Tampa Bay Among Top U.S. Markets for Luxury Apartment Development

Press Release

By Ashley Gurbal Kritzer, Tampa Bay Business Journal

The vast majority of apartments constructed in Tampa Bay in 2015 were luxury units, according to a new study.

RentCafe, a national apartment search website, on Thursday released data that shows 82 percent of new apartments completed in the Bay region in 2015 were high-end rentals.

Nationally, an average of 75 percent of completed apartments were luxury units, according to RentCafe. Luxury apartments are typically defined by high-end finishes in individual units and building amenities.

There's been an explosion of luxury apartment development in the Southeast in recent years. RentCafe found that "the most significant increase from 2012 to 2015 in the ratio of high-end to total new apartments was in the Southeast, up by 119 percent."

There are varying philosophies on luxury apartment development in the Tampa Bay region. Some developers, like Atlanta-based Pollack Shores Real Estate Group, believe that the segment is overbuilt. To compensate, Pollack Shores has shifted its focus to more affordable developments, like the one under way just off Gandy Boulevard.

But others say there's an increasing demand for luxury units, driven by millennials delaying homeownership and baby boomers who want the convenience of a multifamily unit without the responsibility of ownership. Market dynamics so far — Tampa's luxury properties are more than 90 percent occupied and continue to see rent growth.

"The ratio of high-end to total apartments completed increased by a staggering 63 percent from 2012," according to RentCafe. "In absolute numbers, this translates into 896 luxury multifamily projects of 50+ units (out of a total of 1,188 total projects) completed in 2015, compared to 382 luxury multifamily projects of 50+ units completed three years prior."

The dynamic will likely continue in 2016, according to RentCare. Of developments completed nationally in the first quarter, 79 percent luxury developments.

Read the full article here.