2007-2009: Tampa Bay in the Recession

The economic downturn of 2007-2009 spared few areas of the Bay area. Tampa Bay was more severely affected than the nation overall because of the preceding housing boom and its collapse. Tampa Bay had further to fall according David Denslow, an economist at the University of Florida.

The Tampa Bay economy was heavily dependent on construction and a large segment of the workforce was employed in the real estate sector during the boom years. The sudden collapse created a situation where there was a large supply for housing and little demand. As the construction sector retrenched it created a domino effect on the economy. Unemployment went above 12% in 2010. The falling economy had a dramatic effect on the commercial real estate market. As businesses suffered, vacancies in the office, retail and industrial sectors of the Tampa Bay Commercial Real Estate market increased dramatically , creating an excess of supply over demand for space in existing buildings. New construction already in the pipeline further exacerbated the situation. Lease rates in the Tampa Bay area tumbled and the selling prices for commercial property followed. See Trend lines for Office space in Tampa Bay, Industrial space in Tampa Bay, Retail space in Tampa Bay, Multi-Family Property in Tampa Bay.

The Tampa Tribune ran an article by Kevin Wiattorwski on January 23, 2011 examining how the Tampa Bay area fared during the recession comparing census figures from 2007-2009
Some interesting demographic shifts occurred which may be of importance to commercial real estate in Tampa Bay

On the positive side:
People moving to Tampa Bay: According to census figures 145,598 people were moving to the Tampa Bay area during the boom years of 2005-2007. In the Bust years of 2007-2009 this number dropped to 118,747 people moving to the Tampa Bay area. An 18 % reduction in the rate of immigration to Florida. However, it is interesting to note that even in the worst of times Tampa Bay was still gaining in population ? approx 165 people per day.
Sumpter: Sumter County, home to The Villages retirement community, was an exception to the trend. Sumpter led the handful of counties still luring more people during the bust than during the boom

Per-capita income remained stable despite job losses at the lower end of the pay spectrum. More people worked from home. And women found new spaces in the work force, often at higher wages than they previously received. The recession has cost low-skilled men their jobs, but it has created openings for women, Denslow said. “It used to be that women were the first to lose their jobs in a recession because they were in low-paid service-sector jobs,” Denslow said. “We’re seeing a big gain in women in the labor force now because more of them have college degrees.”
Some negative effects of the recession in the Tampa Bay area have been:
•The number of vacant homes exploded

•The vacancy rate for rental properties grew even faster than the rate for homes, jumping by 50 percent in Hillsborough County. The change may have come from construction workers and low-wage workers abandoning apartments they filled,

•The number of people moving from other states – long the bread and butter of Florida’s growth – dropped sharply.

•The number of people on food stamps or other government assistance grew sharply, driven by formerly middle-class people who had never sought help, said Erin Gillespie, spokeswoman for the state Department of Children & Families. Hernando County led the region with a 70 percent increase in people getting help.

•More than two-thirds of families with small children sent both parents into the work force to make ends meet, up about 10 percent.

•Household sizes crept up, as more people shared housing with friends and relatives to cut costs. As a result, in Hillsborough County alone, about 50 percent more grandparents reported living with their grandchildren during the bust.

An interesting fact to note is the shift in the make-up of the Hispanic population. The Mexican communities in the region’s largest counties shrank, along with the construction and landscaping jobs that once drew people. Despite that, Hillsborough County still has the state’s largest Mexican population: more than 52,000, down 7 percent from the boom. By comparison, the region’s other major Hispanic groups, Puerto Ricans and Cubans, grew in population across the region.