How Commercial Real Estate Can Navigate Tampa Bay Housing Deals, From Affordable To Luxury

Tampa’s luxury condominium market has been on the radar of buyers whose wishlist includes a breadth of amenities, high-level service and water access.

On the other side of the coin, the region is in need of more affordably priced housing to meet the needs of its growing population. 

The performance of these asset classes was discussed among Tampa's industry leaders at Bisnow’s May 14 Tampa Bay State of the Market event. Speakers on the Tale of Two Markets: Multifamily Challenges and Condo Opportunities in Tampa panel shared success stories of developing luxury properties and insights into how to build more affordable housing.

The panel was moderated by Rachael Kratz, an attorney in Florida-based law firm Gunster’s real estate practice.

“The conversation flowed extremely well between the panelists,” she said. “They were able to show the connection between two completely different ends of the housing spectrum and share thoughts and ideas about how the Tampa housing market is progressing.” 

In a conversation with Bisnow, Kratz spoke on how owners and developers should approach growing demand and opportunities and how Gunster helps these stakeholders through each step of a project’s life cycle, and she shared insight into developing different types of housing.

Bisnow: How would you describe the current state of Tampa’s multifamily and condo market?

Kratz: It's a fundamentally strong market, but developers and owners need to ensure that they’re thoughtful about the basis and the timing of the project, as well as the location and amenities.

Tampa is a very compelling market, but it's not one where every single project is going to work because demand is so strong. Getting these projects delivered requires a more thoughtful and structured approach. Owners and developers need to make sure that there's appropriate capital. I think everyone's trying to tune in more to what Tampa buyers want today — whether they’re local or from elsewhere.

During our panel discussion, we talked about Pendry Residences as an example of bringing forth thoughtful amenities. It combines hotel and luxury condos, so while the residents will have access to the hotel’s gym, pool, spa and other amenities, they will also have their own entrance to the building and elevator. 

Bisnow: How can developers navigate opportunities in these two sectors while keeping costs in mind?

Kratz: When developers are doing their due diligence, they have to look at aspects like land basis, construction costs and insurance, financing terms and operational expenses. These need to be considered before a developer is starting a project because the margin for error is narrow. 

Doing due diligence early is the most important part of structuring a deal. If they aren’t already, developers should focus on being proactive rather than reactive.

Bisnow: How does Gunster's real estate practice support Tampa’s developers?

Kratz: We support multifamily, mixed-use and condo developers in all stages of a project, including site acquisition, due diligence, entitlements, financing, development, leasing and sales.

Gunster is a Florida firm, so we excel at navigating Florida-specific legal requirements. What distinguishes Gunster's real estate practice from other real estate practices is that we are focused on practical, deal-oriented advice. Ultimately, business decisions are up to the developers and owners, but we help identify risks early on and solve problems while also keeping the project moving and protecting our clients' interests.

We consider ourselves full-service, from start to finish. We start with the purchase and sale agreement, helping with those negotiations and drafting contracts. 

In terms of due diligence, there's a slew of different reports that a developer has to look at, which depends on whether they’re dealing with vacant land and building from the ground up versus an existing structure. We help obtain those reports and review them. 

We work through all parts of the acquisition, and then once we've gotten through due diligence, we work on putting that financing in place and creating corporate structures for that financing. When they want to lease the building or if they want to eventually sell it, we can help with that as well.

Bisnow: What were some of the hottest topics of discussion at the Tale of Two Markets panel?

Kratz: We spoke with a luxury condo developer about the state of Tampa's high-end condo market. We discussed challenges, what they like about the market, what they’re doing to separate themselves from competitors, where buyers are coming from and what growth may look like in a few years. 

We contrasted that market with multifamily and large apartment buildings. The luxury condo market seems to be much more robust now than multifamily. Right now, multifamily is a bit riskier, with investors not jumping at deals because leasing is more competitive than it was previously, and there’s more product than there has been historically. Investors have been waiting to see where the market will go.

We also talked about affordable housing. One of the panelists develops affordable housing, and another one was from the Tampa Housing Authority, so we talked about the interplay between the developer and the Housing Authority and different ways to make those projects work. They require coordination between the developer and the city to make these deals pencil.

The panel explored all different sides of the market and where each type of development stands. Ultimately, these deals have to really make sense and be well thought-out. This is not a climate where demand for properties is so strong that anything will work. However, investors are more willing to take that leap for condos at this time, more so than multifamily.

Bisnow: What's the main takeaway you hope attendees will have from the event?

Kratz: Tampa is still very strong and very attractive in terms of its real estate market. Success requires a level of forethought, discipline and an understanding of the community, but opportunity and growth are present.

This article was produced in collaboration between Studio B and Gunster. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.