2 min read May 2023 — Invest: spoke with Brian Katz, founder and CEO of Katz Capital, to discuss how Tampa Bay has been able to overcome economic headwinds that have otherwise impacted other metropolitan regions. “Tampa inherently presents massive opportunity. The population trends here are unparalleled. The talent pool here is great, growing and getting more traction against comparable markets,” he said.
What have been your key takeaways from the past year?
We’re under a new interest rate paradigm. It’s unclear how long this rising rate environment will last, but inflation has been sticky in light of the broader economy’s resilience in the face of high interest rates. Nothing appears to strongly indicate that interest rates won’t continue climbing and that has the propensity for a material adverse impact on real estate values. Given the historical movement in interest rates, the fact that Katz Capital, in aggregate, has been able to continue along its growth path, has been a phenomenal achievement. Mind you, some of what we do is transactionally driven, namely brokering and closing transactions, which has been impacted greatly while other business lines, namely insurance and private credit, have actually benefited.
What opportunities are you seeing in the current market?
Tampa inherently presents massive opportunity. The population trends here are unparalleled. The talent pool here is great, growing and getting more traction against comparable markets. We’re seeing companies of all sizes choosing Tampa given the tremendous fundamentals here. From an investment standpoint pertaining to real estate, opportunities will come when there are motivated counterparties willing to sell reflective of the current interest rate climate. Our position is to remain patient and allocate capital as opportunities arise.
What is the landscape regarding buyer preference right now?
I see buyers wanting to have a sense of driving the transaction given a potentially inaccurate perception of seller stress. There has been so much money printed in the last decade that consumers and businesses are still flush with reserves, so if sellers aren’t forced to sell, they won’t. It will take time for the money supply to right itself. A lot of sellers are seeing low offers at first but unless they’re in a distressed scenario, they have time to wait for the right buyer. The glide path of transactional velocity has slowed down but people are still buying and selling down here even if the real estate market isn’t as frothy as prior years.
How is the economy impacting transactions overall?
The economy has been fairly strong and we still see real estate activity, albeit at a much slower pace, and certainly much more competition for those remaining transactions. A recession – assuming one comes – will be a double-edged sword. Buyers will be less creditworthy in general, but rates should be lower assuming the Fed reverts to a lower baseline risk-free rate. From a short-term economic impact standpoint, we try to stay rational and long-term greedy. We are focused on fundamentals while not worrying about day-to-day volatility. We make decisions based on what things are and not what they will be, and that helps us navigate volatility in good times and bad. Everything in Tampa Bay is promising right now. The cost of money is up and that can mitigate the demand for real estate, but an asset that might be considered expensive here remains a relative bargain compared to other markets. We continue to allocate capital and operational resources locally despite the current and forthcoming economic headwinds.
For more information, visit:
