It’s always interesting when the market analysts at MPF Research get a chance to sit down with clients and discuss performance results across multi-metro apartment portfolios.
Given differing strategies from client to client, markets that are the right choices for some just don’t fit the desired profile for others. Still, most apartment investors and operators tend to agree that any specific market has fairly well-defined characteristics: You’ll get the same list of pros and cons for a given spot, whether the person you’re talking to wants to target that locale or stay away from it.
There are a few places, however, where discussions with multiple clients reveal drastic variation in perceptions of just what these metros are on a very basic level. Tampa is one of those markets where disagreement can be extreme.
The mid-sized to large Southeast markets generally rank among the nation’s population growth leaders, and many of them are stand-outs for attracting the young adults who have a high propensity to rent. Metros in this part of the country, then, tend to generate some of the strongest apartment demand seen anywhere. While big (sometimes really big) construction volumes can limit overall performance momentum for apartments at various points in time, quite a few markets in the Southeast fall into the very desirable category for many multifamily investors and operators. Places often cited as the best choices – markets preferred currently or those that earn the up-and-coming designation – include Charlotte, Raleigh, Nashville, Orlando, and Fort Lauderdale.
Some in the multifamily industry put Tampa on that same list.
Others don’t think that Tampa makes the cut for the top tier of metro choices across the Southeast. And, that’s our general opinion at MPF Research, too. From our perspective, the most significant weakness in Tampa as an apartment investment choice is that Millennials comprise a smaller – and slower growing – segment of the total population relative to the numbers seen in most of the metros mentioned above. With a somewhat older base of residents, Tampa’s housing focus tends to shift to single-family homes, both for-sale product and for-rent properties. It’s no accident that Tampa is one of the nation’s biggest centers of single-family rental investment now that institutional money has moved into that product niche. It’s not just that the homes have been available for investors to purchase: The homes also are a good fit for many of the renters present in the market.
None of this means that Tampa can’t be a solid choice for apartment investment. However, it’s important to approach the market from a realistic viewpoint. At MPF Research, we think that means you should think of Tampa as a limited risk but limited reward locale. Like metros such as San Antonio or Philadelphia, the Tampa market rarely sees its apartment sector performance falter to an alarming degree. But it lacks the demographic and economic characteristics that have yielded periods of fantastic results historically, and perhaps it is less favorably positioned than some other markets in the Southeast when it comes to enhancing its upside potential over the long term.