All indicators also point toward Palm Beach County as the leading growth market, primarily because of increasing scarcity of property in Broward and Miami-Dade counties suitable for apartment development.
"There is not a lot of land available in Miami-Dade or Broward," Richard F. Davis, a Grubb & Ellis senior vice president, tells GlobeSt.com. "As a consequence of that, over the past 18 months or so a lot of developers have been coming to Palm Beach County. We have a lot of projects proposed here."
It is estimated there are about 9,956 units in leaseup or up for development review in Palm Beach, with several large institutional investors backing much of the development.
"More and more institutional investors are starting to realize the apartment market is not as cyclical as the office market," Davis says. "It's a more conservative play from an investment perspective. You do have turnover in tenants, but it's not as risky as leasing to, say, a retail tenant, since this is about having a home and roof over their head."
Because of the increased interest, Davis says, market prices for apartment properties are responding in a fairly predictable manner. "There are more buyers and not as much available product on the market," he says.
The average price for class A apartment properties in Palm Beach County through the first quarter this year was at a regional market high of $105,676 per unit. That compares with an estimate of $82,821 per unit in Broward County. There are no comparables for Miami-Dade, since that market did not record any sales of class A properties during the survey period.
All this activity has Davis and his associates asking whether the region, especially in Palm Beach County, can sustain the growth, considering current overall US market conditions. The market should retain these growth characteristics, Davis says, so long as the current market slowdown doesn't extend into 2002. All indicators point toward increased population and job growth, especially in Palm Beach County.
"We think, with the caveat being the economy and that we come out of this softness in the third or fourth quarter this year, we'll be okay in Palm Beach County," Davis says. "If there's any weakness, that is the one market that could be affected because there is much more new product than being built in Broward or Miami-Dade."
Even if the market softens, Davis adds, Palm Beach may benefit from a reluctance of possible first-time homebuyers delaying a market purchase and continuing to rent space.
"The slowdown in the economy is double-edged," he says. "Tenants who may be thinking of moving out may not because they fear they might lose their jobs."
Continue Reading for Free
Register and gain access to:
- 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
© 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.