What's the Latest with the Commercial Real Estate Market
June 1, 2020
Here's the latest 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 - We're getting more data - some good and some bad - about the effects of the coronavirus on business and human lives here in Tampa Bay.
Part I: Unemployment in Tampa Bay
At the end of March, we saw the largest weekly increase in the initial unemployment claims in U.S. since we began tracking these numbers. Now, as some of the initial dust settles from the effects of the coronavirus, we are getting some solid data regarding the last effects of this pandemic.
From the graph above from the Tampa Bay Partnership's COVID-19 Community Report, we can see the different counties in the Tampa Bay area, along with their corresponding unemployment rate for the month of April. Hillsborough County has fared the best so far compared to other counties around the area, and has kept unemployment less than the state and national average. This is due to the fact that Hillsborough is home to several "durable" employment sectors (read more about that in Part III.)
Part II: City of Tampa Permit Applications
A good indicator of future growth is to look at the number of building permits pulled in a particular jurisdiction. Typically, more permits equals more work which equals more economic development.
From the chart above, we can see the weekly permit applications for the City of Tampa have remained consistent throughout 2020, except for a slight dip during the height of the stay-at-home orders in the city. (The data for the last week in May is only through Tuesday, May 26, 2020.) Building permits are a lagging indicator of future growth as much of this work has already been planned and paid for to some extent. To understand the full picture of future development, the data of permit applications in the summer months will reveal more helpful insights.
Part III: Durable Employment Sectors
The effects of the coronavirus have hit different industries and businesses much worse than others. Most notably, the retail and hospitality sectors ("non-durable" sectors) have been hit the hardest as they heavily rely on in-person experiences. Other industries, like white-collar professional services sectors ("durable" sectors), have fared better by shifting the work-life balance from the office to the house.
From the chart above from Yardi Matrix, we can see which metro areas across the United States will be most effected by the fallout from the coronavirus. The metro areas with the most durable employment sectors are the ones that are most likely going to make it through any sort of economy. The metros with the most non-durable employment sectors will struggle during an economic recession caused by the coronavirus.
For the Tampa Bay metro area, there are some positive signs for the future of the economy has it ranks number 21 out of 50 metros area nationwide for durability. Plus it ranks in the top 3 in the Southeast and the number 1 metro area in the state of Florida for durability. All these are signs that Tampa can weather the storm of the coronavirus better than most cities. The only question remains is how long will this storm last?
Here's to the Fundamentals.