Apartment, office deals in near equilibrium

Apartments edged every other commercial real estate sector along the Gulf Coast in 2019 in the largest deals of 2019, the fourth consecutive year that multifamily rental properties dominated the list of the top 15 transactions from Polk to Collier counties.

But unlike the previous two years, a handful of major office property sales brought equilibrium to the region’s sectors, at least in terms of large outlays of capital.

In all, six apartment complexes traded hands in the Top Deals of 2019, while five office sales made the overall list. Combined, the multifamily rental deals generated $475.4 million for sellers; office properties — several in the form of multi-property portfolio deals — cost buyers a collective $549.25 million, by comparison.

The apartment sales were spread both throughout the three submarkets and reflected both investor interest in urban and suburban properties. In the Tampa Bay area, the downtown Icon Harbour Island sale set a record price per unit, while in Southwest Florida, the Gulfstream Isles trade — its second sale in three years — topped the largest sales there. In Sarasota/Manatee, the 10-story DeSota Apartments transaction also established a new high watermark for sales in the submarket.

The office deals, by contrast, were clustered in and around Tampa, not surprisingly, with Baypoint Plaza on Rocky Point, a five-building portfolio led by WeWork Place in downtown Tampa and Crosstown Center, in Brandon, dominating that submarket.

Elsewhere, the four-building Gateway Professional Centre in Sarasota and Gartner Inc.’s new offices in Fort Myers also made the cut for office deals.

A lone sale of an industrial property, a retail center, a hotel, a condominium complex and a recreational vehicle park rounded out the 15 Top Deals list.

In all, total sales of the 15 Top Deals amounted to $1.5 billion in 2019, a roughly 10% drop from the $1.66 billion of 2018 but still well ahead the amounts posted in 2016 and 2017.

Strikingly, though, while submarkets in Southwest Florida and Sarasota and Manatee counties cooled somewhat from 2018 — each was down on a volume basis by 16.4% and 46.6%, respectively, the result of a lack of a signature large sale — the Tampa Bay area was up dramatically.

Total Top deal dollar volume in Tampa Bay surged 28% to nearly $837 million in 2019, powered by a series of nine-figure deals.

“I’ve never in my entire career seen so much excitement or energy in the Tampa Bay market as I have the past 12 months,” says Tim Rivers, Florida market leader for commercial real estate brokerage firm JLL.

“Investment money is coming in, and every sector is showing how much people believe in this market,” Rivers adds. I couldn’t be more optimistic about the next two to three years, as Tampa Bay evolves into what I expect will be the hotbed of the Southeast.”

Rivers and others point to the Tampa Bay area’s rising national recognition, along with the in-migration of nearly 1,000 new residents daily to Florida — many of which settle in the Tampa area drawn by job growth — as a primary reason for the surge in commercial real estate investment.

Perhaps not surprisingly, the overall numbers were skewed, somewhat, by a lack of major hotel or resort trades along the Gulf Coast in 2019, despite the $145 million sale of the 444-room Grand Hyatt Tampa Bay to IP Capital Partners and GEM Realty Capital.

In contrast, in 2018 sales of the Hyatt Regency Coconut Point Resort & Spa in Southwest Florida and the Ritz-Carlton Sarasota resort in Sarasota County pushed transactional volume upward in each of those submarkets.