Sunday, March 21, 2010
There is a lot happening on the real estate scene in the Tampa Bay area. The residential and commercial markets continue to evolve and there is an undercurrent of life just going on. I am going to touch briefly on a list of items that have caught my eye over the past few days.
Commercial real estate shows signs both good and bad. Two large new projects are moving ahead in Clearwater that will replace years-old eyesores with new senior housing, upscale apartments and retail and restaurant space. The Tampa East Industrial Park had one tenant renew their lease for 100,000 square feet of space. But Tampa area hotels saw average daily rates and revenue per room rates drop much more sharply than the state or national rate. I am seeing more empty retail space in Pinelllas county strip malls every time I go out.
Residential single family home sale numbers are strong, mostly on foreclosed properties priced at $125,000 and less being snatched up by first-time home buyers taking advantage of the $8,000 tax credit and the bargain prices. On the down side, Tampa Bay’s average home price continues to drop more quickly than state or national rates and foreclosure rates remain the highest in the nation. More bad news recently came from FEMA, which refused Florida’s request for federal emergency money to deal with high rates of toxic Chinese drywall in all 67 counties.
For investors the low prices and foreclosures make finding good properties easier than it has ever been before. The low prices and foreclosures also mean that profit margins are very thin. But even with depressed rental rates it is not difficult to find properties with good positive cash-flow. The near stand-still in new construction starts means a lot of unemployed construction workers which translates to a discount labor pool for rehab investors. The still dropping prices mean that properties must be turned around quickly or bought at huge discounts, though.
For anyone involved in real estate, adaptability is absolutely necessary. Many of the old game plans no longer work very well and there are opportunities that did not even exist a few years ago.