Multifamily Market Adjusts to End of Condo Craze

(To read more on the multifamily market, click here.)

BOCA RATON, FL-With the condominium craze ended, Florida’s residential market is going through a transitional phase, but one that could bode well for the multifamily market, according to Apartment Realty Advisors’ newly appointed COO for Florida Kenneth Krasnow.

“The market is clearly going through an adjustment period,” Krasnow tells GlobeSt.com. “In the past few years, there was a frenzied period similar to what you saw with the dot com boom.”

In his new position, Krasnow is responsible for leveraging ARA’s existing brand and client base to grow the company geographically across the state. The company recently opened an office in Tampa and is scouting sites for a soon to be opened Orlando office.

Krasnow was previously an executive vice president with Trammell Crow Co. in New York where he was responsible fro the overall direction and growth of the tri-state brokerage unit. Prior to that, he was the executive managing director and New York area leader for Cushman & Wakefield.

With the sense that any type of condominium property would sell in Florida, property was acquired at a rapid pace for condo conversion in the past few years. But now, with dwindling sales rates and falling prices, the dust has settled in the condo market with market conditions dropping back to a more normal pace. “Sellers are more realistic and buyers are true buyers, not just investors or speculators,” he says.

Although the boom has ended, it is not reason to be pessimistic about prospects in the multifamily market. In fact, over the next few years, the market may see a shortage in rental units due to the prevalence of condo conversion over the past few years. In 2007, there is expected to be 65% fewer apartment units delivered to the market through new construction than in past years. “We’ve seen decent rental rate growth across the state. That will continue because of the supply of units delivered to the marketplace,” Krasnow says.

ARA is particularly bullish on areas in Central and Northern Florida, such as Orlando, Tampa and Jacksonville, which have been experiencing positive job growth and other strong demographic trends. “In the rental community, there’s been a push to the north, northeast and west. The demographics are pointing in that direction,” he says.