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PO Box 1212 Tampa, FL 33601 Pinellas Updated November 2005
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Tampa's billion-dollar construction permitting plateau void of speculation
TAMPA -- Saying that the construction business in Tampa is booming may be an understatement. Especially after city officials announced that more than $1 billion in construction has been permitted within the city limits for 2005, the highest amount ever.
Part of those big dollars is coming from two residential towers planned for downtown, SkyPoint and Trump Tower Tampa.
But when the city's last two towers were built in the 1990s, they were built on speculation, and sat largely empty for years.
That won't happen with this slate of projects, said Jeff Rogo, government affairs director for the Tampa Bay chapter of the National Association of Industrial and Office Properties.
"There was some speculative construction (then) where you would build an office building and hope they would get clients to move in and lease space," Rogo said. "Today, our developers are a little more conservative, and that is partly determined by those folks that are financing development projects. They are requiring that developers have a certain percentage already leased before they free up any money to let that developer begin construction."
From speculative building to high demand "Tampa is a good new market for a lot of people," said Christine Burdick, president of the Tampa Downtown Partnership. "Tampa has not experienced some of the development growth that Miami and the east coast of Florida has."
Tampa city officials said nearly $1.05 billion in new construction has been permitted during 2005, with $689 million dedicated to commercial construction and $356 million for residential. That's nearly the same amount permitted in Tampa in 2003 and 2004 combined. Officials said those costs include hard costs for construction.
When the Bank of America and 200 Ashley towers were built in the 1990s, those developers used incentives being offered by the city to bring office space downtown. At the time, officials had hoped that the availability might increase the demand.
This time, however, there are no government incentives to build and the market is completely demand-driven, said Cynthia Miller, Tampa's director of business and housing development.
A much bigger picture
The $1 billion construction price tag in Tampa is a small part of the overall resources being poured into the area.
"This has been going on in the region for the past several years," said Joseph Narkiewicz, executive director of the Tampa Bay Builders Association. "It's not just $1 billion. It's billions of dollars every year added to the tax base due to new construction."
The financial resources coming to the region is in the billions, Narkiewicz said, and these are projects that will make it off the drawing board.
"When they go to permit, the chances are, they are going to occur," he said. "When you're dealing with a 200-unit, 35- or 40-story high rise condominium building, you don't pull a permit just for the sport of it. You're talking about hundreds of thousands of dollars in permitting fees, as well as consulting fees, just to get that permit."
Investors are attracted to Tampa, but can the city maintain that interest?
"There are members of our association who say that these are the best times they've ever seen," Rogo said of NAIOP. "And it's not so much because of new development but because as long as the population continues to grow at a reasonable rate, people are seeing businesses move into the area and lease up some space that has been empty for a while. That's allowing the owners and managers of office buildings and industrial parks to start getting the rents up a little bit, and that's something they haven't been able to do for several years."
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