Writer: Max Crampton-Thomas
2 min read February 2021 — Despite the challenges of the last 12 months, opportunities for economic growth and development remain robust and plentiful in Florida. The I-4 corridor in Florida could easily be the best investment area in the world, as the state and the region benefit from immigration and economic growth, said Andrew Wright, CEO and managing partner at Franklin Street, in an interview with Invest:.
How is the office market performing and what emerging trends do you see remaining over the long run?
The pandemic didn’t change anything, it just accelerated trends that were already in place. Maybe there’s a bit of an exemption to that in the retail and entertainment space but from an office perspective, working efficiently, working remotely, using technology for meetings and information sharing and interviews – those things have been going on for some time. It’s interesting that a lot of people talk about the benefits of working from home but I would also say that the longer people have worked from their houses, the more they realize that there are also negatives of working from home and they miss some of the benefits of working in the office.
When you’re trying to build a growing operation, having people together and being able to understand the mission and common goals is harder via Zoom. In terms of productivity, there are many people who say they’re more productive from their house but I don’t know if that’s true. I think companies lose a lot of financial efficiency because of people working from home. Businesses are going to look for ways to optimize but, eventually, the fear will subside.
Is the current situation influencing the market to be more favorable to tenants as landlords look to retain them?
That is correct. There are a couple of factors there. Long term, in the next 12 to 24 months, there are a couple of things that will converge. One is that you have a lot of new supply being delivered, at a high cost per foot and high rent per foot. That’s being delivered, probably, at the worst possible time because you have all these businesses that are thinking about downsizing, not looking at spending top dollar in a pretty space Downtown.
The second part of that, in the short term, is that people will be looking for expense savings. There has been a large spike in subleased space. A lot of companies are putting their offices on the market, thinking about subleasing. There’s a lot of subleasing coming online, a lot of new product coming online, so the supply side of that dynamic is very much going to make it a tenant environment for the foreseeable future, at least from an office market perspective.
How has the industrial space fared in the region as e-commerce takes hold?
You can’t talk about Tampa without talking about population growth. People continue to move here more than anywhere else in the country. You look at people, especially from New York and California, and I think Florida is going to be a net beneficiary for many reasons. From weather to political climate, from taxes to environment, there are a number of things that work in our favor and you are already seeing that in the housing market.
The single-family market has been very strong during the pandemic. Florida is the No. 1 destination for one-way trips. That’s going to continue and that drives the overall gross regional product (GRP) and activity. That’s the starting point. Why is there a strong industrial market? Because there are a lot of people coming here.
The second half of that equation is people’s buying patterns and trends. More and more they want convenience and if I can conveniently and cost-effectively have something delivered to my home, versus driving somewhere to walk into a crowded store and wait in line, that is a global trend that is not going to slow down at all. The industrial market is underserved for the current population, let alone that future growth. There’s been a frenzy to build new or renovate those last-mile industrial spaces. That and multifamily have been the best performing products by far in this pandemic. The pandemic is really driving that industrial business.
I would say that if the United States is the best country in the world, and within the United States the Southeast, and within the Southeast, the I-4 corridor could literally be the best investment corridor in the entire world. I really, strongly believe that.
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