Market Spotlight: Tampa, FL
Breneman Capital has developed a predictive appreciation model we’ve dubbed our “Market Outlook Model” for multifamily values. The model’s primary purpose was to focus on the fundamentals - understanding how each market has performed historically and why it behaved the way it did. The model references historic multifamily appreciation rates from 2000 to 2022 and is backtested with an array of statistics spanning Economic, Demographic, Affordability, New Supply, Apartment Fundamentals, and Single-Family Home data. Through this analysis, we determined which data points are predictive of multifamily appreciation over the past 22 years and which are not. Moreover, we can precisely pinpoint the specific indicators that are the primary drivers for each market’s performance. Each market is ranked by the sum of its indicators, weighted by their actual correlations and statistical significance with appreciation.
Our model comprises the 37 largest markets across the country, 16 of which were determined to have had above-average appreciation rates for 2022. In the coming months, we will release new articles profiling our model's results and the benefits of investing in each market.
In this article and in our analysis, “Tampa” refers to two MSAs: Tampa–St. Petersburg–Clearwater Metropolitan Statistical Area (MSA) and North Port–Sarasota–Bradenton Metropolitan Statistical Area (MSA).
Tampa ranked as our #1 market in the country for 2022 Year End, scoring 1.36x the average appreciation rate of the 37 largest markets in the US.
From the City of Tampa itself to nearby cities such as Clearwater, St. Petersburg, Sarasota, the Tampa-St. Petersburg-Clearwater MSA and North Port–Sarasota–Bradenton MSA have become a hotbed for investors looking to take advantage of the region’s strong rental market and affordable cost of living.
But what makes Tampa so attractive for those looking to buy multifamily properties? Let’s look at the top 5 benefits that make investing in multifamily properties here so appealing.
1) Robust and diverse growth
What’s interesting about Tampa is that it was #1 overall in our Market Outlook Model, but it was not a runaway #1 in any one category (Economic Scores, Demographic Scores, Apartment Fundamental Scores, New Supply Scores, Affordability Scores, Single Family Home Scores).
Tampa had a far above-average score in each category but was not a runaway #1 in any particular category.
2) A booming population
The Tampa-St. Petersburg-Clearwater MSA is the second-largest MSA in Florida, and its population continues to grow at a rapid rate. Over the past decade, the MSA has experienced a 20% growth in labor force– significantly higher than the national average of 13.7%.
This population growth has been driven by both domestic migration (people moving from other parts of the country, mostly due to COVID-19 restrictions and high taxes) as well as international immigration.
Naturally, the influx of new people has increased demand for rental properties and pushed up rents, making it an attractive option for investors looking to maximize their returns on investment.
3) Low cost of living compared to Miami
Most of the new residents in Tampa are moving from high-cost cities like New York City, Boston, and Chicago. They are typically looking for a less congested lifestyle and to save money and this is where Tampa shines: Living in Tampa is relatively affordable compared to other major cities in Florida. The median home price is significantly lower than in Miami, and rent is ~20% cheaper than Miami—leaving plenty of room for rent growth.
For investors, this means they can buy properties at a more attractive price point and offer competitive rates on rent that appeal to potential tenants – while still having room to grow rents. In our market appreciation model, we found a correlation between affordable chunk rents and multifamily price appreciation. The correlation between appreciation and chunk rent prices is stronger than with rent-to-income ratios.
For renters, this means they can enjoy a higher quality of life at an affordable rate. With the option to rent in desirable areas like Tampa, Sarasota, Clearwater, and St. Petersburg, it’s no wonder so many people are choosing to move to the region.
4) High quality of life
Tampa is known for its incredible quality of life thanks to its proximity to the beach, plentiful outdoor activities, and vibrant cultural scene.
For investors looking to capitalize on this popularity, there are plenty of opportunities in popular areas such as downtown St. Petersburg or Clearwater Beach, where they can purchase and renovate multifamily properties that will attract tenants who want to be close to all the action.
5) Healthy job market
Tampa has a healthy job market, with the unemployment rate falling steadily since 2010 (not counting the temporary COVID spike) and no signs of slowing down anytime soon.
This is great news for investors, as it means that there will be more potential tenants in the area looking for rental properties – meaning more demand and higher rents for landlords.
Tampa is home to a growing number of major employers, including healthcare providers, financial institutions, and professional sports teams. The unemployment rate in the area is also lower than the national average. Its proximity to several major ports and transportation hubs also made it a hub for logistics and distribution jobs.
Final thoughts: investing in Tampa, FL
Tampa is an attractive option for investors looking to capitalize on the region’s strong rental market and affordable cost of living. With a booming population, affordable prices, and high quality of life, there are plenty of benefits to investing in multifamily properties here.
Whether you’re looking for single-family homes or apartment complexes to add to your investment portfolio, Tampa has a wide range of investment options available – all while taking advantage of a healthy job market with plenty of new potential residents moving in.
About Breneman Capital
Breneman Capital is a private real estate investment management firm specializing in the multifamily property sector. Breneman Capital employs a deliberate investment approach, leveraging data analytics and proprietary technology to generate superior risk-adjusted returns for investors.
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