ORLANDO—New multifamily product is coming online in Orlando. What's the common theme in this development cycle? What markets are seeing the highest rents? And were do we go from here?
GlobeSt.com caught up with Shelton Granade, executive vice president of CBRE Orlando, to get answers to these and other questions in part two of this exclusive interview. Granade has helped negotiate some of the highest priced sales in Central Florida, and focuses on creating value-added strategies for clients throughout the multifamily acquisition/disposition process. You can still read part one, Why Investors May Flock to Orlando Multifamily, if you missed it this morning.
GlobeSt.com: What are some common characteristics of the new product coming to market in this cycle?
Granade: Value-add opportunities in infill or unique locations have been getting very strong interest from buyers looking to re-position properties through interior and amenity enhancements. Investors are looking to spend $3,500- to $6,000-per-unit in upgrades and get a return of $75 to $125+ per unit per month in increased rent. We're selling more true class A assets as well—institutional capital has started pushing hard for new product similar to our 300-unit Crosswater at Lakeside Village and 326-unit SteelHouse Orlando sales last year.
GlobeSt.com: What markets do you see achieving the highest rents in the current cycle?
Granade: Downtown Orlando is renting at a big premium. Baldwin Park, Lake Mary and the Lake Nona area are also expected to “outperform” in terms of average rent growth.
GlobeSt.com: Are there changes in financing that are impacting development?
Granade: Construction financing is becoming more readily available as the economy improves. That said, the development deals are not easy. They really need to underwrite well on all fronts and that's become a challenge as construction costs have soared recently.
GlobeSt.com: How or will job growth, apartment demand, rent, revitalize Central Florida?
Granade: New apartment projects are shaping where and how we live. There are several properties being built in downtown Orlando that are helping to revitalize that central business district.
Historically, people in Orlando worked downtown, got in their cars and drove home to the suburbs. Now, we have an emerging 24-hour city in an urban environment where tenants can walk to where they live, work and play. Also, as new construction and value add development continues to increase thousands of local jobs will be created by these apartment projects.
GlobeSt.com: Are there any challenges or obstacles ahead that could cause another major bust?
Granade: Financing in the investment market is important. The government is working on various proposals that could restructure two big lending sources for apartments, Freddie Mac and Fannie Mae.
It will be important for debt to continue to be available for these big apartment purchases. Freddie and Fannie are very active on the multi-housing side in Orlando. That said, life insurance companies and CMBS lenders have also been increasingly competitive.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
