(Carl Cronan is editor of Real EstateFlorida.)
ORLANDO, FL-Continued job growth and stabilization of supply and demand are making Central Florida an attractive market for apartment investors, say local brokers. Many units that had been converted to condos for sale are returning to the market as rentals, while occupancy remains well within the 90% range.
"The pipeline looks pretty good over the next couple of years," says Shelton Granade, first vice president of the Central Florida Multi-Housing Group with CB Richard Ellis Inc. in Orlando. While the area's total rental pool is currently 138,000 units, only 3,000 new apartments are expected to open this year with limited construction over the next few years due to scarcity of multifamily-zoned sites and rising impact fees.
Granade notes that Orlando is expected to lead the country in employment growth over the next two years, with more than 116,000 new jobs coming into the market through 2010, despite a national economy that has stunted job growth in other Florida metropolitan markets. That's good news for investors seeking value, especially among properties that have reverted back to rentals.
CBRE's Central Florida Multi-Housing Group, which also includes operations director Luke Wickham, posted total sales of $384 million over the past year. That includes a $28-million sale last month for which the names of the parties are not being disclosed.
Despite a slowdown in sales volume caused by tightened capital markets, "we're still doing a pretty good clip of business," Granade tells GlobeSt.com. He says institutional investors and real estate investment trusts are interested in larger apartment complexes and similar core assets, while private-equity buyers are drawn to smaller properties.
Interestingly, Granade points to an unexpected market in "fractured" multifamily assets, in which a percentage of converted units have been sold as individual condos while the remainder have reverted to rental apartments. Offshore buyers from Canada and South America are buying remaining units in bulk at perceived discounts, he says.
Population growth is expected to absorb excess vacancy in the Orlando apartment market, reducing concessions offered to tenants and stabilizing average rents within the $800-per-month range, according to a recent report by Marcus & Millichap. "As credit market conditions improve, a greater number of properties should come to market as owners seek to monetize the increase in value," says Greg Matus, the firm's regional manager in Orlando.
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