Services, Real Capital Analytics

24

Tampa Cap Rate Trends

2%

4%

6%

8%

10%

12%

Apartment Office Retail Industrial

2000-2008 2009 1H10

Includes Sales $1M+Sources: Marcus & Millichap Research Services, CoStar Group, Inc.

Ave

rage

Cap

Rat

e

Retail (Landlord)

Greg SemblerThe Sembler Company

The National Retail Perspective

NOT GOOD!

The State Retail Perspective

The Tampa Bay Retail Perspective

Even Worse!

Don’t Ask!

THE U.S. RETAIL SUMMARY

WHY TENANTS ARE NOT TAKING ADVANTAGE OF CURRENT MARKET

CONDITIONS

THE TAMPA BAY RETAIL SUMMARY

Existing InventoryTotal GLA

VacancyTotal SF

YTDNet

Absorption

Under Construction

QuotedRental Rates

210,956,000 16,351,000 (7.8%)

(512,190) 318,543 $14.50 SF

Healthiest retail submarkets: Northeast and Northwest Tampa

TRENDS

Tight lending will keep a check on speculative development An oversupply of retail space will slow speculative development Note sales of distressed properties by commercial banks

LANDLORD MOVES TO SURVIVE

Managing bank relationships and capital issuesManaging co-tenancy issues

Leasing as much space as possible – Co-tenancy!

Sources: Marcus & Millichap Research Services, Realpoint

WHAT WE NEED TO RECOVER IN RETAIL

Jobs

Jobs increase consumer confidence

A confident consumer buys retail stuff

Retail (Tenant)

David ConnCB Richard Ellis

RETAILER OVERVIEW

David ConnCB Richard Ellis

When Does Recovery Turn Into Expansion?

Source: CBRE EA Summer 2010 Outlook

Sum of 55 Retail Markets

RECO

VERY

EXPANSION

No Rent Expansion Until 2016

Sources: CBRE Econometric Advisors

United States | Retail | Market Trends: ForecastBaselineFall 2010

Outlookdata as of 2Q-2010

Rent Expansion2019

US Retail Store Openings (Closures 2008-2010)

July 2010 Comparable Stores Sales Report

Tampa Bay Big Box Deals

FAMILY DOLLAR

DOLLAR GENERAL

DOLLAR TREE

hh gregg

ALDI

Office (Tenant)

Cheri O’NeilStudley

Client logo inserted within this area on title master

NAIOP Broker UpdateNAIOP Broker UpdateOffice Market:Office Market:Tenant Representation PerspectiveTenant Representation PerspectiveSeptember 2010September 2010

Cheri O’NeilSenior Vice PresidentBranch ManagerStudley, Inc.

September 2010

NAIOP Broker Update

September 2010

Office Market: Tenant Representation Perspective49

Availability Rates Availability Rates Major Market ComparisonMajor Market Comparison

• NYC and Washington, DC have the lowest availability and are already pushing rental rates.

• Tampa Bay availability increased the most over the past year.

Tampa Bay

Tampa Bay

September 2010

NAIOP Broker Update

September 2010


Rental Rates (2Q 2009 vs. 2Q 2010)Rental Rates (2Q 2009 vs. 2Q 2010)Major Market ComparisonMajor Market Comparison

• US Average Asking Rents - $28.42, down 7.6% from a year ago; • Tampa Bay continues to be one of the least expensive;• The highest priced markets saw the greatest decline.

Tampa Bay

Tampa Bay

September 2010

NAIOP Broker Update

September 2010


Office Employment (Losses vs. Gains)Office Employment (Losses vs. Gains)Major Market ComparisonMajor Market Comparison

• As of June 2010, 8.3% of US jobs lost during the recession have been recovered;

• 7.3% of Tampa Bay jobs lost have been recovered.

Tampa Bay

September 2010

NAIOP Broker Update

September 2010


Emerging ConfidenceEmerging Confidence Is Tampa Bay on the Rebound? Is Tampa Bay on the Rebound?

• Florida added 21,000 residents in 2009;

• Bottom of the market? Increased activity levels, National exposure;

• Longer term commitments will create Real Estate Industry jobs.

September 2010

NAIOP Broker Update

September 2010


Advising Our ClientsAdvising Our ClientsSecuring the Tenant’s InterestSecuring the Tenant’s Interest

• “Zombie” buildings can cause a false sense of availability;

• Distressed Property concerns – Timelines, TI’s & Commissions, Building Services, etc.

September 2010

NAIOP Broker Update

September 2010


Today’s ViewToday’s ViewBalancing Concerns & ConcessionsBalancing Concerns & Concessions

• Understanding the Debt;

• Structuring the Deal, Creating the “Win-Win”;

• Tampa Bay Office Market … positioned for recovery!Tampa Bay Office Market … positioned for recovery!

Office (Landlord)

Kyle BurdEola Capital

Kyle BurdPrincipal|Regional Vice President

Eola Capital

NAIOP PresentationSeptember 8, 2010

Tampa Office Vacancy

21.4%

Westshore Availabilities

SF Spaces Bldgs.0-5K 512 1465-10K 201 7810-20K 117 5420-50K 65 2550-100K 22 5

Making Deals – What Works?

Managing Expectations

Making Deals – What Doesn’t Work?

Over Selling

Market Influences

•Tenant Credit

•Ownership – Capital – Structure

•Debt – Loan Situation

Thank you to our Silver Sponsors


Workplace Resource Bricklemyer Smolker & Bolves, P.A. WilsonMiller The Sembler Company Masters Construction Trenam Kemker


Bishop & Associates Eshenbaugh Land Company Ross Realty Group, Inc. McNamara & Carver, P.A. Cherry Bekaert & Holland, L.L.P.

Broker Update Committee

Stevens Tombrink & Julia Rettig Duane Milford Chase Collier Jennifer Neal Guest Panelists Dallas Whitaker Pat Kelly Mark Wanich

Amendment 4

Broker Update Date PowerPoint

This presentation will be available on-line on Thursday, September 9, 2010.

www.naioptb.org go to the links & resources tab.

http://www.naioptb.org/