How will hurricanes affect area real estate development?

Tampa Bay development industry stakeholders expect service demand and construction to cool in 2025, due to an unprecedented hurricane season’s impacts and higher costs.

However, they also believe even modest growth underscores the area’s resilience to building hurdles. St. Petersburg-based developer Will Conroy, president of Backstreets Capital, and Tampa architect Jonathan Moore, president of InVision Advisors, shared those sentiments with the Catalyst following the latest local Voice of Architecture survey.

The Tampa Bay chapter of the American Institute of Architects (AIA) released the results of its seventh annual survey Tuesday. While 66% of area respondents expect service demand to increase in 2025, that number falls well short of the 85% benchmark set in 2022.

“I was excited to see optimism from the design professionals in the architectural world,” Conroy said. “Architects are really the canaries in the coal mine.”

Will Conroy, president of St. Petersburg-based development firm Backstreets Capital.

Conversely, he said a drop in demand for pre-construction services “portends bad outcomes” for developers. AIA Tampa Bay surveyed 96 local architects, and 77% expect higher project costs due to Hurricanes Helene and Milton.

Another 42% believe obtaining construction materials and labor will present more of a challenge in 2025. When asked if storm-induced permitting backlogs would hinder commercial construction, Conroy said, “Unequivocally, yes.”

“Permits in the City of Tampa and permits in the City of St. Pete are taking much longer to process,” he continued. “And the reason I mention those two jurisdictions is because I actually think they deserve a lot of credit.”

Conroy noted the area’s largest cities have fared better than coastal communities with less governmental capacity. He also believes stringent rebuilding regulations will create a more resilient housing stock.

Moore called Tampa Bay a “fighter.” He said the region’s economy remains strong despite recent headwinds.

The survey found that 80% of his colleagues agreed with that sentiment. Like 64% of respondents, Moore’s boutique firm plans to hire additional employees in 2025.

He said 20 to 30 contracts is a successful year for InVision Advisors, and “smart, strategic projects are still moving forward.” Moore also stressed the importance of adaptability as “the storms made labor and materials a little bit harder to get in Tampa Bay.”

“Rebuilding isn’t just about putting things back together,” Moore said. “It’s about making things better. The best investment now is one that will prevent damage and costs in the future.”

Architect Jonathan Moore, president of Tampa-based InVision Advisors.

He, like Conroy, believes local governments were right to prioritize residential permits and storm drainage projects after the storms. Moore said they should now shift to commercial developments and bolster the economy.

He noted AIA Tampa Bay members have worked to help government officials streamline the application review process. Those efforts include creating more detailed drawings to increase efficiency.

The two development industry stakeholders also agreed that steady growth has more long-term benefits than the building bonanza of 2022. “You can’t have a market that is on a rocket ship at all times,” Conroy said.

He believes the “density game is here to stay,” particularly in Pinellas County, which lacks developable space. Conroy builds commercial and residential properties and has noticed a “tremendous flight” to elevated neighborhoods.

Conroy applauded St. Petersburg officials for increasing allowable density along transit corridors. However, he said building apartments is “tough right now.”

“Construction costs are elevated, insurance is elevated, interest rates are elevated, and rents are flat – at best – maybe falling,” Conroy added. “Those are the four major drivers for the success of a multi-family deal.”

The survey showed that 79% of respondents believe higher interest rates negatively impact their business, and just 34% expect a significant decrease in 2025. However, stakeholders believe there is still reason for optimism.

Moore said Tampa Bay design and construction companies came together to repair homes and businesses. “We filled our plate up with storm work.”

“There’s lots of opportunities for smart, residential growth in downtown St. Petersburg,” Moore said. “Is that another 30-story tower? Maybe, maybe not. I think there are still lots of ways to look at this …”

Conroy said design professionals remaining cautiously optimistic is “a good harbinger of things to come.” He also noted a storm-weary Tampa Bay is “still paradise.”

“We have two really good city governments in St. Petersburg, certainly, and also in Tampa, and I think sometimes you only see that in difficult moments,” Conroy reiterated. “I think, even though it wasn’t perfect, city governments in both places responded well to unprecedented disasters.”

AIA Tampa Bay boasts 750 members from Citrus to Pinellas Counties. The organization has assembled an industry panel, including Conroy, to interpret and discuss the report’s results Feb. 20 at the Center for Architecture & Design.

The event is from 5:30 until 7:30 p.m. at 1208 N. Howard Avenue in Tampa. For more information, visit the website here.