Mar 13, 2024 - News

High interest rates temper optimism for Tampa Bay real estate development

Illustration of a construction crane with palm tree leaves on top of it.

Illustration: Brendan Lynch/Axios

High interest rates and a dearth of qualified workers have tempered optimism for Tampa Bay's real estate development market, according to a new survey of local architects.

The big picture: 81% of the 124 local architects who responded to the annual Voice of Architecture survey said this year's development-related economy will be "excellent" or "good."

  • That's higher than last year but lower than 2022, per a news release about the survey conducted by the Tampa Bay chapter of the American Institute of Architects.

Why it matters: This is still a hot region for development, but outside economic forces may continue to slow the pace of construction.

What they're saying: "Everyone's saying, 'OK, we could start this now ... but we feel like in six months it'll be a better environment, so let's just wait,'" said Rachael Brown, commercial real estate director for the Bank of Tampa, during a recent panel discussion about the survey results.

State of play: Local architects are feeling the high interest rates, with 80% of respondents reporting a negative impact on their business. More than half said they had to cut costs to compensate.

  • Panelists also pointed to the tough competition for trade labor as another factor influencing development.

Zoom in: Institutions like St. Petersburg College and Pinellas Technical College are ramping up their workforce and technical education programs, panelists said.

  • But there's still a societal stigma against pursuing trade work, said Joshua Bomstein, president of Clearwater-based Creative Contractors.
  • "I am hopeful," he said, "but we're not yet producing enough workforce."

What's next: Respondents expect strong activity this year in the residential and health care sectors. Commercial office space is projected to have the least demand.

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