The Tampa Bay metro area unemployment rate hit 3.2% falling 330 basis points (bps) year-over-year (YOY), on the addition of 75,900 jobs, for an impressive job growth rate of 5.5%. In addition, retail landlords benefited from steady employment gains in sectors that positively impacted demand. As a result, there was an 8.1% YOY increase in retail trade. However, despite these increases, there is still a shortfall of employees to meet the area’s growing demand. Leisure and hospitality grew 13.5% YOY as Tampa tourism rebounded quickly from the pandemic with increased hotel revenue and occupancy. The thriving economy continued to vitalize the metro area’s retail market, as absorption remained positive for the third consecutive quarter, decreasing the overall vacancy rate to 5.8%, dropping 90 basis points from Q1 2021. Single-tenant retail has undergone a significant shift in operations, design, and delivery. The tight labor market continued to squeeze the food and beverage industry, causing many restaurants to restructure their business models to adapt to these new demands by increasing the number of drive-through lanes/or adding dedicated pick-up areas. These adaptations resulted in investors adjusting their strategies and return expectations as strong tenants equated to safer investments. During the first quarter, the number of transactions for multi-tenant centers doubled over last year and the average sale price increased to $255 per sq. ft., which was 51% higher than a year ago. Investors also sought out single tenants which were considered essential retail with investment-grade lease guarantees. The number of single-tenant transactions during the first quarter were 22% less than last year but had an average sale price of $342 per sq. ft., which was 1.5% greater than a year ago. Cap rates dropped to record-breaking historic lows of sub-4%. The demand for essential and investment-grade single-tenant assets is anticipated to remain robust in 2022
while capital is still attractive and financing is still available.