Tampa area touted as cheap place to do business

Largely unable to lure companies here the last few years, the Tampa Bay area is being touted as a cheap place to do business nowadays because of its high unemployment and depressed real estate market.

The Tampa Bay Partnership, a regional group that promotes economic development, is running a savings calculator on its website that lets businesses add up how much they would save by moving to the area. Economic development leaders in Hillsborough and Pinellas counties are sending the same message.

Ironically, the area's depressed real estate and high unemployment are touted as pluses in the game of luring businesses to town and convincing existing industries to expand.

At least one business cites the cheaper real estate as a reason it opened up here. Gordon Food Service bought a 1 million-square-foot Albertsons warehouse in Plant City for about $31 million this year. The property fetched about $44 million a few years ago, county records show.

"It (the price) was a factor in our decision, absolutely," said Deb Abraham, a company spokeswoman. The Bay area couldn't boast of being cheap a few years ago.

In the mid-2000s, asking prices for real estate soared. For example, the "effective rental rate" for area office space - rental rates that factor in discounts, such as a month of free rent - rose from $15.17 per square foot in 2002 to $21.91 per square foot in 2007, according to real estate firm Cushman & Wakefield.

That eliminated a big advantage for the Bay area. We never could tout a bevy of Ph.D's or venture capital companies, but we could at least say it was inexpensive to do business here.

Costly real estate was one reason the area had relatively little success in luring new industry, even before the recession started, economic development leaders say.

During the boom years of the late-1990s, the Bay area created more than 7,000 jobs a year through its economic development efforts. Many of those jobs arrived as big banks and insurance firms built back-office operations here.

But that number fell throughout the 2000s. By 2007, the area was creating far fewer jobs - 675 annually, according to Cushman & Wakefield, or a little more than 2,000, according to the Tampa Hillsborough Economic Development Corp.'s numbers. Meantime, local officials began worrying that even if a company wanted to relocate here, people couldn't afford to buy houses. The Tampa Bay Partnership began thinking about sponsoring an investment fund that would build affordable housing, said Chris Steinocher, the partnership's chief operating officer. Given today's low real estate prices and high unemployment, plans for that investment fund have been put on hold, he said.

Effective rental rates in the Bay area have sunk from that high of $21.91 per square foot in 2007 to $15.68 per square foot, according to Cushman & Wakefield.

Economic developers hope such low prices bring more jobs here.

Economic development efforts helped to create 1,481 jobs through June - a six-month total that's only 500 jobs behind last year's job total, according to the Tampa Hillsborough EDC.

Mike Meidel, director of Pinellas County Economic Development, sees signs that businesses are at least considering the Bay area again. Northerners looking to move to the Bay area are still having trouble selling off their old homes. But at least companies can find cheaper offices and warehouses, and employees can find cheaper houses, he said. "Now we really do have bargains on both fronts," Meidel said.