Returning to the investment fold will be pension fund players hunting for buys in industrial and class A office, Grubb investment specialist Steve Flanagan tells GlobeSt.com. Strong net absorption in 2000 in the office, retail and multifamily markets should also rekindle interest.
A continued perception of a supply/demand imbalance in the Orlando market should temper the recovery in apartment sales volume," Flanagan says. "The key to transaction volume in 2001 may be the willingness of investors to buy at price levels demanded by owners under no pressure to sell."
The anomaly in the multifamily sector is that apartment prices are up but sales are down, the broker says. Although the average sale price per unit increased to over $43,000, up almost 9% over 1999, the total volume of apartment sales, which peaked at $429.5 million in 1998, dropped below $150 million in 2000. The market absorbed a record 9,201 units in the 12 months through September 2000.
The jury is still out on what direction REITs will go in Orlando's investment arena this year, Flanagan says. "Most REITs have the choice of either acquiring property from third parties at market prices or developing for their own account," he says.
For the past few years, property prices have been at or above replacement cost. "That answers why REITs have chosen to develop," Flanagan says. "This will likely continue in 2001."
Aggregate sales volume in the office and industrial areas was short of expectations, even with several key sales during the year. Average building prices in 2000 were $122 per sf in the central business district and $105 per sf in the suburbs. Average industrial sales came in at $28 per sf. Retail averaged $59 per sf.
The record average $43,000 per unit in the apartment market surpassed the average $42,000 per unit in 1999; $40,000 in 1998; and $36,000 in 1997.
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