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Riverwalk Spurs Development of Downtown Tampa Apartments

Public Investment Helps Create Destination for Millennials

By Louis Rosenthal | Friday, July 7, 2017

 

An apartment construction boom along the recently developed Tampa Riverwalk is raising long-term expectations for the viability of downtown Tampa apartments as a haven for millennial renters, even as the burst of apartment-building activity presages a more competitive leasing environment.

The vast majority of new apartment developments within Tampa’s urban core are centered on the Riverwalk, a long-gestating public investment in a walkable district that ties together employment opportunities, restaurants, residences and arts and recreation. According to Axiometrics’ projections, the Central Tampa submarket’s inventory will grow by 12.5% in 2017, which represents nearly 2,800 new units — the largest single batch of new supply in the submarket since at least 1997, according to Axiometrics apartment market research.

 

City leaders anticipate that the redeveloped Riverwalk will attract college-educated young adults who work in Tampa’s expanding professional and scientific workforce — anchored by the University of South Florida and the MacDill Air Force Base — which is growing at a faster pace than most other employment categories.

However, despite the strength of apartment demand, the bulk of new supply delivering in downtown Tampa has cannibalized rent growth. In May, rents in the downtown area grew by only 0.1% -- a sharp decline from the 5.3% rent growth posted in December 2016. Meanwhile, suburban rent growth has stabilized at around 2.5%.

Central Tampa’s fortunes are tied not only to the Riverwalk, but also to larger supply and demand factors that govern apartment performance at the metro and national levels. Nationally, the Tampa apartment market (including the urban core) is growing at about the same pace as the national average as of May 2017, following a prolonged period of outperforming the nation.

Across the most populous metro areas in Florida, Tampa apartments are growing at nearly the same pace as Miami—but both are dwarfed by the performance of Orlando apartments, which are growing at around 4.8%.

But this is not surprising considering that from 2010- 2015, Orlando’s prime renter age group (ages 20-34) grew by almost 12% -- but Tampa’s grew by just 9%. And this is precisely the impetus behind the redevelopment of the Tampa Riverwalk: How can the city help an area compete with other submarkets and metros in attracting young, urban-minded renters?

To that end, public-private partnerships are charting a new course for downtown Tampa, with an astonishing scheme to spend $3 billion on building three million square feet of apartments, more than two million square feet of office space and over a million square feet of retail.

In short, the importance of the Tampa Riverwalk is not so much in its economic growth potential as it is in its potential for economic development: providing the initial public investments to spur private investments, in turn creating a positive feedback loop that attracts more residents and more investment dollars.

This is important for urban core apartment markets that must compete with suburban areas and other metros in attracting the “right” sort of renter: skilled professionals with money to spend.

 

 

 

Louis Rosenthal

Louis Rosenthal

Real Estate Analyst

Louis Rosenthal researches and analyzes current apartment trends in the United States and correlates them with economic indicators. He also studies the urban landscape and other metrics to develop in-depth reports and presentations for clients. Louis recently earned his Master of Science in Public Policy, focusing on housing, landuse patterns, real-estate dynamics and economic development. He combines that knowledge with his four years of practical experience in tax analysis, regression analysis and presentations to develop insightful analysis. An accomplished writer, Louis’ work has appeared on Forbes.com and Axiometrics’ blogs, among others.

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