United States -  Tallahassee

Overview:

Overall, many growth factors have positively contributed to the economic prosperity of the Tallahassee area. The government sector remains the market's center of economic activity. Tallahassee also benefits from the presence of several education entities and is a major medical center for the Florida Panhandle, anchored by Tallahassee Memorial HealthCare. Additionally, local economic development officials report that the market has undergone significant retail growth, with Trader Joe's, Whole Foods Market, and Bass Pro Shops having opened locations in Tallahassee. Furthermore, multi-unit residential, retail, and mixed-use developments, such as those in the College Town area, continue to bolster economic growth. The recent voter approval in favor of the Blueprint 2020 initiative should further boost development in the city over the next decade.

Government offices and related entities, legislative activity at the Florida State Capitol, and leisure activity related to Tallahassee's colleges and universities represent the primary sources of demand for this market. As supply levels remained stable in 2014, market-wide occupancy continued to increase, surpassing the 60% mark for the first time since the onset of the recession. However, data for 2015 illustrate a flat occupancy trend, with average rate increasing. Future revenue growth is expected to be driven principally by average rate.

Four hotels totaling approximately $31.6 million in transaction volume have sold since January 2015, including such assets as the Hampton Inn & Suites Tallahassee I-10 (highest price per key at $147,000, for a total of $18,000,000). In recent years, improving market conditions have put downward pressure on capitalization rates, driving hotel values to peak levels. However, early indications for 2016 illustrate a deceleration of growth in transaction volume, and values are anticipated to stabilize in the near term. As the transaction market for hotels declines over the next several years given the introduction of new hotel supply coupled with the expectation of higher interest rates, capitalization rates are likely to increase; as such, hotel values are forecast to fall slightly in future years.

* The HVI is an index, a statistical concept reflecting a measure of the difference in the magnitude of a group of related variables compared with a base period. As such, it is a measure of broad market trends, rather than a conclusion as to the specific value of any asset, and cannot be applied to an individual asset. A good comparison is the Consumer Price Index. While this index provides a reliable measure of the overall rate of inflation in a region, it does not indicate how the price of milk has changed at your grocery store. So how can the HVI be of use to an individual investor? Although the HVI cannot tell you what a particular hotel is worth, it does provide excellent big picture data, indicating which market areas are experiencing positive trends, and thus may present good investment opportunities. The HVI for the U.S. is a measure of the strength of the lodging industry as a whole and, specifically, the hospitality investment market. The HVI for the various identified markets can provide a basis to evaluate and compare different geographic regions. For more insight on the limitations and applicability of the HVI, please read the message on the HVI home page by clicking on the graphic at the top of this page.

Valuation Trends and Predictions:

Tallahassee United States
Previous Year -11% (71 of 71) +1% (49 of 71)
Growth in 2017 -6% (70 of 71) +2% (36 of 71)
Growth in next 3 years -1% (69 of 71) +10% (36 of 71)

Change In Value For Market:

Tallahassee RevPar % Change

For more information, please contact:

Kathy Conroy, MAI
kconroy@hvs.com
  • +1 305 378-0404 (w)
John Lancet, MAI
jlancet@hvs.com
  • +1 305 378-0404 (w)
  • +1 305 502-1167 (m)
Kristin Rinaudo
krinaudo@hvs.com
  • +1 850 774-4229 (w)