Many CRE sectors remain healthy as businesses migrate to the Sunshine State
There’s a whole lot of demand, not enough supply.
That sums up much of the commercial real estate (CRE) market in the Florida cities of Bradenton and Palmetto. But builders and investors are doing something about that.
The market here is strong on multiple levels, but there simply isn’t enough product to go around, at least in some sectors. That’s because companies, investors, and individual business owners are pressing into this state in teeming numbers, seeking to escape soaring taxes in their home states. Many have been snatching up the available CRE, making it far less available than ever.
Progress in downtown Bradenton
But that scarcity may be reversing. In Bradenton’s downtown area, for example, the inventory of available properties was almost nil. That is until investors started acquiring some of the old buildings to either repurpose them or build something new in their place. That’s led to the development of much-needed apartment buildings to fill the demand for downtown housing — an extremely positive trend. It’s good for the downtown area, its businesses and the real estate market in general.
Here’s a look at other some sectors in Bradenton and Palmetto:
Storage: This market is thriving right now. Not long ago, the number of facilities was fairly sparse — people had to drive out of the area to put their belongings into storage. No longer. Self-storage businesses are popping up everywhere, even on the main drags. They’ve become lucrative investments because of the monthly rents they command. Accordingly, investors are buying properties, tearing down the existing structures, and building storage units to meet the demand.
Large offices: While many office employees are returning to work, some larger businesses are holding off on staffing to pre-pandemic levels. That’s lessened demand for big office buildings, at least for the time being.
Retail: This CRE market has done surprisingly well. A few years ago, “Mom and Pop” establishments comprised much of it, but that’s changed recently. With the mass migration of businesses into Florida, bigger retail companies have been acquiring properties and setting up shop in this area. That’s changing the retail landscape.
Medical: This sector has seen a recent buying spree. Many physicians are acquiring properties and building on them to create a network of satellite offices. Of that number, some have decided to sell their developed properties to REITs and investors, typically in the form of a sale-and-leaseback arrangement, realizing they can make a great deal of money without the rigors of maintaining a medical practice.
Restaurants: Compared to the rest of the country (and the world), this industry is faring well here. The challenge for busy restaurant owners, however, is keeping operations humming in the midst of a labor shortage. With the advent of government stimulus checks, some recipients have decided to forego their lower-wage jobs and simply stay home. As a result, a lot of owners are scrambling, working long hours to meet the patron demand while short-staffed. But they seem to be holding the line.
To sum things up, CRE is generally healthy in Bradenton and Palmetto. As people keep moving their businesses here and as out-of-state investors increasingly set their sights on this market, we expect that to continue. It’s a good place to be a CRE advisor.
Angela Varga, Senior Investment Advisor
SVN | Commercial Advisory Group