C&W Unit Bullish on Multifamily Market

ORLANDO-Previously record-low mortgage rates this summer have turned many apartment-renter prospects into home buyers but the city’s modest job growth performance is fueling a healthy multifamily market, the Apartment Group, a division of Cushman & Wakefield of Florida Inc., says in a mid-year industry analysis.

“In the face of an economic downturn which has gripped the nation, the local multifamily market has stood strong, increased employment and stabilized development levels,” says Cole Whitaker, senior director of the Apartment Group.

“One of the key factors in determining the viability of a multifamily market is employment,” the broker says. Whitaker says the city has added about 3,000 jobs over the past six months, while the city’s unemployment rate has fallen to 4.8%–well below the unemployment rates for both the state (5.3%) and the US (6.4%).

“While these numbers pale in comparison to the economic boom Orlando experienced in the 90s when employment grew by more than 22,000 jobs per year during the past decade, the fact remains that Orlando’s economy is growing, while many other regions of the nation are experiencing contraction,” Whitaker says.

The 90.3% occupancy level among the metro area’s 146,802 units in 607 apartment buildings continues to attract regional and national investors, the broker says. The occupancy in the first half of 2002 was 90.7%.

“Increased revenues are expected in the third and fourth quarters as communities burn off concessions that were instituted during the second half of calendar year 2002 when market-wide occupancy levels fell below 90% for the first time since 1992,” Whitaker says.

Despite statistics from other brokerages that indicate investment sales activity is lagging, the Apartment Group has brokered 17 multifamily contracts valued at $159 million over the past six months, Whitaker says. Per-unit sale prices are increasing, as many owners hold back properties and dicker strongly on price.

“There are several communities which are generating interests at price levels above $100,000 per unit,” the broker says. “Sales activity is very strong due to a tremendous amount of both private and public capital.”

Whitaker sees a new trend developing Downtown where apartments are being converted to condominiums. He estimates there are 437 existing condo units in the city with about 1,000 more in various stages of construction.

“Interest among apartment owners in selling to converters has already been documented by the Apartment Group,” the broker says. “The prospect for these converters currently include nearly 1,700 existing (apartment) units and 600 proposed units.”