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Market Update

What's the Latest with the Commercial Real Estate Market

June 15, 2020

<-- Previous Installment (06/1/2020) | Next Installment (06/30/2020) -->

Here's the newest edition of our continuing series on What's the Latest with the Commercial Real Estate Market.

To dive deeper into the state of the commercial real estate market and the economy here and abroad, keep on reading. (We have graphs!)

TL;DR - The country is re-opening businesses again, but that may be having a negative effect on people's health.

Part I: Multifamily Rent Growth
The multifamily market, especially in the Tampa Bay area, has been one of the best performing sectors in the commercial real estate market in the last ten years. Even over the last few months, the multifamily market here has continued to out-perform other sectors and other parts of the country.



From the chart above, with data from Yardi Matrix, we can see that rent growth over the past year for multifamily units has hovered around 2.0% in the Tampa Bay area. That's nearly double the national average, and significantly better than all the other major metro markets in the state of Florida. Tampa Bay is also one of the few markets in the country with multifamily rental growth rates expected to stay positive throughout all of 2020.

Part II: Doing Normal Activities, Scientifically Speaking
As consumers start to go back to doing activities that they did before the outbreak of the Coronavirus pandemic, epidemiologists were surveyed and asked when they would be comfortable going back to doing things they did before the Coronavirus.



From the chart above, using data surveyed and collected by the New York Times, we can see that the majority of the scientists who responded to the survey felt that they would be comfortable doing almost all of the activities listed within the next year. It is also important to note that while epidemiologists deal with scientific facts and data, consumers deal in sentiment and confidence. The scientists will recommend doing things by the book but consumers don’t always behave in the same way.



Part III: Coronavirus Cases in Hillsborough County
On May 4th, Florida entered Phase I of it’s re-opening plan. On June 5th, Florida entered Phase II of the re-opening plan. As more and more of the state begins to re-open, there will be more face-to-face interactions with more people (the number one way the coronavirus spreads.)



From the chart above, with data from the Florida Department of Health, we can see that the total number of daily new cases in Hillsborough has risen steadily since the state began re-opening. While this was to be expected, the next most important data point to examine is the total number of deaths from coronavirus. If, in the next month, the number of deaths also increases, we will know that the virus is still as virulent as it was in early spring. If, however, the number of deaths from coronavirus a month from now remains the same or even decreases, we will know the disease has become less virulent. A less virulent disease means it is safer to go back to doing normal activities at full capacity.


Here's to the Fundamentals.
-Nico

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