"There has been increased activity and interest over the past 60 to 90 days," says Shelton Granade, first vice president with CB Richard Ellis in Orlando. He tells GlobeSt.com that CBRE's Central Florida Multi-Housing Group closed four local apartment properties totaling approximately 700 units in June for a total of $67.4 million, or $96,300 per unit.
The purchases, which involved three separate buyers, included two value-add opportunities built in the late 1980s, a newer community built during the current decade and a small low-income tax credit property. CBRE declined to identify the buyers and sellers at their request.
Private equity buyers are leading the charge to buy apartments in the Orlando area, rather than institutional investors, according to Granade. He adds that each property being marketed by CBRE is receiving as many as 20 offers, with three others currently under contract.
"Things are picking up. It's not a tidal wave, but it's a notable increase," Granade says. He notes that overall interest in apartments slowed down last fall before picking up again in spring, as investors became more comfortable that the multi-housing market might have finally bottomed out.
Although economic conditions in Orlando have continued to erode since late last year, including 10% unemployment both locally and statewide, apartment investors are starting to stir, according to a research report by Marcus & Millichap. The current median price of $55,000 per unit is down 25% from the 2007 peak but is off by only 8% over the past year.
Apartment vacancy has increased to nearly 10% locally, while the number of new units being built this year has slowed to 900, only a quarter of what was delivered in 2008, Marcus & Millichap states. Asking rents this year are expected to fall 2.5% to $868 per month, while effected rents should recede 3.3% to $798 per month.
"The long-term prospects for Orlando are still intact and will sustain investors' interest," observes Dan Colachicco, Marcus & Millichap's regional manager. He notes that the area's population growth is expected to accelerate with the economic recovery, while the diverse local economy will continue to generate demand for rental housing.
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