Florida is a constant target for real estate investment and it seems
that some of the state’s major cities are trending to have a good year for
multifamily growth. Orlando, for one, has experienced job and population growth.
Considering that a lot of jobs revolve around the city’s high tourism rate,
this could mean more demand for apartments. Job growth has been noted for
professional and business service jobs but the greater growth was seen around
tourism-based jobs. This low wage job growth means that the income may not keep
pace with increase in value of real estate promoting higher demand for
multifamily and positive rent growth. South Florida has a surplus of demand for
multifamily and investors are jumping at the opportunity. Some have even
shifted their business from condos to supplying the apartment demand. With
interest internal and foreign, the demand seems to be strong and steady.
Although there has been an increase in unit development, absorption rates are
forecasted to keep up comfortably.
The projections for job growth for Orlando are expected to remain
above average for the following three years, centering around tourism and other
low wage jobs. Being among the better off Florida metros, investments are being
offered that will spur tourism and economic growth. On top of that, Orlando
have just under 10,000 apartment units under development for the year. Although
this is a good amount of units to drop into the market, the demand is expected
to support this increase. The vacancy rates have been stable but may reflect
the impact of releasing this many units and level off shortly after. However,
the vacancy rates are expected to improve, in the long run, considering the
demand justifies the amount of units under development
in South Florida has been very good for the multifamily market. There were
eleven large multifamily housing properties that were sold in the second
quarter of 2017 totaling a little under a billion dollars. Even still,
developers like Related Group are sticking to condos to keep from competing, as
much as that may be, with rentals. They have stuck to targeting the condo-side
of business in South Florida. In the article, they mention that the area is
undersupplied with rental units of both luxury and lower quality. South Florida
has begun to get back to the peak of number of apartments that was set before
the crash, but there has been notable population, job, and income growth to
consider. These factors only underline the growing demand for rentals in the
area and developers have taken notice. InTown Apartments, for example, started
as a condominium project that they converted to an apartment project in wake of
the growing demand. Additionally, all classes of residential rental properties
have high occupancy rates which have settled concerns for overbuilding.
Florida home price growth is increasing faster than rent rates reaffirming the
trend away from homeownership. The prices of Class A rentals are expected to
soften as investors are becoming more and more interested in Class B and C. The
brokerage firm Franklin Street, for example, has had more problems with supply
than demand saying that whatever they list will sell, with only price
negotiation to worry about. Demand is also attributed to foreign interest in
the area. Franklin Street boasts of the high demand by explaining that one of
their properties was listed at $7 million and shown 40 times in three weeks.
This property ended up selling slightly under listing.