The 301 Business Center is going in on East Columbus Drive in Tampa. Courtesy of Cushman Wakefield
Central Florida is following a national trend with heavier investment in warehouses than in retail construction.
This trend started before the COVID-19 pandemic but has steadily grown as a result of more people staying at home, shopping online, and sprucing up their living spaces, says Rick Brugge, executive managing director for Cushman & Wakefield, a global commercial real estate service firm with offices in Tampa.
“These are more broadly national trends, but it is certainly happening here locally,” Brugge says. “There is a flight of capital out of retail and a lot of it is chasing industrial. We have seen expected returns on industrial compressed since COVID-19 hit. The conversion to e-commerce is being accelerated by the pandemic and investors are following that trend.”
Part of it is due to increased shopping online, but there are other broader trends, he says. “People are nesting, for lack of a better way to put it. They are investing in their home and home experience, so a lot of products they are buying are coming out of warehouses or industrial properties, like pavers or landscaping. These things are making their way through the industrial supply chain, so it is creating more demand. People are spending less money on services like massage therapists or going out to dinner, so they are putting more money into homes, creating demand in other areas of the economy. The industrial sector is a beneficiary.”
A number of these new industrial buildings are going up right in Hillsborough County, including a Home Depot distribution center in Plant City, an Amazon distribution center in Temple Terrace, and the 301 Business Center on E. Columbus Drive in Tampa.
“At the very beginning of the pandemic people weren’t sure what was going to happen. It created caution. There were projects that would have broken ground sooner, but they have now come off pause. There are plenty of projects going that were planned or in the planning process well before COVID. There are a ton in Central Florida,” Brugge says.
This area is seeing everything from multi-tenant industrial buildings to big box e-commerce distribution centers. Brennan Investment Group is building a 1 million-square-foot building in Lakeland designed for multiple tenants.
Brugge says he believes this trend will stick.
“We were already going through a change in how we get goods in this economy. Used to be, we would go to the mall or a retail store and shop. Today, many people don’t even go to the grocery store. They get groceries delivered. The adoption of e-commerce has been accelerated in that regard and I think it is here to stay and it is a long-term trend.”